Interview
The Power in Fixed-Sized, Non-Compounding FX Plays · Christian Mayer
- Christian Mayer plans to maintain his mean-reversion Forex strategy indefinitely while working a full-time job or studying, given the low frequency of approximately 10 trades per year, and intends to launch a course in the future to address high inquiry volumes regarding his methods.
- The strategy currently employs fixed position sizes and an averaging-in entry logic (split into three tranches) to withstand drawdowns, with expectations that absolute drawdowns will remain constant while percentage drawdowns decrease as equity grows over time.
- Mayer anticipates future portfolio enhancements by adding trend-following strategies on equity indices and weekly/daily timeframes, believing that combining non-correlated strategies will significantly reduce overall drawdowns, though he notes mean-reverting strategies are inherently more suited to Forex pairs than trending assets.
- Specific exposure focuses on G10 currency pairs like the Canadian dollar vs. Norwegian crown, leveraging the low liquidity of the Norwegian crown to protect profitability from institutional arbitrage and relying on fundamental economic correlations between oil-exporting nations.
- Risk management protocols include using wide stop losses set at absolute price levels (cents) rather than technical levels to avoid stop-loss hunting, ensuring survival during black swan events provided sufficient equity has accumulated to absorb a 100% historical drawdown without blowing the account.
- Participation in the World Cup Trading Championships involves leveraging approximately twice the normal amount to achieve high returns (100% to 1,000%) and frequent profits, though Mayer explicitly rejects this "risking accumulated profits" approach for his personal trading, preferring consistent small returns.
- Mayer expects to trade the Canadian dollar vs. Norwegian crown pair again in the third and fourth quarters of the current year, anticipating mean reversion following deviations caused by tariff news.
- The outlook acknowledges that while mean-reverting strategies excel in short-term competitions due to frequent wins, they face psychological risks during prolonged drawdowns (e.g., 20% drops) where traders may abandon the strategy despite valid historical backtests.
- Mayer expects to continue trading through black swan events without stopping, relying on pre-set sizing and backtested resilience against crises like the COVID crash, while avoiding the use of copy trading in favor of educational content.
- The strategy's longevity is predicated on the belief that fundamental correlations driving mean reversion will not cease, and that fixed sizing allows for recovery even after rare, extreme volatility events that would otherwise wipe out a leveraged account.