In this article I’d like to introduce Toby Crabel.
Some readers will certainly have heard of this successful fund manager, who wrote the trading book Day Trading With Short Term Price Patterns and Opening Range Breakout. But others will be hearing his name for the first time.
I think you can learn a lot about successful trading by taking a closer look at Toby Crabel’s trading results, which are available publicly.
He’s one of the rare book authors who has proven his trading skills in the real world.
Who is Toby Crabel?
Toby Crabel is an American futures trader who became a millionaire by trading the financial and commodities markets.
He is the founder and manager of the hedge fund Crabel Capital Management, which currently has more than one billion dollars under management. The fund employs more than 50 people, including both traders and analysts.
In 1990, Crabel published the well-known and highly respected trading book Day Trading with Short-Term Price Patterns.
Before launching his own fund in 1992, he worked for the well-known hedge fund manager Victor Niederhoffer, whose career included an eight-year stint managing fixed income and foreign exchange for George Soros. Victor Niederhoffer has also written a well-known book, The Education of a Speculator.
This is how Toby Crabel describes his trading philosophy on his website:
“Our core trading philosophy is that our strategies incorporate the consistent and explainable behavior of market participants. We believe it is very important to diversify risk in every possible way, which includes strategy type (i.e. momentum and mean reversion), geographic region, sectors and individual markets within a sector. We also believe that risk is best controlled by making a large number of small trades rather than placing a few large bets on a small number of trades.”Toby Crabel
Toby Crabel’s trading returns
From 1998 to 2007, Toby Crabel traded profitably for ten years in a row.
All told, he’s concluded just three years with a small loss.
- His largest monthly loss (–9.81%) occurred in 2001.
- His longest drawdown (i.e. losing streak) lasted from April 1998 to August 1998, with a capital decline of 16.27%.
His average annual return is 10.78%.
His total return is 450.52%.
With his proven hedge fund performance, Toby Crabel ranks among the best traders in the world.
There are only a few fund managers who have been able to achieve a comparable steady positive return over a period of almost 22 years.
What can we learn from one of the world’s best traders?
It’s only possible to trade profitably over the long term if you keep your risk per trade and the risk of all open positions extremely low.
This is how Toby Crabel has managed to keep his drawdowns low.
As a result, he can recoup losses relatively quickly.
As a fund manager, he can’t afford to have large swings in account performance.
And that’s exactly what we, as private traders, can learn from him: trade small positions and always keep your risk low and under control.
Conclusion of this article about Toby Crabel, one of the world’s best traders
I’m curious to see how Crabel Capital Management performs over the next few years. I regard Toby Crabel as a really impressive trader and hedge fund manager.
If you have any questions about Toby Crabel, please post them in the comments section below.