Churning and Chatting Interview 2: The Dark Lord–Trader of the Decade at NYC’s Top Prop Desk

Present-day note: These days, there’s maybe 7 old-school day-trading prop firms that remain. They’re not too hard to look up. One stands out as the Ivy League of the bunch. They’re the oldest and he most prestigious¹they’re actually a spinoff of D**** Securities, which was the #1 OG prop shop to be at in the 1990s, that’s my only hint to you. Because all the traders at this shop, including the subject of the interview, are very guarded about being named and revealing anything about this firm, we can only refer to this mysterious firm as Ironwood Trading.

At Ironwood Trading, there was one mythical figure that they called The Dark Lord. He held so much power there that they gave him his own remote office close to home and he signed his own exclusive contracts.²Usually Ironwood holds the party line for traders who wanted to re-negotiate profit split–driving a hard bargain? feel free to leave. But not The Dark Lord–they gave him whatever he asked for. He traded in his own enclave with just a couple of apprentices, handpicked from Ironwood’s best recruits to learn under him.

He rarely talked to people outside of his exclusive circle. He didn’t want to reveal any of his super secret trading strategies. Whenever one of his apprentices approached him about the idea of stepping foot in one of the main offices just to see how it was or just to mingle a little, he would threaten to destroy them. They always complied. None of his secrets were ever shared. Traders in the main NYC office started to doubt he even existed–maybe the CEO created this ghost account to win Trader of the Year award every single year so he didn’t have to pay out the award bonus.

The Dark Lord finished as the #1 Trader at Ironwood eight times—and never fell outside the top ten for fifteen consecutive years. He has no social media presence and people outside of prop trading circles would absolutely not recognize his face or name. He has never been interviewed before. I cold messaged him and despite not knowing who I was or what my blog was all about, he graciously decided to let me be his first interview.

The Gateway into Markets

PETE: What got you into stocks?

TDL: I got interested around nineteen. I’d done a stock-market project during my senior year of high school, and one of the stocks I bought was JLG. They made construction equipment—boom lifts. The stock exploded, and that was my gateway drug. At the time, I was a busboy, getting yelled at by dishwashers for doing my job too well—bringing back too many dishes. After experiencing the nirvana of a stock going up, I just quit immediately. Today it still warms my heart whenever I see a JLG Boomlift on the street.

PETE: How’d you find your way onto a trading desk?

TDL: I saw an ad in The New York Times for something called “equity trader job”, from a commodities-focused firm called Zahr, located in the old NYMEX building. There wasn’t much infrastructure or training at all. Zahr eventually got bought by Ironwood.

PETE: Did they assign a trainer to you? Was he any good?

TDL: It was your typical “sit next to him and absorb” setup. There was someone training me, but he wasn’t particularly good, and he eventually left after 4 months. There were a lot of dinosaurs around—people who’d had strategies that worked in the nineties but were becoming obsolete. All they really knew was tech stocks go up, you buy them and they kept going up. That cycle was never going to last forever so most of them kept dropping by the wayside.

PETE: So how did you survive and figure out your strategy?

I had to become a student of the market and figure a lot of it out myself. My study method was to just find repeatable patterns in charts. I printed out charts with bollinger bands and I’d annotate them by hand. I’d see real time trading setups and think to myself “hey, this setup here looks like what I saw days/weeks/months ago.”

Initially, I learned pullbacks and breakouts. Breakout was a stock breaking a key level at the highs, pullback was trending stocks that went back to a moving average and bounced. Those were short-term scalps, ranging from minutes to hours. Over time, pattern recognition became the basis of what I did. I’d watch how stocks behave, how people react, and which situations keep producing opportunities. This is what developed conviction.

Pattern Recognition Maestro

PETE: When did trading really take off for you?

TDL: My breakout year was 2004. TASR³(now known as AXON, Axon Enterprises) was my best stock. It would run up and down on these lightweight press releases–oh yay, we sold a box of tasers to some podunk municipal police force. Who cares?! But it went up so much just on PRs like that, and then right back down. I excelled at spotting the turning points of extreme moves. More emotion meant more volatility, and that gave me more recognizable patterns to trade. I gravitated toward the most volatile stocks. The movement wasn’t something I wanted to avoid; it was where I found the most opportunity. That year I ended up winning Trader of the Year for the first time, having made $1.2 million. After profit split, that gave me a paycheck of $800,000.

PETE: What kind of entries did you like?

TDL: Initially, it was those pullbacks and breakouts. Later on, it was the more contrarian style entries. I’m looking at the way people behave when a stock gets very emotional, and I understand that through the chart. Finding bottoming patterns has been one of my strengths. That’s been a consistent thread even as the instruments and my holding periods have changed. I can see when peak fear has hit the market and reversal becomes a high probability event after all the urgent sellers have sold out.

