Top Traders Unplugged

SI371: Trends Don’t Form Randomly. They Form Reflexively ft. Richard Brennan

112 snips
Oct 25, 2025
Guest
Richard Brennan
Rich Brennan, an experienced systematic investor and trend follower, delves into market dynamics, arguing that movements arise from impact and memory rather than randomness. He explores the concept of reflexivity, explaining how single trades reshape market structures. Rich also discusses the significance of fractals in understanding market trends and the implications of non-ergodicity. Position sizing strategies come to the forefront as he highlights the importance of survival in a fractal market over traditional statistical methods.
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ANECDOTE

Recent Metals Volatility Example

  • Niels notes the precious metals sector had a violent selloff with gold down over 6% in a day and palladium down 16% in two days.
  • This recent volatility fed their later discussion on position sizing and reversals.
ANECDOTE

From Worry To 'Trend Heaven'

  • Brennan recalls being worried in the first half of the year that models had stopped working during whipsaw markets.
  • He then observed a robust environment later, calling the current period 'trend heaven'.
ADVICE

Design For Survival, Not Volatility Targets

  • Don't equate volatility with risk; treat compressed low-volatility regimes as stored latent risk.
  • Engineer robustness into systems rather than over-optimizing to fragile statistical metrics.
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