He also taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.

That’s from Bruce Kovner talking about one of the many important lessons he learned from his mentor, Michael Marcus.

We’re going to dissect that here in a bit. But I want to first get through some quick accounting. Then the rest of this note will be a short stream of consciousness, covering some things and trades.

First, the numbers. The Macro-Ops portfolio finished the quarter up roughly 25% year-to-date. That’s down from a YTD high water mark of 39%, but still not too shabby. Our overall execution has been decent, though I think we can improve on the way we think about and carry out hedging — that’ll be an area of focus for us going forward.

Our higher-than-normal portfolio volatility is the result of carrying Micron (MU) DOTM calls that have grown into a monster position. Which is a problem that we don’t mind having, but greater portfolio volatility should be expected as the calls get closer to in-the-money.

In other news, I’m trading in the World Cup Trading Championship this year. I’m in the Futures division. It’s a bucket list item for me to place in this. I competed years ago and was in the top three for a while, but then I blew out. I got a late start. The tournament kicked off on Jan. 1 but I didn’t get my account up and funded until mid-February. I’m up 16% at the moment and have my work cut out for me if I’m going to get into the top 3 (first place is up 83%).

I think it’s doable, as the strategy I run attempts to exploit Pareto’s Law to the max. In other words, its returns are very bunchy. I go through long periods of performance chop followed by wild bursts in returns off just a few trades. The strategy is an aggressive macro discretionary one. It’s one I started trialing last year. Here are the nine-month return and performance metrics via FundSeeder.

I won’t get too much into the specifics here. They really aren’t that important. But the basis of the strategy is to take multiple swings at key intraday technical inflection points in an effort to catch multi-day/week swing moves. What is important and where the real edge comes from is on the trade/risk management side. The strategy is centered around what Kovner said he learned from Marcus; being wrong, being wrong, then doubling your money.

Cue some words from Michael Marcus:

At key intraday chart points, I could take much larger positions than I could afford to hold, and if it didn’t work immediately, I would get out quickly. For example, at a critical intraday point, I would take a twenty-contract position, instead of the three to five contracts I could afford to hold, using an extremely close stop. The market either took off and ran, or I was out.

Using inflection points to get large size on with little risk is key to this strategy, and to any aggressive trading strategy. I’ll flesh this strategy out more soon. In the meantime, I’ll be posting my trades (entries, exits, etc.), as well as updating my weekly performance numbers. On another note, it was pointed out to me that the Ethereum fund (ETHE) has actually been recently trading at a discount (chart below).

The technicals of the setup are solid. And if we’re entering a general market risk-on Buy Climax, as I’ve been suggesting this past week, then the cryptocurrency space should lead the way.

I also continue to like the action in Palladium. The chart is bull flagging after a strong breakout from an extended consolidation period. And it remains firmly in a Bull Quiet regime. This trade has a host of tailwinds behind it. The market is in deficit, positioning and sentiment are completely offsides, and positive seasonality returns in April.

Other than that, our long gold trade we entered recently is off to a good start. We want to see it hold strong. I’m toeing the waters with some short dollar trades. I got stopped into a long EURUSD recently.