⁠Fredy Sarmiento

About Fredy Sarmiento

Fredy Sarmiento is a former institutional market maker who spent 12 years on a trading floor in the City of London, at some of the largest institutions and banks in the world, with more than 20 years in professional trading overall. On the desk, the minimum trade on his platform was a million dollars, and he managed derivatives flows worth hundreds of millions of dollars. Today he trades futures and futures prop firms using options flows and GEX levels, and he has coached more than 500 traders across the world.

His core message cuts against one of the biggest narratives in retail trading. Institutions aren't hunting retail stop losses or manipulating the market, he says. They are forced to hedge. As he puts it, "I don't think they manipulate the market. They just have to do it." That hedging, especially in the options market, is what creates the flows that move price.

From Australia to the 2008 Crash

Fredy is from Colombia. He completed his first master's degree in Australia, where he finished top of his class in financial modeling using Microsoft Excel and Visual Basic. The subject became so popular that his teacher asked him to help teach it.

He then started as a junior broker in Australia during the mining boom, when China was buying huge amounts of materials from Australian mining companies. Then he noticed the yield curve had inverted, a sign that something was wrong. His colleagues told him not to worry. The 2008 crash came, and Fredy lost everything, including his job.

He wasn't angry with himself or with life. He decided he needed to be better prepared so it could never happen to him that way again. He took out another loan from family and friends, moved to England, and completed a second master's degree at the ICMA Centre at Henley Business School, which focuses on trading and risk management. While studying, he worked weekends as a bartender in London to pay for his accommodation and food.

His boss in Australia, Rob Willis, once told him he had gone bankrupt four times in his life, and here he was. That stayed with Fredy. It's not how many times you fall, he says, it's how many times you stand up.

Becoming a Market Maker in London

Fredy landed a job as an institutional trader in the City of London, competing against graduates from schools across England and Europe. On his first day, his boss told him his daily risk limit was $15,000. He lost $30,000, double the amount.

He went for a walk, wondering how he had spent most of his life working toward this job only to lose double his limit on the first day. That was when he realized something was wrong inside his own mind.

His mentor on the desk built his character under pressure. On a trading floor of 200 to 300 people where everyone could see and hear you, Gary once gave him a 100 million EUR/JPY position. He told Fredy to cover the EUR/USD and keep the USD/JPY in his book, then shouted at him while he worked out the calculations in seconds. When Fredy moved from 1 million to 5 million to 10 million positions, Gary told him, "It's just one zero. Don't worry, just one more zero."

Over time, the pressure became excitement. Fredy and his colleagues handled derivatives flows of 500 million, 1.5 billion, and 1.8 billion dollars. They trained so hard that they would wait for colleagues to go on holiday so they could take on their flow.

How Institutions Really Trade

As a market maker, Fredy didn't trade to make money from direction. He had to manage the flow that came into his book. When a client wanted to trade, he had to trade, even on the most volatile days, and those were the days he lost the most money. The market maker's job is to provide liquidity and earn the spread, while staying delta neutral at all times. As he explains, if a market maker didn't hedge because he thought a client was wrong, he could lose his job.

That, he says, is the reality behind the "stop hunting" narrative. Because options are the perfect vehicle for protection, institutions hedge, especially after the lessons of 1987, the dot-com bubble, the global financial crisis, and COVID. Market makers in the middle have to hedge their exposure, and they do it in liquid futures markets. Fredy believes the options market trades more than $3.3 trillion a day, so that hedging creates flows big enough to move price.

He compares it to car insurance. Just as people will always insure their cars, pension funds, mutual funds, and other investors will always need to protect their portfolios. That's why he believes options flows will remain a driving force in the market, whatever theme is moving prices at the time.

Why Fredy Left FX

Fredy traded FX derivatives during his professional career, but he no longer touches the FX market. FX isn't transparent, he says. You don't know the real volume. He could quote on his platform, but a client could just as easily call JP Morgan, Citi, or Barclays, and no one knows what really flows.

Options are different. They are cleared centrally, with a small group of market makers reporting the data, which makes the flows far more transparent and measurable.

How Fredy Trades Today

Fredy trades futures and futures prop firms using options flows and GEX, or gamma exposure, levels. He started trading this way in 2022, the year after zero-days-to-expiration options launched, when there was still very little information available. Today, he uses GexBot [CONFIRM spelling], which turns complex options mathematics into a handful of levels he can trade.

