Sept. 27, 2011 -- On Monday a purported independent trader going by the name Alessio Rastani appeared on BBC and said some delicious things, namely that he's been dreaming about a recession and that Goldman Sachs rules the world.
Gawker promptly called him a "sociopath." My colleague at Forbes said he might be a psychopath. Some people commenting on his Facebook page called him a "muppet," a "nasty little self-publicist" and a "totally honest bastard who wants to rise to the top of [on] the rest of the world's misery." Another suggested that he die.
But then talk circulated that Rastani might be a member of Yes Men, a collective of impersonators. Was his little talk a hoax? When I reached Rastani in London to ask, he spouted some vague wisdom, mentioned his "trader friends," and insisted that trading is his obsession. He started off the conversation:
AR: I had something to tell you guys. The guy who wrote [on Forbes] mistakenly wrote that I'm a Wall Street trader. I'm not an institutional trader. I wouldn't dream of ever doing that. I trade my own money, my own account. That's what I always wanted to do. I like the idea of not having a boss. I did work for one institution, but I realized I want to do it for myself. I just started, and I worked with some of the best traders in the world. I saw how they were doing things. Eventually I developed my own style.
FORBES: Who are some of those 'best traders?'
AR: I started with traders just like me, trading for themselves. They have their own trading room, desk, basically trading their own money. Some of these guys are millionaires and doing really well, I followed their footsteps. What did I learn from them? I think the most important thing I learned from them is how to not lose money, to protect themselves against risk. …. What you realize is the most important thing is to take care of the risk. To not have an opinion about something, to see what's in front of you. Follow the charts and signals. You have to have a plan of action, a set of trading rules or a trading plan. So what that really means is a set of rules that tell you exactly when you're going to enter the markets and when you're going to exit. You've got to be humble about your decision. If you see something is not working for you, if you get into a trade, you have to get out. As they say, cutting your losses short. That's sort of general knowledge, nothing shocking, nothing new.
FORBES: When did you start trading?
AR: I started trading for real in 2006. And to be honest, the teaching side of it is mostly just a bit of fun. In this business you meet people who come up to you and say, "Can you show me how to do this?" It's rewarding to show people how it all works.
FORBES: What kind of trader are you?
AR: What kind of trader? What do you mean?
FORBES: Usually traders have strategies.
AR: Oh I see, I'll tell you what kind of trader I'm not. I'm a very risk-averse person. I never get into a position that I haven't fully analyzed. I trade mostly the Dow futures, also a bit of forex, and I trade stocks, the most liquid stocks in the market. What I look for, essentially what I look for is opportunities. I'm a trend trader, so I trade trends, that what I like. And I like volatility. There are three things I wait for. I look for moments of high volatility, or the early parts of a volatile market, and I trade the momentum.
Basically, markets go through periods of high to low volatility, and what you want to do, the style I prefer is to be prepared for the moment when there is a sudden shift from low to high volatility, capture that momentum and ride it as high as you can. You can be very good at predicting direction, but you can really never be 100% sure about the magnitude. So what you need to do is keep yourself in the markets as long as the trade is working your direction. And when you realize when the trend or mom is weakening, then just get out.
What you could say, I'm mostly a technical trader. I look at charts. I'm not a big, huge fan of funny analysis, you know, fundamentals.
FORBES: What front end do you use?
AR: I'm sorry. In terms of what? Oh, I use actually TradeStation. I don't know if they want to advertise that.
FORBES: Where did you grow up?
AR: I grew up in London. I spent some time in Italy, some time with my folks in America. My uncle lives in California, two uncles in California. My folks, I can't comment on them, to be honest. I can't say where they are right now, they're temporarily out of the country.
FORBES: How have you done since credit crisis?
AR: I'm doing well. The markets can be punishing as well as rewarding. If you break your trading rules and don't take care of the risks and just take care of the rewards, the markets will punish you. Every now and then, I get tempted and do break my rules. As far as the credit crisis, my biggest regret was that I did not make as much money as I should have done, because that market was beautiful. Nice trends and nice volatility. My biggest mistake was basically getting sucked into waiting for news, distracted by the fear… what I should have done is stick to my plan and my strategies.
FORBES: Do you trade the VIX?
AR: Did you say the VIX, V-I-X? Volatility index. That's not my thing, to be honest. To be successful, just stick to a few markets. I like the Dow Jones futures, I like the Euro-Dollar forex markets. EUR USD. I'm talking about Euro-Dollar, spot, the major pairs.
