Rule #8: It Takes a Team
Trading Rules Series
Investing and trading are highly rewarding professions because they offer immediate feedback on your performance, and the rewards are based on merit. It is a very individualistic endeavor, and the allure of the business tends to stem from deep internal drives to become wealthy and independent. The romanticized image of a trader is a 35-year-old in their basement with neon accent lights, six monitors, a Secret Lab chair, a hoodie, and short 1000 SPUs.
We romanticize the isolation and separation from others. As a result, Fintwit and the investment research landscape often focus on being “contrarian” and recessions to sell you what you want to hear. Our ego drives the persona that I described above. It comes from our desire to be right vs. our desire to make money. Last year, we wrote a piece on the topic.:
Watch Out for "Analysts"
In financial markets, some make money by taking risk, and some by telling people what risk others should take. The incentive structures for both parties are typically at odds. Analysts need to seem clever, and Portfolio Managers need to make money. Bulls versus Bears
The truth about trading is that you must find your path and build your convictions. You will need to isolate yourself from the outside world to reduce the voices in your head. However, like every other high-performing endeavor, it takes a team. It is only possible to be successful in the business with help. Everyone has read “Market Wizards” by Jack Schwager, but I think they missed one of the most significant lessons in the entire series. The best traders all had successful people in their corner, and most of the time, they worked for the same firm.
Commodity Corp
The Turtle Traders
Ritchie Brothers
Richard Bargh, Amrit Sall, Daljit Dhaliwal
etc.
There are pools of talent that it is essential to connect to and collaborate with. It is impossible to do this alone. Being a lone wolf might sound like how you want to live and trade, but it will lead to your failure.
Start to build out your little pod that you trade with. Be transparent with them:
Share your strategy so that they can understand how you trade. (It doesn’t need to be the intimate details of code and proprietary information.)
You can connect regularly; quarterly reviews are great.
Focus on trading stats and risk management, not percentage returns or dollars made.
We work as a team here at MMR because we know that the team is greater than the sum of its parts. This allows us to build off each other's skill improvements. We regularly gain insights that we can share and then refine. This process of learning and studying separately but sharing and teaching is a powerful virtuous cycle. Our team is the lifeblood of our successful trading. On our own, we would be far from as successful.