Core Criteria for Phase Two Success
Phase Two at Raen is designed to further confirm your readiness for institutional-scale trading. By reaching this stage, you've already demonstrated solid potential through steady returns, disciplined execution, and adherence to risk parameters. Maintain this trajectory, and you're likely to succeed.
While markets and portfolio needs evolve, I can share what consistently works well: we aim for low correlation and consistent alpha, so strategies with a Sharpe above 1.5 and minimal correlation to both market beta and our existing book tend to thrive in our environment.
But let's go deeper into what these numbers really mean. We're looking for genuine alpha—returns that demonstrate true edge beyond basic market exposure. To understand alpha, you first need to grasp beta, which represents your fundamental market exposure. We analyze how your returns correlate with key risk factors: equity indices, interest rates, commodities, and other major drivers of return.
While those baseline metrics provide a practical framework, they're guides rather than rigid requirements. Some of our most successful traders might not have hit every number perfectly, but they demonstrated exceptional capability in areas that complemented our portfolio.
As a practical framework, we typically look for:
Risk-adjusted returns showing genuine edge (think Sharpe ratios north of 1.5)
Returns that are roughly twice your maximum drawdown (Calmar ratios above 2.0)
Low correlation to both market beta and our existing strategies
These aren't rigid requirements but rather indicators of the kind of robust, scalable performance that succeeds at institutional levels.
Performance metrics are tools for understanding your trading profile, not absolute barriers. We're looking for traders who can generate consistent alpha while maintaining professional risk management—the numbers help us evaluate this, but they don't tell the whole story.
Your ability to deliver uncorrelated returns efficiently, adapt to changing market conditions, and scale your approach effectively matters more than hitting specific numerical targets. Focus on developing genuine edge and disciplined execution. The metrics will follow naturally from solid trading fundamentals.
Execution Efficiency and Cost Discipline
Effective institutional traders aren't just profitable—they're efficient. Excessive trading or "churning" fees without proportional net profitability isn't sustainable at institutional scale:
Demonstrate thoughtful trade execution; minimize unnecessary commissions.
High trade efficiency indicates professional maturity and respect for the economics of institutional trading.
Balance trading activity with cost-awareness—your metrics improve significantly by ensuring each trade counts.
Disciplined Risk Management
Consistent discipline in your trading remains critical:
Steady position sizing and controlled risk exposure.
Maintaining disciplined risk management without frequent resets.
Sustainable strategies showing resilience in various market scenarios.
Beyond the Numbers: The Bigger Picture
Phase Two is also about how you handle feedback and growth:
Adaptability and willingness to integrate mentorship feedback into your trading.
Continuous improvement, willingness to learn, and evidence of ongoing development.
Positive contributions to Raen's professional trading culture.
Even if You Don't Pass
Remember: even if you don't progress to the Junior Desk, most traders who reach Phase Two ultimately succeed. Regardless, every trader leaves Phase Two significantly improved, benefiting from intensive mentorship, professional analytics, and deeper strategic insights.
Takeaways:
Keep doing what got you here—consistency and disciplined risk management.
Avoid excessive trade churn; focus on cost-efficient execution.
Show adaptability, openness to mentorship, and willingness to learn.
Phase Two is as much about growth as it is about selection—you're becoming a better trader no matter the outcome.