cryptocurrency

From Traditional Trading Floors To Crypto With CMT Digital’s Brad Koeppen – Forbes


CMT Digital’s Brad Koeppen talks about his trading journey, leading from traditional assets to cryptocurrencies.  

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These are the podcast episode notes from an interview with Brad Koeppen, head of trading and business development at CMT Digital. Listen to the Crypto: Secrets of the Trade interview on Apple Podcasts or Whooshkaa.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

The cryptocurrency world differs in many ways from trading traditional assets. From his days as a floor trader, to current computerized methods, CMT Digital’s head trader Brad Koeppen now applies his expertise and professionalism to the crypto space.

Starting On The Floor

A full-time professional in the asset trading world, Koeppen’s interest grew from his college days at the University of Chicago. Upon graduation, Koeppen dove head first down the trading rabbit hole, taking a job at a Chicago trading firm known as IMC. The firm tasked Koeppen with “trading equity options on the floor of the Chicago Board Options Exchange [CBOE],” he said. “That was 17 years ago.”

Back then, Koeppen said trading largely was accomplished via open outcry. This form of manual trading brings about a vision of a large, loud and bustling room of people in colored coats, yelling and signaling various hand gestures, manually putting up buys and sells – much the same as the movie Ferris Bueller’s Day Off portrayed when the gang visited the Chicago Mercantile Exchange (CME) near the beginning of the movie.

Shortly after Koeppen’s arrival on the scene, “the exchange moved to a hybrid system, where some trading was done electronically, some trading was done open outcry,” he explained. “Then eventually the exchange allowed you to trade completely electronically,” he added. “At that point, my firm decided to move off the floor and trade completely electronically for equity options and some of the indices as well.” After about nine years at IMC, Koeppen found himself at CMT, where he still resides, as of the May 2019 podcast recording.

A Move Toward Crypto

When he moved over to CMT, Koeppen’s work focused more on high-frequency trading (HFT) for equities, futures and exchange-traded funds (ETFs), the trader explained. After about half a decade working on those endeavors, Koeppen found himself applying his knowledge to the crypto space. “About 18 or 20 months ago, I made my full transition into crypto,” he said. “CMT Digital is a part of CMT and the trading desk for CMT Digital started in early 2017.” The crypto trading desk grew over 2017, and by the latter part of that year, Koeppen saw most of his time turn toward a focus on that desk, he said.

Transitioning Into Crypto

In his transition over to crypto trading, Koeppen saw both ease and difficulty. On the trading side of things, he said CMT Digital sees cryptocurrency as simply another asset class. “We’re trading it like we would any other proprietary asset class,” the CMT head noted, pointing toward CMT’s options and equities desks as examples. “We’re trying to build strategies and build technology to help us find opportunities, find trading strategies and trade profitably.”

In contrast, however, crypto does have aspects in which the space differs from traditional asset trading, adding challenges in areas. Koeppen said the crypto ecosystem varies greatly from traditional markets, mentioning the transfer of assets, such as bitcoin, between exchanges, as well as bank interaction on the fiat currency (USD, CAD, etc.) side.

It wasn’t so much crypto’s market volatility or behavior that impacted CMT’s development, as much as it was the handling and securing of assets. “A lot of the early solutions for us were how to do this efficiently, how to do this intelligently,” he said, adding that human error in transferring bitcoin to an incorrect address potentially could lead to a loss of funds.

A Bit Of A Different Animal

Koeppen specified a few differences between crypto markets and traditional markets. One such difference pertains to the aspect of liquidity. “The traditional markets tend to be more liquid, easier to trade – you sort of know the price you are going to get,” he said. “You sort of have some faith in the technology and the execution piece, where on the crypto side, there are more question marks in all of those areas,” he added. The trader also mentioned variable data, times of greater market activity and other aspects that impact processes and execution.

Bitcoin As Crypto’s Top Dog

The crypto space is muddled with varying opinions on if any digital asset will ever overtake bitcoin as the top global cryptocurrency. Koeppen said he sees bitcoin keeping its status as the top crypto asset. “I think a lot of that has to do with a bit of the first-mover advantage and the fact that it seems that that’s where people are trying to build the most use cases, around bitcoin,” he said. “That doesn’t mean that it’s always going to be that way,” he added. “There definitely could be something out there that’s going to surpass it, but I think at this point in time it’s hard to see where that could come from.”

Regarding bitcoin’s price and ecosystem, Koeppen spoke on a correlation between bitcoin’s price, and the interest and momentum around the asset and its development. At the time of the May 2019 interview, he said price might need to go a bit higher to continue the upward movement in confidence, building and investing, pointing out a slowing of interest when bitcoin hit its recent price lows back in December 2018 and early 2019.

“The longer that this building and this ecosystem grows, the harder it’s going to be to find a level in the price that’s going to make people stop working on it,” he said. “At some point, there’s going to be a critical mass there where the price could go down to $2,000 or $1,000 and it won’t matter because enough people have invested enough time and money in their projects, and they still believe in them enough to keep going even in that scenario.”

Koeppen dove into other topics, providing great insight. Catch the rest of the interview on the Crypto: Secrets of the Trade podcast.



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