An Interview with Luis Cruz

I am a firm believer in keeping company that is more intelligent than I. It would be naive of me to deny that a majority of what I’ve learned in recent years is mostly a result of the knowledge my friends have shared. As an attempt to show gratitude, I thought it would be fun to interview each of my friends about their learnings, projects, and plans. First up, I’d like to introduce you to Luis Cruz.


Q1: Tell me about some of your previous work. What projects have you worked on?

A1: “Since I was 14 years old I have been working with programming languages and electronics. My passion for video games made me teach myself computer science and engineering. I have worked on many innovative projects that have gained international recognition, from video games made from scratch using electronics to an eye tracking device. The ‘eyeboard’ is an electrooculography system for disabled people that gained international recognition due to its building cost compared to similar devices.”

Q2: What sparked your initial interest in coding, statistical modeling, and investing?

A2: “Bitcoin. After learning about bitcoin and how supply and demand affected its price, I became passionate about modeling algorithms that would try to predict these stochastic processes. ”

Q3: Could you give some details about your work with bitcoin? How did the arbitrage bot work? What ultimately ended up being the biggest issues?

A3: “I started trading with bitcoins when I discovered the markets were inefficient, there were price discrepancies between exchanges. The spread between some exchanges were sometimes huge, and someone –especially a bot– could take advantage of this. So I began working on different bots for bitcoin, and different exchanges. The theoretical returns were great, around 1% daily. With real money, however, the strategy wasn’t that profitable due to low liquidity, and sometimes even market manipulation. With little money, the bot worked like a charm, but with more money, the majority of the time, the bot would end with net losses at the end of the month. So after countless months of coding, studying the markets, and even after withdrawing from college to work full time on this project, I realized I was doing it wrong all this time. The bitcoin market was probably not my best choice as the first market to start trading at. This is why I then moved to more liquid and solid markets.”

Q4:  How do you plan to apply similar work to the Forex? How will this bot differ from the bitcoin bot? What sort of statistical modeling is involved?

A4: “I am currently using the concepts and all the knowledge I acquired on the bitcoin market and applying them on more liquid markets. Forex was one of them. However, after a few trades, I discovered that arbitrage opportunities on these highly liquid markets existed only for a matter of a seconds at most. So only institutional investors with access to high frequency trading algorithms and ultra fast computers could take advantage of them. Right now I am working on an options strategy, using statistics (like I did with bitcoin) but combined with different approaches, such as looking at the fundamentals.”

Q5: What are some general investment ideas you try to abide by?

A5: “As a general rule, I have learned to only trade with large amounts of money on highly liquids market (like the stock market). I combine fundamental analysis with technical analysis, and I never try to compete with the institutional investors that have access to million-dollar, ultra-fast computers for high-frequency trading. I want to take advantage of the short arbitrage opportunities that exist in these markets.”

Q6: What do you think is the next big technology that investors should look to invest in?

A6: “The future lies in decentralization. This is why I was so passionate with bitcoin and the reason I started trading it. Decentralized currencies like bitcoin are the future. They are really risky investments right now. This is why it’s not a good idea to just hold the currencies, but probably look at start-up opportunities with them.”

Q7: I know that, like myself, you have a love for chess. How do you think the skills required to be good at chess have helped you in your work?

A7: “Chess gives you a better ability to think under stress. It strengthens your patience and ability to adapt. Like most things in life, the markets are dynamic processes, they change over time. So, the only way to beat the market is by adapting and strategizing different things that eventually could lead to success. ”

For further reading on some of the projects Luis has been involved in,  check out these links:

Thank you for learning about my friend Luis!

Stay tuned for more interviews with people smarter than I.