So You Say You Want to Be a Pro Trader

Nov 28th, 2011 | By | Category: Mike Bellafiore's (Bella's) Blogs
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I’m the guy you pitch as to why you should be hired for your “dream job” as a trader. This whole trader recruiting thing is inverted. You should not be pitching me. My desk should be pitching you. But you need to do some work before this can happen. Like start developing a track record now!

During a recent interview at the Las Vegas Trader Expo I outlined what I call the GM Test. If I were the general manager of the New York Knicks and I told you someone sat in my office and said, “You know, I really like this whole basketball thing. I have been playing a lot of pickup basketball with my buddies from DrinkingGames Dorm, we just won the school club championship, been hitting the weight room, put on a few pounds of muscle and am thinking I would be a nice pick for you in the First Round.” What would you think? You would think I was a soon to be ex-GM of the New York Knicks. But this is what we do in the trading world.

In our trading world some bright, ambitious, and well-mannered candidate sits in offices all across the country and talks of their love of trading. As proof they offer that they watch CNBC, read The Wall Street Journal, and play around with an underfunded Scottrade account. This is, to say the least, insufficient preparation for your life passion.

If I were the GM of the Knicks, I could have watched you in high school, AAU ball, college, had you in for drills, scrimmages with like talent, interviews, body fat and drug testing, etc. There is meaningful data available that I could use to predict how you will do in the future. In MoneyBall, by Michael Lewis, we learn some major league baseball teams shun drafting high school athletes because this playing data is too limited to make an investment in a player. And with CNBC answers like above, what can I really model accurately about your ability to trade pro? More importantly, what can you say to yourself about your ability?

Trading is a skill. You were not born a great trader. The insightful books on elite performance such as Talent is Overrated, The Talent Code, and Outliers teach us that to become great at anything requires purposeful practice over an extended period of time. In The Inner Voice of Trading, Michael Martin writes that it takes a trader about eight years to trade at the level of an expert. You need screen time to become a consistently profitable trader.

In June of 2011 SMB started its summer training class with 10 students. The two best performers traded in college. They started faster, did better, learned more and more quickly, added more value to the desk, and were most enjoyable to coach. At SMB Training Blog I have written about the rise of the college trader and barren university trader education. Start like TO and Swag!

Before trading coach Dr. Brett Steenbarger left the trading blogosphere for a top US Hedge Fund, he saturated his must-read TraderFeed Blog with the importance of working on your trading game. Paper trade. Trade a small account. No matter. Just trade. If trading is your passion, Dr. Steenbarger concluded that there’s no excuse in this hyper-connected, online age not to develop a track record.

Be that candidate who walks into an interview and drops a few profitable years of trading records on the desk of a partner. Then sit back and wait for him to pitch you.

You can be better tomorrow than you are today!

Mike Bellafiore

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9 comments
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  1. Mike,

    If a person can trade already, like some college students, why would he or she want to work at a prop firm?  I’m not trying to be excessively provocative with my question, just pragmatic.  Perhaps my actual question should be, “What is the benefit of going to a prop firm when one has already developed the skills to work profitably out of his or her den?” 

    BCT

  2. I’m sure Bella can elaborate, but several points come straight to mind:
    -Deeper camaraderie than just an online trading community
    -Gain critical outside feedback from not only partners, but also those around you
    -Deeper pockets
    -It’s easier to make up excuses for yourself when your alone
    -Trading by yourself can make you go a little crazy 😉

  3. I actually have the same question, I am a college trader and would like to know the pros and cons.

  4. I think the greatest benefit is having direct access to other like-minded individuals that have far more market experience than you do.  Even if you like the comfort of your own home, having access to the traders on the desk remotely is far better than trading by yourself, and allows you to constantly improve on your trading by talking to other prop traders and asking questions about what they saw on a particular trade, or what setups are working for them and why……

    That is just one benefit I see….

  5. The saying “Need experience to get experience,” comes to mind.  The most difficult part of becoming a consistently profitable trader is the initial learning curve.  I can watch Tiger Woods play golf all day, attempt to imitate his swings, but I can assure you, my mimicry will never award me a PGA title.  However, if I sat with Tiger Woods talked to him about his game. If we practiced together where he was willing & able to correct my mistakes then I went home and practiced till my hands were sore.  I may just have a shot.

    “Dropping a few profitable years on the table,” in my opinion requires coaching from a Tiger Woods (I.E. SMB).  What do you think?

  6. Mike-The posts are all accurate.  Nothing would please any of us more than to walk in and drop these profitable records on your desk.  IF it were that easy, wouldn’t we all do it??  In your book you talk about many traders who worked for a year or more before they were CPT’s.  I think about my potential interview with SMB often, and I am pretty much “breakeven” which I “thought” was decent in this market.  Does this mean the rest of us have no chance?  We are all HUNGRY for the best coaching in the world.  I am sure you have people that can do that.  Do the rest of us even have a chance?? 

  7. What terrible, stunning nonsense. OF COURSE you were born a great trader – or not. That does not substitute for having to hone the skills over many thousands of hours. But to say “you weren’t born a great trader” is just unadulterated cruelty. I know of scores of people who have slaved for years on trying to become good traders, only to turn away disappointed at the end BECAUSE THEY DIDN’T HAVE THE INNATE SKILLS TO BEGIN WITH. Stop trying to be cool with the silly truisms. It’s the same with any endeavour. You’ve got to have the talent to start with. But you know that very well…

  8. Mike would be great if you could respond and maybe give us fledgling traders hope?

  9. I will write about Shark in my next book who defies the need to start trading early.  You can do it.  My point is that it is easier if you start early.  And no one talks about this so I thought I would raise the issue.  Good luck with your trading!