Magazine article Modern Trader

Dunn: Slow Reversal Pays Off

Magazine article Modern Trader

Dunn: Slow Reversal Pays Off

Article excerpt

With the exception of John Henry, veteran trader Bill Dunn of Dunn Capital Management in Stuart, Fla., probably made the most money last year: His World Monetary Assets program, with $340 under management, was up 97.11%.

While many traders scramble to adapt their systems to changing market conditions, Dunn by-and-large has stuck with the long-term trend-following reversal system he conceived in the early 1970s. It paid off handsomely last year, also seen by the showing of Dunn disciple Frank Simons of Simons Capital (up 174.38%) and by Dunn's other CTA, Orion Futures (up 75.68%).

Dunn, 61, grew up in Kansas City and Southern California. After high school, he signed up with the U.S. Marine Corps for three years. His "head cleared," Dunn received a bachelors degree in engineering physics from the University of Kansas in 1960 and a doctorate in theoretical physics from Northwestern University in Chicago in 1966. After a brief teaching spell, Dunn worked for research organizations near Washington, D.C., from 1967 to 1974, developing and testing logistical and operational systems for the U.S. armed forces.

In 1970, Dunn came across a newsletter touting a commodities trading system, "which almost sounded too good to be true." Upon testing it, that turned out to be the case. His interest aroused, however, he started trading $337,000 with his own system three years later, making 35% in 1975.

Using daily data, the system looks for big trends, as defined by a percentage of a price move from a recent low or high. …

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