Unconventional Pairing Leads to Trading Success

In the world of finance, sometimes an unlikely partnership can yield remarkable results. Such is the story of Briarwood Capital Management's founders - DeMarco and Schutzman. Their collaboration began with a shared desire for knowledge but evolved into one of the most successful trading firms.

Learning from Different Perspectives

DeMarco, initially following his father's footsteps as a coffee trader on the Coffee, Sugar & Cocoa Exchange (C), was introduced to Schutzman during a class on technical analysis by John Murphy at New York Institute of Finance. DeMarco wanted to trade better using technical analysis; Schutzman aimed to apply theoretical knowledge practically.

A Blend of Skills and Strategies

Despite their contrasting personalities, with DeMarco being an extroverted trader and Schutzman preferring peace and quiet, they found a common ground in trading. Their first trade involved 30-year bonds (BAC), where Schutzman introduced the concept of setting a stop loss to manage risks effectively.

Triumph Over Trend Volatility

By 2001, Briarwood launched its program with three systems: long-term and two intermediate ones based on trend following (C) and pattern recognition (GS). They adopted Jesse Livermore’s pyramiding approach but adjusted it to minimize volatility risks. This method allowed them to capitalize on the best trends fully while limiting their losses on failed breakouts.

The Power of Simplicity in Trading Systems

Schutzman emphasizes that simplicity is key for effective trading systems, as complex models often become problematic with changing market conditions. Briarwood's system had only eight lines of code but provided consistent double-digit returns since 2001 without any down years.

Managing Risk in Dynamic Markets

DeMarco's experience as a floor trader instilled the importance of managing risk by not holding positions for too long, especially during volatile market conditions (MS). They developed a risk management overlay that adjusted trailing stops or took profits when necessary.

Actionable Insights from Briarwood Capital Management's Journey

Investors can learn from Briarwood Capital Management's success by embracing simplicity in trading systems and being vigilant about risk management, especially during volatile market conditions. Their journey demonstrates that a blend of different skills and strategies can lead to remarkable achievements in the financial world.