He trades a maximum of two hours in the morning. That is when options traders position themselves in the market. He then studies the Greeks, such as theta decay and gamma, to understand how those positions change through the day. He usually takes one or two trades a day. He explains it simply: price reaches a level, gets a reversal, and the reason is that the volatility surface has pockets there. He also watches options expiration closely. Large positions can pin the market at a level through the week, and once those options expire, the pin is gone and the market can move freely the following week.

He believes every trader should spend time learning how options flows influence the market, whatever strategy they use. Options, as he puts it, are what move the market nowadays.

Mindfulness and the Trader's Mind

After losing double his limit on his first day in London, Fredy took a mindfulness for traders course in London. It was run by someone who trained the British Army, and the same kind of training is used by athletes, firefighters, and air traffic controllers. The lesson he took from it was to be mindful of how his amygdala influences his trading decisions. It isn't something you master once, he says. It's a training process he continues every day.

His losses come every two or three weeks, but when they come, they are hard, and he feels them everywhere in his body. When that happens, he knows that staying in front of the screen will lead to revenge trading, moving stops, doubling up, and blowing the account. So he shuts down the platform and goes for a coffee and a walk. Tomorrow is another day.

He also prepares like an athlete. He respects the market because he knows he is competing against brilliant minds, including the PhDs in maths and physics he met in London. He prioritizes exercise, eating well, and sleep, and reduces his coffee on trading days because it makes him more anxious. He spent a year in the army in Colombia, hoping to be a fighter pilot, and he brings one lesson from it into trading: your preparation should be so hard that when you go to war, it feels like a game.

Advice for Traders

When Fredy left London after 12 years, he moved back to Colombia and gave himself three years to solve the puzzle of trading for himself. Even knowing he needed time, he wanted the "aha" moment every day, and there were moments he questioned leaving a job thousands of people wanted. Eventually he put the pieces together, and it became rewarding.

His advice reflects that journey:

• Give yourself time. No course will make you a millionaire in three months. Real traders understand that learning takes time.
• Keep your job while you learn. Trading for an hour or two and keeping your income removes the pressure to make money while you build knowledge and experience.
• Treat small losses as cheap lessons. When the traders he coaches lose a $60 evaluation account, he reminds them he lost $30,000 on his first day. Today, traders can learn with very little money.
• Keep learning. The market is always changing, from Bollinger Bands to RSI to geopolitics to options flows. You can never say "I know this" and stop.

Fredy's mentor Gary eventually left the desk to teach maths and physics at a school, telling Fredy they needed to give something back to society. That stayed with Fredy, and it's one of the reasons he began coaching traders in South America, where he saw a real need for honest education.

Learn From Fredy Sarmiento on Chart Academy

Fredy's free masterclass, Mastering GEX Levels, is launching soon on Chart Academy.

Frequently Asked Questions

Who is Fredy Sarmiento?

Fredy Sarmiento is a former institutional market maker who spent 12 years trading in London at some of the largest institutions and banks in the world, managing derivatives flows worth hundreds of millions of dollars. He now trades futures and futures prop firms using options flows and GEX levels, and has coached more than 500 traders across the Spanish-speaking world.

What markets does Fredy Sarmiento trade?

Fredy trades futures and futures prop firms, using options flows and GEX levels to find his trades. He no longer trades FX, because he believes the FX market isn't transparent about volume.

What is Fredy Sarmiento's trading strategy?

Fredy trades levels created by options flows and gamma exposure. He trades for a maximum of two hours in the morning, usually takes one or two trades a day, and looks for reversals at the levels where options positioning creates pockets in the volatility surface.

Do institutions hunt retail stop losses?

According to Fredy, no. He says institutions don't manipulate the market. They are forced to hedge their exposure, especially in the options market, and that hedging is what creates the flows that move price.

Why are options flows important for traders?

Fredy believes options are what move the market nowadays. Market makers have to hedge their options exposure in liquid futures markets, which creates levels where price tends to react. He says every trader should learn how options flows influence the market, whatever strategy they use.

What can I learn from Fredy Sarmiento on Chart Academy?

Fredy's free masterclass, Mastering GEX Levels, is launching soon on Chart Academy.

What is Chart Academy?

Chart Academy is a free, all-in-one trading education platform designed to help traders learn real, practical skills from world-class traders. It offers in-depth masterclasses taught by real traders across stocks, options, futures, forex, crypto, and trading psychology. In addition to educational content, Chart Academy includes personalized learning paths, downloadable resources, and access to exclusive tools and rewards, all in one place. There are no subscriptions, no paywalls, and no credit card required. The goal is to make high-quality trading education accessible, practical, and easy to follow for traders of all levels.