Colm O’Shea is an Irish macro trader and hedge fund manager. His typical investment horizon ranges from one to three months, and he trades across Forex currencies, equities, commodities, and interest rate products. As of 2011, between 2005 and 2011, he achieved an average annual return of 11.3%.

 

Colm O’Shea Background

 

O’Shea is a pure macro trader who prioritized steady compounding with low volatility. O’Shea’s track record at COMAC Capital was featured in Jack Schwager’s Hedge Fund Market Wizards (2011), where he stood out for his risk-adjusted returns:

• Average annual return: 11.3% (net of fees)
• Maximum drawdown: 10.2% (far lower than most macro funds)
• Annualized volatility: 8.1% (extremely low for a hedge fund)

These metrics highlight his ability to generate solid returns without excessive risk—a rarity in the often-volatile world of macro trading.

Career Highlights

• In his early-career, he trained at Soros Fund Management under the legendary Stan Druckenmiller, learning the art of large-scale macro bets with controlled risk.
• Colm O’Shea founded COMAC Capital in 2005. the fund managed over $2 billion at its peak before O’Shea closed it in 2012.
• Currently, he serves as a portfolio manager at Citadel, one of the world’s most successful multi-strategy hedge funds.

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Colm O’Shea Trading Tips

 

■ Price movements only have a meaning in the context of the fundamental landscape

People get all excited about the price movements, but they completely misunderstand that there is a bigger picture in which those price movements happen. To use a sailing analogy, the wind matters, but the tide matters, too. If you don’ t know what the tide is, and you plan everything just based on the wind, you are going to end up crashing into the rocks. That is how I see fundamentals and technicals. You need to pay attention to both to make sense of the picture.

 

■ Always knowing the odds

If you play roulette, you are in the world of risk. If you are dealing with possible economic events, you are in a world of uncertainty. If you don’ t know the odds, putting a number on something makes no sense.

 

■ Markets matter more than policy

I learned that markets matter more than policy. You have to look at real fundamentals, not at what policymakers want to happen. The willing disbelief of people can carry on for a long time, but eventually, it is overwhelmed by the market.

 

■ The great trades don’ t require predictions

Fundamentals are not about forecasting the weather for tomorrow, but rather noticing that it is raining today.

 

■ Equity Trading

People love stable earnings, isn’t that great? I hate stable earnings. It just tells me the company is not being truthful.

 

■ Liquidity is not the same as solvency

The big mistake people make is to confuse liquidity with solvency.

 

■ All markets look liquid during the bubble

In a bubble, the true believers will always win. You just need to make decent returns and wait until the market turns. Then you can make great returns. What I believe in is compounding and not losing money. The main thing about bubbles is that you need to be early. The worst thing you can do in a bubble is to be stubborn and then late to convert. All markets look liquid during the bubble, but it’ s the liquidity after the bubble ends that matters.

 

■ Markets don’ t think, just like mobs don’ t think.

Why did the mob decide to attack that building? Well, the mob didn’t actually think that. The market simply provides a price that comes about through a collection of human beings.

 

■ Most good macro traders will be right only about half the time or even less.

Having a positive skew is very important. It is not about being right all the time. Most good macro traders will be right only about half the time or even less.

 

■ Limiting losses

You need to implement a trade in a way that limits your losses when you are wrong, and you also need to be able to recognize when a trade is wrong. First, you decide where you are wrong. That determines where the stop level should be. Then you work out how much you are willing to lose on the idea. Last, you divide the amount you’re willing to lose by the per-contract loss to the stop point, and that determines your position size. The most common error I see is that people do it backward. They start with position size. Then they know their pain threshold, and that determines where they place their stop.

 

 

□ Colm O’Shea Trading Tips

Forex-Investors.com (c)

Source: Dialogues from the New Market Wizards {Jack D. Schwager}