The coronavirus created some hectic weeks for our traders, to say the least. In this blog entry Joacim, Senior Trader at Lind Capital, tells you what it was like to be in the eye of the storm.
During the most hectic time of the coronavirus pandemic we experienced some of the most dramatic trading days of all time. Day after day the major equity indices dropped heavily. Just when you thought you had seen the worst of it, you would arrive at the office the next morning only to experience index futures plunging yet another 10%. Everywhere you looked it was risk off in all asset classes and the bottom was impossible to see. Even though our trading strategy is based solely on statistics, these days in particular were beyond what historical data can possibly describe. Not even during the financial crisis of 2008 did we see market drops of this caliber, so we had to act swiftly and immediately adapt to a situation, the likes of which none of us had ever come across.
I have of course experienced various degrees of market turmoil during my six years of working as a trader at Lind Capital. I will probably never forget the day after the Brexit vote, or the day President Trump was elected. We also experienced some crazy markets in December 2018 caused by the US’ trade war with China and the Federal Reserve Bank of New York. But none of those episodes come even close in comparison to the market crash triggered by the coronavirus. The market plunged at an unprecedented speed – it was extraordinary and unbelievable. The mid-March days were without a doubt the toughest days of my career, but it was also an instructive period.
The market forced us to step up our game, and we needed to do it fast. Luckily, we have a fantastic organization driven by some very dedicated people. Our Quantitative Research team developed new models for us overnight, and the support we received from all our colleagues at Lind Capital was priceless. The coronavirus gave us an opportunity to grow as a company – and we did.
In a nutshell, our trading strategy revolves around identifying market imbalances and betting on it reverting back to “normal” based on historical data. During the worst days of the coronavirus pandemic, we experienced equity markets so far out of balance that we did not really know what to make of it. In times like these it is paramount to keep your head cool. You have to keep chasing good trades and have confidence in what you are doing, even though some trades quickly turned out to be less than ideal. You have to believe in the strategy and that things will revert to “normal” while trying to identify what “the new norm” will be. In my opinion, the main reasons we managed to keep our head above water through these unprecedented levels of market turmoil were our confidence in the team along with our belief in the strategy.
As a trader, teamwork is essential, but I dare say it becomes even more important in hectic times like we just went through. When things move rapidly, as they did during the market crash, it is important that every member of the team trust that everyone makes the right decisions, and support each other with a second opinion when needed. We also had to adapt the way we worked together as our team was split into two separate locations due to the risk of infection, and all communication was conducted through an open virtual line. It was an entirely new way for us to work together, but we made it work, and we are a stronger team today than we were prior to the pandemic because of it. I am proud of the way we got through such trying markets conditions together. It was an extreme and stressful situation, but we made the necessary adaptations, and got through it as a team. In my opinion, it also got us one step closer to one of our main goals in the team – moving from a good, solid team to a genuinely high-performance team.