Meet Dylan The Day-Trader, Or When Fundamentals No Longer Matter

Tyler Durden's picture

Only 25, self-described 'risk-taker' Dylan Collins plays the markets with a pot of more than $1 million - $100,000 of his own money earned from trading over the past two years, the rest provided by his bosses and partners at AMR Capital Trading. As The Washington Post reports, Dylan exclaims, "trading is fun; for me this is the dream job;" but as they note, for most of us, day trading conjures up the image from the dot-com era of some dude in his pajamas with a two-day growth of beard logged on to a Charles Schwab account buying Nortel Networks and Pets.com on margin. But have no fear for - New York-based AMR, a division of G-2 Trading, is a lot more disciplined and sophisticated than that - specializing in “momentum trading,” riding hot stocks up and cold stocks down, taking advantage of the irrational herd behavior that characterizes financial markets. “I understand the idea that maybe you’d want to do something more meaningful, but I don’t think I need to worry about that at my age,” Dylan explains as he exploits momentary mispricings and sudden spikes in volume.

The thing about this kind of trading is that you don’t have to know very much about the companies whose shares you are buying or selling.  “So much of trading is just about intuition,” he adds brushing off how quickly knife-catching turns to blood (as the BTFD strategy backfired on Sino-Forest and Digital Domain).

"This isn’t just an 8 to 4 job. There are a lot of tiny intricacies," he says, "and there are so many others out there doing the easy, obvious trades that they don't really work any more. You have to stay a step ahead of them." On a typical day, Dylan may put in a thousand orders to buy or sell dozens of stocks at prices higher or lower than where the shares are trading at that moment, anticipating movement up or down. Most are never filled - or will be canceled - as prices move in the other direction. By day's end, only a dozen or two trades may be executed.

"Barring some disaster, I can’t imagine leaving this firm,” Dylan declares with the confidence of a twenty-something. "I'm sure this is the perfect career for me." Party likes it's 1999.

Via The Washington Post,

I first recall seeing Dylan Collins years ago on the basketball court of my son’s junior high school,... Twelve years later, I am sitting next to Dylan in a nondescript office in one of those new town centers that have sprouted along Florida’s gold coast. Arrayed in two rows, a dozen men, ages 23 to 36, are dressed in dungarees, T-shirts and flip-flops sitting in front of banks of computer terminals, their fingers flying across keyboards, ...

 

...

 

Dylan is a day trader ...

 

...

 

Only 25, Dylan plays the markets with a pot of more than $1 million — $100,000 of his own money earned from trading over the past two years, the rest provided by his bosses and partners at AMR Capital Trading. While many of Dylan’s high school friends are still grinding it out in graduate school or moving up the ladder of barely paid “internships,” Dylan last year was pulling down a six-figure income.

 

“Trading is fun,” reports Dylan.

 

...

 

It all began with online poker.

 

“In high school, I started playing $5 games on weekends with my degenerate gambler friends...

 

...

 

By senior year, Dylan had given up the “prop player” gig and was simply playing poker for his own account,

 

...

 

“I was always doing the go-for-broke strategy,” he says. “The adrenaline rush of playing for thousands of dollars was crazy.”

 

...

 

So what’s it like telling your parents that you’ve decided to be a day trader?

 

“They hated it,”

 

...

 

For most of us, day trading conjures up the image from the dot-com era of some dude in his pajamas with a two-day growth of beard logged on to a Charles Schwab account buying Nortel Networks and Pets.com on margin.

 

New York-based AMR, a division of G-2 Trading, is a lot more disciplined and sophisticated than that — more like a small hedge fund only without any outside investors. That makes it rather unusual. The New York office tends to specialize in “momentum trading,” riding hot stocks up and cold stocks down, taking advantage of the irrational herd behavior that characterizes financial markets. The smaller outpost in West Palm specializes in looking for large but momentary mispricings of stocks that result when there are sudden surges of buy or sell orders that knock a share price off its trend line — “price-action trading” or “liquidity trading,” it is sometimes called.

 

The thing about this kind of trading is that you don’t have to know very much about the companies whose shares you are buying or selling.

 

...

 

“So much of trading is just about intuition,” Dylan says. He tosses around Wall Street jargon and nostrums (“buy on the bid, sell on the ask”) as if he’s an old hand.

 

...

 

Dylan started at AMR in August 2010. He didn’t have a positive trading month until January. He didn’t “make his bank” and get his first paycheck until May. In June, he lost it all.

 

...

 

“There was this Canadian company, Sino-Forest, that we were all buying,”

 

...

 

Dylan noticed a sharp drop in the stock of Digital Domain, a company founded by director James Cameron to do the special effects for the movie “Titanic.” There was no news that might explain the sudden price movement, so Dylan, like a number of his colleagues, jumped in and waited for the natural reversion to trend. When it didn’t happen, the others sold out at a small loss, but Dylan decided not only to hold on but bought even more as the price continued to fall. The “dead cat bounce” he anticipated never came. What eventually did was an announcement that Digital Domain was filing for bankruptcy protection.

 

...

 

“This isn’t just an 8 to 4 job,”

 

...

 

“There are a lot of tiny intricacies,” he says. “And there are so many others out there doing the easy, obvious trades that they don’t really work any more. You have to stay a step ahead of them.”

 

...

 

On a typical day, Dylan may put in a thousand orders to buy or sell dozens of stocks at prices higher or lower than where the shares are trading at that moment, anticipating movement up or down. Most are never filled — or will be canceled — as prices move in the other direction. By day’s end, only a dozen or two trades may be executed.

 

...

 

“I understand the idea that maybe you’d want to do something more meaningful, but I don’t think I need to worry about that at my age,”

 

...

 

"Barring some disaster, I can’t imagine leaving this firm,” Dylan declares with the confidence of a twenty-something. “I’m sure this is the perfect career for me.”