FORBES: Why the Dow?
AR: Good question. I look at the S&P futures. If I see a signal, I'll take it in the Dow. The S&P contracts, each tick is going to cost you a lot more than the Dow. The Dow gives you more flexibility. I will look at S&Ps if I see trading opportunity on that. Their movements pretty much are correlated.
FORBES: What's the tick size in the Dow?
AR: It's .25 each tick. For the S&Ps…. well, for the S&P we're talking about $12.50, each tick. The Dow Jones futures, each tick will cost $5. That's why I do the Dow Jones futures.
FORBES: Who are your favorite traders?
AR: Well, here's the deal. If I was going to mention somebody, it probably would be…. If I mention somebody, I'm giving free publicity to them, right?…. I would say, man… let's see… I've quite liked what I read about…. basically I remember reading a long time ago about Linda Raschke in America. At the moment, Guy Cohen. He's a trader in the U.K. what I like about Guy Cohen is he's a very conservative trader.
FORBES: Do you work from an office or home?
AR: I work from home. Just going to go back earlier about Dow Jones and S&P, it was $5 per contract, $5 a tick for the Dow each contract. And the S&Ps, each tick is $12.50.
FORBES: Where do you live?
AR: In south London.
FORBES: What do you think of the attention you've received since going on TV?
AR: I think it's overblown. I have no idea why I'm getting this attention. I don't think it was news. For someone to say what I said, I thought everybody already knew this kind of stuff. The big players of funds rule the world, I don't think that was news. And what I said about making money from a crash, obviously not everybody knows about that, you can make money from a downward market. A lot of people just got the wrong end of the foot, misunderstood what I was saying. They thought I was joyful or licking my lips about the idea of making money from people's miseries. That's probably the way it looked on the video. But if they watch the whole video, what I was really trying to say is people need to educate themselves about how to do that… what I was trying to say was, look, everyone should basically prepare. I was trying to be the good guy. If this market's going to crash, then you've got to prepare yourself. You've got to basically learn how to make money from this. Otherwise you'll be like I did 10 years ago … I made some huge mistakes 10 years ago, during the dotcom crash. I realized it was a falling knife. I was trying to say look guys, it's not just for traders, it's for everyone. They should ask me how to do it, I will help you.
FORBES: Are you saying trading is easy?
AR: No, absolutely not. Trading is not easy at all. What I'm saying is people should educate themselves. People shouldn't really gamble on the markets.
FORBES: How old are you?
AR: I'm 34.
FORBES: What hours do you work?
AR: I trade first two hours of the NYSE, here it's 2:30 p.m. – 4:30 p.m. Then the last two hours of the markets, over here 7 to 9. Sometimes just the last hour.
FORBES: What do you do when you're not trading?
AR: I'll be honest with you. Here's the deal, Emily. Trading is basically an obsession of mine. Anyone who knows me will tell you, I probably spend more hours…. It kind of takes over your whole life. If anyone wants to be really good at trading, just become obsessed by it. Ok, but what I do apart from trading? Well, I love traveling. I've been to the States quite a few times. I love writing. I've actually got a book proposal with a publisher in the UK, a few months ago. An interview-style book with some of my favorite traders. OK, I forgot to mention one trader, Carolyn Boroden, I quite like what she has to say about Fibonacci clusters. Her website is fibonacciqueen.com.
FORBES: Have you heard of the Yes Men?
AR: Heard of it before? Not quite sure why they're calling me that. I have no idea where that came from.
FORBES: Because there's a video of you posing as a Dow Chemical spokesman.
AR: What? A Dow Chemical spokesman? Have you seen this video? That can't be right. I've never spoken to Dow Chemical before in my life. Maybe it's a fake. Are you sure about this? Honestly, listen, I've no idea where that came from. That interview yesterday was one of the first ones I did live.
I don't know why they think it's a hoax. No, I am a trader absolutely. I have trader friends who could back that up. One of my mentors is a bestselling author and trader. Everyone knows me.
Editor's note: On Tuesday afternoon, the BBC Press Office released a statement on the BBC News channel interview on Monday with trader Alessio Rastani.
"We've carried out detailed investigations and can't find any evidence to suggest that the interview with Alessio Rastani was a hoax," according to the BBC. "He is an independent market trader and one of a range of voices we've had on air to talk about the recession."