Olympic Hopeful Turned Trader


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When Derek Frey fell in love with the financial sector, he was not trading stocks like Apple (NASDAQ: AAPL ) or Microsoft (NASDAQ: MSFT ). He was a teenager training for the Winter Olympics. "I picked up a book about trading the markets when I was 15 and was instantly in love," said Frey, the Founder and Chief Market Strategist of Carnac Investment Advisors, LLC. "At the time I was training for the Olympics as a ski racer and I decided that trading would be my backup plan should Olympic Gold not be in my future."

Frey worked at ski areas, as well as a ski shop, to save up $3,000 to open his first "real" futures trading account when he turned 18. "Soon after my 18th birthday I destroyed my knee -- and with it, my shot on the Olympic team," he said. "So I began trading my $3K account. My first trade was in cocoa; it made a little over $600 in less than three days and I thought I was king of the world."

After his initial win, Frey said that he went through the "typical cycle" that most traders go through, "which is make a bunch of money fast and then find all kinds of interesting ways to give it all back, and then some."

"So like most I had to start over a few times in the beginning," Frey admitted. "I traded all through my college years and even the three seasons I spent as a fisherman in Alaska. I was actually trading gold options from pay phones on the few stops on land that we had, as this was before the days of cell phones. We would pull into port, unload our fish, and then while the boat was fueling up I would run up to the harbormaster with a roll of quarters and call my broker from the pay phone and find out how my trades were doing."

Frey's love of the financial sector led him to Denver, Colorado, where he got a job working at Merrill Lynch, which is now owned by Bank of America (NYSE: BAC ). He then quickly moved to another firm and became a commodities broker. "I became a branch manger in only my second year with the firm, and was then recruited to be the head trader at another firm in Florida, which ultimately led to me starting my own firm in 2004, that I sold back in 2008," said Frey.

"I then became Senior Market Strategist at ForexTradersDaily.com , where I developed a number of trading methods and have since publicly shown and spoke about at many trading expos."

Frey's next presentation will take place in September at the Forex & Options Expo in Las Vegas, Nevada.

"My topic is Market Harmonics, which at first may sound esoteric, but is anything but," Frey explained. "All my trading is based on science that is proven in other disciplines and therefore verifiable by many independent third parties. I spoke about this topic last year and since then I have developed a few more tools to compliment the ones we already had."

Frey plans to showcase his new tools at the Forex & Options Expo with a live trading demonstration.

In 2011, Frey won the Top Trader Online Trading Competition using his own tools. Most recently, he founded Carnac Investment Advisors, LLC.

"Carnac Investment Advisors, LLC was formed to offer managed forex accounts to all levels of investors," said Frey. "We chose to form the fund as a CTA (Commodity Trading Advisor) rather than a hedge fund because a CTA offers more transparency to the investor and allows investors of almost any size.

"CTAs are often open to any investors, unlike hedge funds which are usually only open to 'accredited investors.' So the Global FX Harmonics Fund is way for investors to gain access to the forex markets while enjoying the edge that market harmonics offer while not having to learn and manage all or even any of it yourself."

Global FX Harmonics is the "main fund that I am starting within Carnac and is focused solely on forex and typically holds trades for two hours to two days," Frey added. "It is simply exploiting the edge that market harmonics and the edge therein offers us. There is a separate risk matrix that manages the trade size. It is a 'grey box' in that most functions are automated but humans are 'piloting' the ship that is watching it in real-time, at all times, and able to override -- if necessary -- as was the case during the flash crash."

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(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Investing Ideas
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