PETE: What were your best years or best moments, that you can recall?

TDL: The financial crisis in 2008 was one of my best periods. There was a lot of chaos, a lot of emotions. Nobody knew what would happen.Those kinds of markets create the situations I like: lots of emotion, lots of volatility, and prices moving enough to give you something to work with. I really came into my own after 2008.

I also had my moments as a scalper as well. The Facebook IPO had these massive bids at $40 and really more volume than I’ve ever seen on any stock, ever. You’d get hit and taken within seconds just by placing orders. I remember standing up and executing, as locked in with focus as possible on the level II. I’m just smashing my keys to front run that massive $40 bid, get hit and taken and capture 50-75c spreads, over and over again. I think within a few minutes, I was up six figures just doing something so simple. You could look at the chart and think nothing has even happened yet.

Another great year was 2015–specifically August 24th 2015⁴(I wrote about this specific day a long time ago, link here). During that morning, we saw a whole bunch of closed-end funds trading well below their NAV and it didn’t really make sense. So I scooped them up on the panic and rode the bounce back up. Incredible day. That year I took home $9 million.

For context on that specific day–on August 24, 2015, a global selloff fueled by fears about China’s economy turned into a mini flash crash at the U.S. open. Delayed stock openings, thinning liquidity, and repeated trading halts disrupted the arbitrage that normally keeps ETF and CEF prices aligned with their holdings. Some ETFs that went haywire: the Guggenheim S&P 500 Equal Weight ETF (RSP) plunged roughly 43%, while the PowerShares S&P 500 Low Volatility ETF (SPLV) dropped 46%. Close end funds such as Tri-Continental (TY) and Zweig Fund (ZF) traded at roughly 14–15% discounts to NAV.

I heard numerous stories of top prop traders at multiple firms buying into these dislocations and making millions.

The Dark Lord as a Mentor

PETE: How many traders did you mentor?

TDL: Seven in a remote office, far away from the city. I took it seriously and tried to be very thoughtful about what I passed on. Two became very profitable, two were decently profitable, and three weren’t able to make it.

PETE: That’s a pretty good hit rate. Tell me about the ones that didn’t work out.

TDL: There were two who lacked the ability to do even the most basic things. I would tell them to make 10 trades by the end of the day and they would finish the day with 8. It was maddening. I’d threaten to fire them and they’d still have trouble pulling the trigger. We’re talking about just making any trades at all–not even good trades necessarily. Clearly they were not well-suited to be traders.

Then there are the tougher cases, where a trader seems to understand all the lessons I passed onto him, seems to understand the strategy and how to execute it. But this guy, he just couldn’t overcome his weakness of overtrading. He kept trying to force the issue during slower markets. So whatever he’d make on his good days, he’d give it right back to the market and then some on the rough days where he couldn’t stay within himself.

PETE: What are some things that are hard to teach?

TDL: I think aggression is very difficult. Even one of the traders who eventually became very successful needed to be pushed to take meaningful risk. I might have a hundred-thousand-share position in a dollar stock while he had a thousand shares. I’d very politely say something to the guy like- “It’s a dollar stock. How is a thousand shares going to do anything for you?”

But telling someone to be aggressive doesn’t automatically make them comfortable with it. A lot of that has to come through experience.

PETE: What about teaching other characteristics, like patience and discipline?

TDL: Sometimes that was frustrating because the right thing to do was sit. You want to teach someone, but in a slow market there might not be many specific opportunities worth teaching. You can’t force them into existence. Then there’s the psychological part of following a plan after getting punched in the face. Taking a loss is also hard. To succeed over a long period, you have to be able to “be stupid and forget”—take the hit and still be able to trade again.

PETE: What do traders often get wrong?

TDL: I often hear traders say things out of thin air like“I want to risk fifty cents to make a dollar.” That’s the dumbest thing I have ever heard. Why fifty cents, why one dollar? What’s happening in the market at that price? You can’t just make up a risk-reward ratio because you like the numbers. Your decision needs a basis in the chart. I want my stop somewhere that, if the stock gets there, something bad is happening to my position. The market has to give you a reason for the exit. Your arbitrary desire to make twice what you’re risking has no real basis for making a valid decision.

PETE: What are some misconceptions about being a successful trader?

TDL: Working hard and working effectively are different things. Some of what people call hard work is performative. I hear things like “Study hard, eat well, sleep well, and you’ll succeed.” First and foremost, you need a strategy that works. Everything else is secondary. I can have zero sleep and make 100x more than you because I have a strategy and you don’t. I’ve seen very smart people, including Ivy League graduates, get caught in that mindset. They’re busy but not with things that matter.

