FX MANAGERS
Christopher Brandon
founding partner
Rhicon Currency Management
explains why it is fundamental to focus on the absolute
risk and be aware of the worst case scenario at all times.
Interview by JW Partners for FX Trader Magazine
INTERVIEW
Manager
Christopher Brandon
Strategy
Location
Type
Style
Technical Analysis
Instruments
Currencies
FX MANAGERS FX
main offices in London and Singapore
and a partner trading from Geneva.
Due to the nature of the markets we
trade we felt it was important to have
better internal coverage of the markets
on a global basis, both in terms of
monitoring & execution as well as
back office & operations. This shaped
the decision to have offices in Europe
as well as in Singapore.
JW:What are the key positions in
your company?
CB: Beyond the three portfolio
managers, the most important
position is held by our Head of Risk
Management & Compliance who is
based in London, and has been with
the firm for nearly seven years.
JW:Which authority regulates
Rhicon? Do you keep and update
procedure manuals? Do you have a
compliance and risk management
policy? How time consuming and
important is this?
CB: Rhicon is regulated by the FSA
in the United Kingdom, as well as by the
Monetary Authority of Singapore and
the National Futures Association (US)
in Singapore. Rhicon has dedicated
personnel in both locations who
maintain our internal compliance &
risk management policies & procedures.
In addition, we have employed outside
regulatory consultants to keep us
abreast of external developments as
well as provide a health check on our
own procedures. Whilst this may be
time consuming, we feel it is a very
important part of our business, and
we have been keen to devote resources
to ensure that we are fully compliant
at all times. This not only minimizes
the risk of errors but reassures our on the overall portfolio, on the three
investors as well as ourselves.
managers trading books, and on each
and every underlying position. As
JW:As currency program manager, such we have a maximum monthly
how would you describe your loss on the strategy of 4%, split across
investment strategy?
the three books (1% for the intra-day
CB: Our investment strategy is best book, 1.5% for the other two), and
defined as being short to medium also a maximum amount of risk that
term discretionary trading, with a can be deployed on any single trade
strong emphasis on technical analysis. within each book. This emphasis on
We have been quite fortunate that the absolute risk means that we are
the three portfolio managers have aware of what our worst case scenario
naturally evolved into three different might be at all times.
time frames with complementary
styles. These include intra-day trading
JW:Whats the most important
with a more contrarian bias, short lesson youve learned from trading?
term trading with a bias towards
CB: The old adage of plan your
breakout/momentum, and a more trade and trade your plan is one that
medium term perspective which we have learned from experience
comprises both technical analysis and many years ago. Without a strict
thematic studies. This should enable plan, comprising of entry points, stop
us to generate profits in a broad range loss levels and targets, a trade should
of market environments.
not be implemented. This holds true
regardless of investment style or time
JW:How and when did you frame and one which we all adhere to.
develop your current FX management
strategy?
JW:Do you use a blend of strategy
CB: The partners at Rhicon have types for diversification or one and
been trading their own capital for over only?
10 years, and we continue to be heavily
CB: Whilst we all rely on technical
invested in the strategy. This has analysis as the basis for our trading, we
shaped our approach to trading and benefit from a natural diversification
most importantly to risk management across time frames and trading styles.
which is the cornerstone of our Within a robust risk management
strategy.
framework this means that we should
be able to take advantage of a wide
JW:Risk, an exciting yet dangerous set of market opportunities and
word. How do you manage it?
environments.
CB: Anyone who thinks risk is an
exciting word should not be trading
JW:How do you think has your
foreign exchange. In our view, the performance been over time? What
key to successful trading relies on market conditions are expected to have
faultless discipline and focus on the a positive and negative impact on it?
absolute risk deployed at all times
CB: We are constantly striving
FX TRADER MAGAZINE January - March 2010 37
FX
FX MANAGERS
FX MANAGERS FX
CB: A successful trading strategy
should naturally adjust to volatility,
and in this respect our use of technical
analysis allows us to do this seamlessly,
as higher volatility is captured in
larger hourly and daily ranges. Whilst
your trading parameters thus adjust
to these, your risk reward should
however remain constant to ensure
consistency in risk taking.
JW:What should an inexperienced
trader watch when choosing the time
frame to trade on?
CB: He or she should focus on the
time frame they feel most comfortable
in. This should be a reflection of their
personality, so for example a trader
who struggles to sleep with positions
overnight should probably focus their
efforts on intra-day trading.
JW:What are your average and
maximum leverage used?
CB: Our average leverage used
is about 0.5 times AUM, with the
maximum having been 3 times.