In this issue of The Connors Research Traders Journal (Volume 2), we’ll delve into the insights of Peter Muller, who built PDT (Process Driven Trading), one of the greatest proprietary trading firms in the world for Morgan Stanley. Peter and his team then moved from Morgan Stanley to their own $5+ billion quant hedge fund. Reportedly, Peter and his team have achieved returns (after fees) of over 20% annually since the early 1990’s. Even though he is highly secretive in discussing their trading (Peter and his team have written little and said even less on how they trade), this article, published in Quantitative Finance, is one of the few pieces out there, and it has a number of gems in it. These gems can give you a better insight into how to build portfolios with greater returns and with lower risk.
– Things to avoid include correlated strategies.