V.15:8 (373-378): The Systematic Trader: Richard Saidenberg by Thom Hartle

The Systematic Trader - Richard Saidenberg

How many times have you heard that developing your own rules and following them is the way to trade? By now, probably plenty. It’s not just idle speculation, either; Richard Saidenberg, a Commodities Trading Advisor and independent futures trader, discovered that the steps to successful trading were based on developing a systematic approach to trading. STOCKS & COMMODITIES Editor Thom Hartle interviewed Saidenberg via phone on May 20, 1997, and talked to him about system design, the pitfalls to avoid while developing a system as well as other topics.

So what were your early days as a trader like? My father’s a stockbroker, so I was exposed to the markets when I was quite young. In fact, I had learned how options worked by the time I was 15. I learned how to use the Value Line Investment Survey to pick stocks that were ranked first and second for timeliness and safety. So by 1986, when I graduated college, I had made a reasonable amount of money by focusing on companies that I knew: Anheuser-Busch, Coca-Cola, Browning- Ferris and others. I was doing some trading then, but mostly I was investing.

You caught the beginnings of the bull market in 1982, didn’t you? Yes, and I was aggressive. I would use 50% margin to leverage my position. Then after college, I went to work on the floor of the American Stock Exchange (AMEX). I started out working as a file clerk for specialists in the Major Market Index Options pit, and my job consisted of crossing off numbers on a card and then inputting the information on the card into the computer. When I worked up to specialist clerk, I was right in the middle of the action, and I had to keep track of the specialist’s positions. Toward the end of my stay there, I worked as an arbitrage clerk, which gave me the opportunity to place some arbitrage positions. After I had been there for 10 months, though, I decided that I wanted to trade on my own.