Order and Chaos - Two Professional Minds with Different Investment

Approaches
By Anna Smith - Monday November 10, 2014

Trading at the professional level and experiencing the yin and yang of the financial world from
the perspective of an experienced pro, can bring an individual closer to successful investing
nirvana.
Order and Chaos or Steve Vettorel and Larry Hannula are traders with many years of
experience in the investment industry but with two very different paths to how they got to the top
of their chosen professions. Two true teachers of trade technique methodologies on investing
Larry and Stephen are equally straight-laced, by the book, kind of traders. Both of these
experienced investors are joining Trading Street.
Larry has over 30 years money management experience working for such institutions as ABNAMRO, Cantor Fitzgerald and Macquarie Bank. His life-long dedication to the pursuit of better
trading techniques makes him one of the few that has been able to change his trading style over
the years to suit the changing markets.
Stephen on the other hand hails from Fidelity Investments and Fisher Investments, both
outstanding financial institutions that gave Stephen the strong investment sense and the ability to
start his own hedge fund. At Trading Street Stephen is offering a course that will teach the
individual investor how to trade the markets using the same methods he uses to trade millions of
dollars in proprietary money for institutions.
Recently I had the opportunity to speak to both Stephen and Larry and so I am sharing the
highlights in the following paragraphs.
Anna: Stephen, you have been a money manager at pretty high levels in your career. What
wisdom would you impart to your students?
Stephen: Well, there is no real magic to being a good trader. You study hard under the eye of
good mentors, use proper evaluative tools, and practice diligence, risk management and
qualitative analysis by studying and careful observation of the markets and price movement.
Anna: What do all really good traders have in common?
Stephen: In my way of thinking, to be in the upper echelon of successful traders requires an
innate skill, a gift of sorts. Some of this is built into your DNA, just like those who become great
violinists but understand this fact: to be a competent trader and to consistently make money by
showing profits .this is a skill you can learn.
Anna: Thats good to hear. How much work has to go into it?

Stephen: Honestly, Anna, like many professional skills, very few require more hard work,
intelligence, dedication, patience and mental discipline than successful trading at this level. It
naturally helps to foster this by working in an institutional trading environment.
Anna: But there is a solution for those of us who have not worked on pro desks, right?
Stephen: Thats the secret. Like those of us who have worked under the great traders and
investment gurus, you simply need to find someone who is suited to your temperament and with
whom you stylistically agree and study under them.
Anna: Any additional wisdom you can offer to our audience?
Stephen: When it comes to defining your approach to trading as an individual, this is a thought I
have given to my students when we work together in the earlier stages: Every trader has
strengths and weaknesses. Some are good at holding their winners, but may hold their losers a
little too long. Others might cut their winners a little short, but are quick to take their losses. As
long as you stick to your own style, you get the good and the bad in your approach but a
winning technique is a winning technique. You never second-guess yourself, stay true to your
own trading values. And of course find a good teacher.
Anna: Thanks Steve. I like that thought: dont change horses in the middle of the stream. If it
works, dont fix it.
After my conversation with Stephen, I had a chance to talk with Larry Hannula. Unlike
Stephens methodical and studious analysis, Larry's approach is to calm chaos.
Anna: I have heard, from many people in the investment industry, compliments about your
trading style; it is a pleasure to finally meet you. Many of these people talk about you as being
one of the most off-the-beaten-path, intellectually-driven theorists around. Could you explain to
our readers today some of the principles on which you base your unique approach to the
markets?
Larry: Sure, I have always been fascinated by the studies and writings of many brilliant men
whose theories have led to the culmination of our model driven trading methodology. Weve
done extensive research of the teachings of these minds, and it is through this that weve come
up with our slightly different kind of analysis.
Anna: What are some of the details of this methodology?
Larry: We combined Chaos Theory with some Newtonian principles and learned from our
research which were made more precise from our unique proprietary data mining efforts with
the understanding that it would logically make future market movements more predictable during
chaotic, normal or periods of below normal volatility.
Anna: I understand how Chaos theory works, basically, but how do Newtons natural laws relate
to trading and market movements?

Larry: Well, we applied Newtonian principles to understand that when correlated markets have
divergence, it can create equal and opposite reactionary market movements much like the laws
of motion and inertia. We also used this concept to apply to regression analysis, which gave us
our model driven Stat-Arb approach.
Anna: This sounds like a college thesis. How did this intellectual exercise lead to a workable
trading methodology?
Larry: Our ah-hah! moment came when we combined the principles we learned from our
mentors, who came before us, with our analytical model to forecast with a high probability future
price movements. Giving order to chaos using our Predictive Oscillator Studies was the
breakthrough moment that validated the theory. And hey it works. The model has been in
demand now for nearly 25 years.
Anna: So the bottom line is that you are a strict model-driven analyst who operates on outcome
probabilities, predicting price movement by a set of criteria. Does this work with more than one
market or instrument?
Larry: It does. We use this model for virtually anything that can be traded with a large enough
sample. That is to say, just about anything our clients are interested in can be quantified using
our systems. In our way of thinking, it is mandatory that we rely on the model and its rules using
the disciplines where we define higher probability outcomes rather than reacting to price action
.which results in poor trade location and decision-making, thereby leading to bad outcomes.
Understand this: our model filters trade opportunities for us to exploit the fear of others by our
belief in this model-based methodology.
Anna: Bottom line is it necessary for the average person to learn these esoteric market
theories?
Larry: Absolutely not. While fun to contemplate, certainly, we have broken it down into a
service by which we provide intraday, daily, nightly, weekly and longer term forecasts for very
specific instruments and it is ideally suited to Index trading.
Anna: Thanks Larry and thanks for the primer on your fascinating work. We are grateful to Steve
and Larry for sharing their tips and tricks.
So, finding order and taming chaos is within reach to the individual investor if you find the right
mentor. Stephen and Larry may or may not be right for you but at least it may be a start for
finding that perfect person to help you succeed at your long term financial goals. Both of these
outstanding traders are available and approachable on Trading Street so feel free to stop by and
pick their trading brains, and learn from their wealth of material in more detail. If either of them
does not strike your fancy then Trading Street does have many such professionals in many
different asset classes from commodities to bonds, precious metals to foreign exchange and
beyond.

###
About
bout the author - Anna Smith
Anna Smith is an independent journalist that writes for blogs, corporate public releases and
general enjoyment. She has written for many large publications under several pseudonyms
giving varying perspectives about world events. Ms. Smith has over 20 years writing experience
and is passionate about writing quality articles.
Email:
mail: annawritter@gmail.com
About Trading Street
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mentoring
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YOUTUBE VIDEOS:

Stephen Vettorel - https://www.youtube.com/watch?v=FgcIjPp9RLM

Larry Hannula - https://www.youtube.com/watch?v=eriTdVVF7kc

SOURCE: Trading Street

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