Personality Case Study: KD Angle
Prior to his life as a trader, KD Angle (a.k.a. Kelly Angle) had a busy life. He attended both Wichita State University and the University of Southern California and graduated with a degree emphasizing political science and psychology.
KD used to have “real jobs.” Before entering the trading arena, he worked as an operations officer in a diversified firm that was active in oil and gas exploration, drilling rig contracting, refining of special gases, a cattle feeding operation, two regional banking institutions, commercial real estate holdings, and the ownership and operation of a luxury hotel. Busy guy!
It was from this business experience, which involved working closely with related commodity interests, that KD was introduced to trading the futures markets. He entered the futures industry in 1985, with a newsletter and hotline advisory service known as the Timing Device; it was reported in Forbes magazine as being the number one commodity futures newsletter in 1986. He began managing assets in the futures markets shortly thereafter.
KD has also authored several books on trading. KD’s One Hundred Million Dollars in Profits (An Anatomy of a Market Killing) gives his account of a trading experience that influenced his decision to give up his day job and commit his career to the trading industry.1 KD’s unique views on the markets and trading strategies have been published in nationally respected publications such as Stocks and Commodities Magazine and Futures Magazine. He has also been interviewed on the CNBC business television network for his opinions on the markets.
KD was first registered as a Commodity Trading Advisor in 1986. He also serves as CEO and founder of a couple of companies registered as Commodity Trading Advisors with the Commodity Futures Trading Commission.
Currently KD runs two highly successful managed-futures investment programs. The older of the two is the Genesis Program, and the other is the Keck Program. Both are fully systematic in their trading methods.
How successful is KD? Well, the Genesis Program began in 2000 and has generated a compounded average rate of return of 16.83 percent. The Keck program began in 2003 and has generated a compounded average annual rate of return of 19.95 percent. If you add it up, that’s a total return of 546.41 percent and 355.49 percent, respectively. In comparison, the S&P 500 total return index, over the same time period had a total return of 17 percent. If one thing can be said about KD’s documented results, it’s that he has been very, very consistent over the years.
True to form, KD scores high in total conscientiousness (C) and in particular on the order facet (C2), indicating that his personality is better suited to systems trading as opposed to discretionary trading. As such, KD describes spending less than 10 hours per week (not per day, per week!) trading the markets. He takes fewer than 5 positions per week, and he describes his trading positions as “long term”—over 30 days. KD had the following to tell us:
I trade systematically and have employed the same two exact trading systems since 2000 and 2003, and have not made a material change to them since inception of trading. Because they are 100 percent systematic, I can delegate the process, and I have for years. My expertise is not in having the personality of a trader, but in doing good research in system design. This is the true art of trading. I believe it separates the men from the boys over the long haul. I compete against some of the most well-educated computer and math PhDs in the country, and my point is this: A system that consistently ends up in the top tier of performance is created from good design and disciplined execution. This is the reason for this success. I would also say that my work ethic has more to do with conducting the best possible research and design results, rather than from having superior intelligence.
I also believe that trading over many years has had an influence on my personality. For example, because I have no expectation about the results of a trade when I put it on, I am fairly expectation-neutral about all actions in my life. I didn’t start out this way. Some say half of life is expectation, but I would say my expectation factor in most things that I do in life is fairly tempered, with a “wait and see” emotional response. This is a result of my trading. I do not believe that a person is born to trade; like most skill sets, it can be learned over time when taught to the person who is motivated enough to learn what is required to succeed.
Most people who trade do not really trade for the money. They think they are trading for money, but in reality it has more to do with other things. I think amateur traders tend to use trading as a distraction from their day jobs, with the hope of changing their current life condition into something more desirable.
Did you hear what KD said? “I have no expectation about the results of a trade.” In fact, this was a consistent theme we heard over and over while interviewing top market traders. They also frequently make reference to “not doing it for the money.” Now of course every trader wants to make money trading. After all, real money is at stake, and nobody wants to lose real money. But the successful trader’s mind is not so preoccupied with the concept of mega-riches around each and every next turn in the market that she can’t function. By learning to take a more guarded “wait and see” approach, she can concentrate more on the actual art and skill of trading, or in KD’s case understanding what is required when it comes to designing trading systems that actually perform in the markets. Greed, which undoubtedly we all have to one degree or another, is not controlling the actions of superior traders.
In a sense greed is the opposite emotion to anxiety or fear. Greed is the emotion that makes us do things, while fear is the emotion that slows us down or stops us from doing things. The right amount of greed is of course necessary. Greed provides us with the motivation to work hard at something and do a good job at it. In fact, the concept that material wealth can measure happiness, fulfillment, and success is propagated throughout our society. Almost from the time you are born, you are taught the value and influence of money.
However, when we are too greedy, we start to take actions (remember, we are looking at the O4 facet here) that otherwise we would not. It’s that lust for just a little bit more. In market trading, greed can make traders enter random or poorly thought out trades. Greed can cause you to hold onto positions longer than your trading system dictates or your better judgment would usually allow. Greed is the emotion that causes many traders to buy a stock or futures contract right at the end of the up move, or makes them hold onto a position just a little bit longer than they should, hoping to squeeze a few more points out of it. Have you ever caught yourself thinking, “Wow, this thing is going up fast! I’m going to get in right now!” It is only after you get into the trade that you recognize that the trend has already started to exhaust itself and has begun to reverse. This is a classic case of greed, perhaps mixed in with impulsivity.
A very profitable trading day can easily be lost in one instance of greed. Every individual has different triggers that often lead back to an underlying attachment to money. One of the most effective approaches to combating greed is to understand why it exists and to identify when it happens in your trading. But, from our research and interviewing of successful traders, it may be even more important to delete the idea that the almighty dollar sign defines your happiness and success in life or in trading. Here’s another quote from KD to see where his happiness in being a trader lies:
I receive more satisfaction from designing quality trading strategies than from the actual implementation of the strategy itself. Making a living from the markets is the business objective, and ultimately, if I couldn’t earn a living from the markets, I would certainly do something else. But the design process is what I am most passionate about in this work.
It is extremely difficult to create a market strategy that can perform well over many years when compared to an entire industry that is made up of some very bright and ambitious people. Knowing this gives me a great deal of satisfaction. But I also know that any strategy does not have to continue to perform well in the future just because it has done well in the past. I shy away from being too confident about future performance because I believe there is no place in this business for too much confidence. It can only blind one’s ability to see clearly what is being employed in the markets. Like most aspects of this life, one cannot hope to obtain enough clarity when it comes to solving problems and making decisions.