PETE: What would drive you crazy on the desk?

TDL: Seeing traders waste a hot market. They’ve made a thousand dollars, they’re satisfied, and now they’re in the hallway dilly-dallying during abnormal volatility. No urgency at all.

Those are the times you need to stay glued to your screens. A huge part of your profits will come from those hot periods. Save the chit chat for the slow markets. If you don’t recognize that and take advantage of it, you’re leaving the most important part of the business on the table. These traders lack a clear framework for identifying a good market versus a normal or slow one. I knew these people were not going to make it.

The Day of Reckoning

PETE: What’s the worst loss you ever had?

TDL: Oh great, this is going to be my least favorite part. This is the XIV story⁵(I referenced this in my last post, a trader at redacted firm lost $15 million going long on XIV).

On February 5, 2018—“Volmageddon”—a violent volatility spike destroyed multiple VIX-driven trading products. As stocks plunged, forced rebalancing across volatility products helped fuel a feedback loop of buying in VIX futures. At 4:15, there was a violent surge in the underlying VIX futures that triggered “zero events” in exotic VIX products. One of the more popular ETNs, XIV, lost roughly 96% of its indicative value in one session, triggering its termination and devastating traders who had come to view betting against volatility as easy money. Unlike a temporary pricing dislocation, this was a permanent loss.

PETE: Sorry to make you go through this again, I like to tell people about the good and bad in the business. Tell me how the day began.

TDL: Well first, I remember an incredible trading day–one of the best overall in the year, maybe even several years. I’d finished the regular session up close to a million dollars. I felt like I could do no wrong—everything I touched turned to gold. That kind of confidence can get you into trouble.

I looked at the after-hours market and we saw these volatility products plummeting. There were all these dislocations in the leveraged and inverse products. For example, the inverse 2x was trading far more than just 2x–it didn’t make sense. The market itself wasn’t even trading lower afterhours either. My pattern-focused brain recognized what I thought was a premium dislocation or capitulation opportunity. But I didn’t understand the fine details of the product—the prospectus and what could happen to it. It was just red candle after red candle and it never bounced. By the time I found out what drove the move, it was too late.

All in all, I lost about $13 million in XIV. After some deliberation, I decided to leave Ironwood.

XIV had a contractual “acceleration event” clause: if its indicative value fell 80% or more from the previous day’s closing indicative value at any point during the trading day, Credit Suisse had the right to terminate the notes early. It didn’t need to reach zero, and the loss didn’t have to persist until the close.

PETE: Why did you decide to leave?

TDL: I actually had felt a strong level of burnout even before this. In the years leading up to this, I had dozens of sessions with a career counselor on life after trading. Funny enough, I had been telling myself lately to restrict myself from trading premarket and after-hours. I seemed to lose a lot of money in those situations. I just felt too shaken up to stay after that loss, I had to take some time off.

PETE: Did being at prop soften the blow?

TDL: In the back of my mind, I’d always felt that the prop model was a backstop for a potential disaster loss. But that doesn’t mean I felt okay about what happened. I spoke to the CEO about it, and I still feel really bad about it now. I even found out another former Ironwood colleague lost his life savings on the same trade. It was a traumatic event. This wasn’t something I just shrugged off. They trusted me so much given my stellar track record that I didn’t have a lock out⁶(a lock out is a specific number where the firm shuts off your ability to trade, although it is not an auto-liquidation). I spent my entire career at Ironwood and I had a legacy there, it felt like I just destroyed it in one day.

The parallel with my own experience was hard to miss: feeling burnout from the prop life, a crashout loss, and then quitting when everyone wanted me back. Eerily familiar emotions came about as TDL told me his XIV story.

PETE: How long were you away?

TDL: About two years before I really picked up trading again. I didn’t do much besides the occasional long-term position. In my spare time, I went to grad school. I raised my kids. I guess at some point, I just got over it and started up again.

The Dark Lord, Retail Options Trader

PETE: What does your trading look like now?

TDL: I trade options in my own account. Ironwood didn’t really let traders get into options so it was always something I did on the side in my PA, starting from the early 2010s. It’s a more relaxed way of trading, I sell options and then I sit on them a little longer rather than micro-manage them.

My options trading composition is primarily selling naked puts, everything else is minor in comparison.

Finding bottoming patterns is a strength of mine, so the put selling fits that. I’m still interpreting crowd psychology through a chart. The simplest way I’d describe the strategy as an options seller, is that I think I’m collecting too much premium for the risk I see out there.

