EP 097: How to think about strategies like a quant and diversify like a boss w/ Derek Wong

Aaron Fifield Podcast 1 Comment


On this episode, I have our very first guest from China; Derek Wong—he is the Director of Systematic Trading and Options at a private fund in Shanghai.

Initially though, Derek got his start in the agricultural pits at the CBOT, then following on from this, he’s worked at various quant shops in Chicago, South Korea, and now days, mainland China.

After discussing Derek’s backstory, we talk; emerging markets, cultural differences of Chinese investors, convergent and divergent strategies, diversification, and some slightly unconventional ways of thinking about how you trade.

Additionally, Derek also has some awesome insight for traders who are discretionary and what traders should focus once reaching profitability.

Derek has agreed to answer any trading questions you may have. So if you’ve got a question, scroll to the bottom of this page and write in the comments area…



Lessons learned in this interview:

  • Derek talks about his early days in the CBOT agricultural pits, joining a quant fund which managed 300 strategies, and trading emerging markets.
  • The cultural differences between US and Chinese market participants, why retail investors are more prominent than institutions in China, and the virality of news.
  • How Derek thinks about strategies as either ‘convergent’ or ‘divergent’, and the three dimensions of diversification; strategies, timeframes, and markets.
  • Why Derek prefers hypothesis based strategies—as opposed to “voodoo magic” data mining strategies, and why he doesn’t believe in perfect parameters.
  • The major benefits of mixing strategies and the most important considerations of portfolio construction. Plus, how to think about strategies as return series…
  • What discretionary traders can takeaway from a discussion like this. And once a trader becomes profitable, where’s the best place to direct their focus?

“Once a strategy is made, do not think of it as a strategy any more. Think of it as a security you can invest in.”

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Links and resources mentioned:

  • CWT Facebook group – There’s few places Derek can be found online, but he is a member of the CWT Facebook group. Follow the link and click ‘join’ to access.
  • Active Portfolio Management, by Richard Grinold & Ronald Kahn – Derek describes this book as The Holy Bible of diversification and portfolio building.

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