10x Equals X
May 2nd, 2009 | By Bella | Category: Mike Bellafiore's (Bella's) BlogsMaybe I am starting to get a little old. Maybe the half a generation removed from most of our traders is the difference. But I see a disturbing trend with a few developing traders and some potential new traders who we interview. I want to emphasize that I see this with only a few. These new traders believe that if their work output is X then their reward must be X. If only that were the case. When you begin as a trader, your work output must be 10x to make x. Let’s discuss.
I do not want you to be in that group of a few. And I have seen this with a few former talented individuals on our desk who consequently were asked to leave. And I see this with a few of our present traders who have all been talked to. And some of these above were the most talented people we have ever trained. But that is never enough for the market. Potential absent sustained effort is not rewarded by the market.
What I see from my seat as a mentor on a trading desk is crystal clear. The developing traders who love trading and work at it do the best. Our most improved trader this month has done everything a developing trader is supposed to do and then more. Much, much, more. Today as he reviews his numbers for the month, there will be a huge smile on his face.
Little things can make all the difference. Do you watch the markets trade during the midday and search for important levels into the Close? Or do you take a two hour lunch? After the Close, do you obsessively replay your trading day in your head and feed your mind with your best set ups? Or are you immersed in Fantasy Baseball? Do you take all the time that is necessary to ensure that you are in the best trading stocks for your style before the Open? Or do you settle on the first stock that could work? Do you work on your mental weaknesses by performing visualization exercises? Or do you just assume you don’t need to do stuff like that?
From my seat most developing traders struggle when they first start. This is all part of the process. And then they have a choice. They can increase their work output to 10x. Or like all traders who fail they can do 1/2x. After they start doing 1/2x then their results are inevitably -3x. Traders who decide to do 10x then see x.
And then with trading experience and a constant work product of 10x developing traders see 2x, and then 3x. And then with this experience their work product can decrease to 9x and see a gain up to 5x, and then 8x for a gain of 6x, and then 7x for a gain of 7x. Only after years of a work product that is not proportionally rewarded can they then see a work product that is properly rewarded.
Last night I was at a Hall of Fame dinner for a friend in upstate NY. One of the HOF receipients had passed. His wife spoke in his honor. Her speech was moving. This woman’s accomplished husband had passed and she was still so young. What was there really to gain from this speech? The people in the room respected her husband, which was why he was being inducted. Most of the people were her friends so she didn’t need to impress them. She was retired so it’s not like this was going to help her career. There was little for her to gain.
And yet this woman inspired the room. With the care she had taken with the preparation of her words she shouted to everyone in the room, “If you are asked to do something then you do it well.” She never uttered these words. But it was in every line as she reflected on the her husband’s life. She had scoured his old year book, called up old friends for anecdotes, and asked her children what was most important about their father. She had worked on this 5 minute speech for days, with almost no reward to herself. In a room filled with mostly retired jocks she left many in joyful tears, remembering the life of her HOF husband.
We can all learn from this remarkable speech. If you want to be a HOF trader then embrace the value of doing something well for the sake of doing something well. If you are asked to do something then do it as well as you can. There really is nothing else that is as satisfying. For the developing trader, 10x equals x.
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This by far has been the best blog I have read so far. It reiterates everything that I am doing.
Very insightful. I’ve read some of your blogs (Roy Davis referred me to them) and they’ve helped me even as a retail broker.
Thanks
10x and add that psycho-cybernetics book. The visualizations and small, challenging yet attainable goal settings I find helpful. Would it be possible to obtain a transcript of the speech?
I don’t think the Italian American Club in the Albany area, the home of the event, keeps transcripts of their speeches. This is not Columbia young fella. But it was a great speech and I do wish I had a transcript to share. Great suggestions.
Well, it’s important to have fun and balance things. “Work, work, work” might be appropriate for some, but for others not so much. “Success” can arrive in funny ways.
Great post!
Since I last read this post I have really tried to internalize what you were saying Bella. As I am a competitive swimmer I completly understand the 10x yields 1x. I think that any athlete can relate to this model. It was not until your blog that I realized this to be true. But when you think about it I will swim about 40 (8 per week)practices befor a meet (1 every 5 weeks) in order to swim 4 events. So if you do the math it circles back to the 10:1 ratio that you expressed in the blog. By the end of my season when I am in the tapper phase I swim 5 practices a week leading up to a big meet to swim the same 4 events. I guess what I am trying to say is that you formula is universal and it is an easy way for athletes or former athletes to internalize the model to becoming a succesful trader.
Thanks
I read this post via the Oct. 13th Kirk report. This great piece was made even greater by another post in today’s report. That was an article from “Golf Digest” about Michael Jordan’s rules for success.
I am not a trader nor an athlete, but what the traits that each of you describe cross all occupations and professions. Those individuals who have a passion and an enjoyment for their jobs are the ones who work the hardest and benefit the most from their commitment.