PETE: How do you find the names to trade?

TDL: There’s a strategic laziness to it. I don’t pay that much attention until a stock hits mainstream financial news. At that point, I know it’s volatile and has a story attached to it. Volatility is what I want. That gets my attention, and then I look at the chart. I’m more active on down days because of the long-biased nature of what I’m doing. The bottoming patterns are where I feel I have a strength.

PETE: What did you have to learn the hard way?

TDL: Not to sell naked calls. During the COVID recovery, I kept shorting calls on the way up. I didn’t think that kind of sharp recovery was possible when the whole world economy was shut down, and I took a large loss. I don’t like the uncapped nature of upside in markets, compared to downsides where it can only go to 0.

PETE: Any adjustments throughout the years?

TDL: I used to think it made the most sense to sell puts very far out of the money. The stock had farther to fall before reaching the strike. What I learned was that on the odd occasion when it did get there, I absolutely didn’t want the stock. Something bad might have happened—a longer-term change in the business or the situation—and the recovery wouldn’t necessarily be easy. That’s the adverse selection. Now I sell shallower strikes rather than going too deep. I don’t think the farther-away strike gives you the protection it might appear to give you.

PETE: Do you wait for them to expire?

TDL: There’s no need to hold something all the way to expiration just to watch it go to zero. If things work well, there’s going to be a significant decay and I can close it. I can always get back in if something unexpected juices it up again.

PETE: Tell me about some great trades you’ve had, last 3 years or so?

TDL: The 2023 banking crisis worked out great for me. Silicon Valley Bank (SVB)’s surprise bankruptcy created a bank panic where a lot of regional banks got hit hard by proxy if there was even a whiff of contagion fears. I remember Zions Bancorp (ZION), KeyCorp (KEY) being great trades. I like when implied volatility shows peak fear. I sold a ZION $20 put for $9 in premium at the very lows.

It doesn’t seem like it should be possible to get that kind of meat on an options sale but it will happen in these exceptional situations.

PETE: What’s a good year these days?

TDL: It’s about the same range as when I was at Ironwood, although I get to keep everything now. Mid-seven figures is a good year. I made about $6.5 million in 2025. I’m up $5 million so far in 2026.

Glad you found your way back, TDL. Thanks for being so open about the highs and lows. I’m honored you trusted me to share your story, and I hope readers take something from it.

Bonus Interview with Protege

For additional background, I also spoke to one of his proteges.

PETE: What was it like being his apprentice?

PROTEGE: I’ll preface what I’m about to say by first saying I’m incredibly grateful to have studied under him. Without him, I would not be where I am now⁷an extremely successful trader who also won Trader of the Year at Ironwood. He’s the most intense individual I’ve ever met. He was so locked into markets that at times, he could seem unapproachable. I was scared to say anything to him while he was in risk-on mode. It would be super quiet with so much brewing tension… then all of a sudden, I’d get startled by all this noise…

Then it’s market close and he’s down mid six figures–a crazy amount back then for daytrading shops that had lower risk limits. He’d give us his all as a mentor and answer every single question we had. Go over every chart he had annotated. Every trade he’d made. Incredible teacher.

Seeing his intense demeanor first hand really defied any pre-conceived notions I had of this idealistic perfect trader who could stay 100% robotic about his emotions. I respected the hell out of him.

PETE: What did you admire about his trading?

PROTEGE: He could do it all–he could play the speed game and scalp. He’d take positions and hold them overnight or swing. He could do special situations like imbalance trading. He elevated all of us, elevated the entire firm at Ironwood.

He’s a real trailblazer who created his own system. Nowadays, there’s all kinds of labels for what he traded–capitulation, washout, exhaustion, panic, etc–but back when he started, all the reversal patterns were classical technical analysis like head and shoulders or cup and handle. Those didn’t capture the psychology of fear enough. That might explain why he was so secretive over what now seems like a “known” strategy–he worked extremely hard to develop that system at a time when nobody thought about it.

PETE: What do you make of his XIV loss?

PROTEGE: He might find out and kill me for saying this but I think the risk management was going to be the achilles heel at some point. It was a bit of a dilemma for his trading style because you didn’t want to stop out a capitulation trader at the very low of a panic when the probability of a reversal was at its highest. When I saw him trade, he would usually be deep red before the turn and then it would even out and then some on the bounce. Unfortunately, it was just a situational blind spot that got all of us during that XIV trade. I’m just lucky I had a lock out otherwise I would have lost even more myself.

Thanks PROTEGE! We will see you soon in another interview. Hope you all enjoyed this latest post on Churning and Chatting.