This trader wants it all and wants it now- Should he?

Hi Mike,

I hope you are doing well. I am reaching out to you because I am struggling a bit, having kind of a rough month so far….. I violated pretty much every rule in my rule book which is why I decided to take today off and rather spend some time analyzing the situation and maybe come up with a solution.  

This month I have incurred a unusual high number of big / bigger losers. The theme I recognized is instead of taking only my A+ setups and playing those to perfection, I impulsively make outsized bets in stocks and situations where I have absolutely no edge. I say ‘bets’ instead of ‘trades’ because when analyzing those ‘bets’, it feels more like gambling than trading. This is a sharp contrast to my usual numbers (high hit rate, low drawdowns). The question is: why?

After having read The Playbook I started with the professionalization and expansion of my trading business. Since then I was and still am highly productive: on top of the points from my last email, I added a personalized tagging routine for Tradervue, optimized my Bloomberg layouts, wrote some new filters to find stocks in play more easily, fine-tuned news filters, educated myself with SMB videos, the DNA program, some other Youtubers and so on.  Looking at the date from my last email to you makes me realize that I started this process only 6 weeks ago which is insane considering how much I already achieved. 

But this also depicts one of my weaknesses: impatience. I want it all and I want it now. That way I am putting a lot of pressure on myself which is totally unnecessary, because I started this whole process out of a position of strength – I am still making enough money in my current trading, so ‘time’ is not a critical factor right now.

I started out as an arb trader, morphed into a statistical / international arb trader and finally added news trading on top of that. It was an organic growth process and evolved over time. The way I am trying to grow right now doesn´t feel organic at all. It is more like taking over every little company I can find at inflated prices, desperately trying to integrate them all at once. This leads to missed opportunities in my A+ setups because I have way too much other stuff to worry about. In the end this leads me to impulsively make outsized bets without any edge to – hopefully – make up for these missed opportunities in my A+ setups. Hit & Hope.

…The solution seems to be pretty simple:

  • I need to stop putting too much pressure on myself and make that growth process a process that evolves over time (organically with patience). Only then I will be able to trade new setups naturally with bigger size. It is nothing that can be forced overnight. No matter how much Youtube videos I watch or books I read.
  • As long as I haven´t finished my foundation (Playbook / TradeReview / Book of Rules) to an extend where I am 100% comfortable with, I shouldn´t take on more challenges and not even think about trying to trade the US markets on top of all of that. Keep the pressure level as low as possible.
  • I will implement the Daily Report Card. With a monthly goal it will be a great tool to slow me down and take away some of the self-inflicted pressure to do it all at once. It also let´s me focus on one specific area for a long enough period of time. It will be a challenge though not to jump between 2 or 3 goals doing all at the same time again. First goal will be to expand / finish my Playbook with A+ setups and define specific variables for each setup in depth.

This got a bit longer than I originally had thought, but writing it down made me really think about everything in depth which helped me a lot to get a better understanding of my situation and what direction I should take. I knew from the start that this change would not come overnight and I would hit roadblocks at some point. But I am still convinced that this is the right way and that I will benefit from it in the future. Your comments / thoughts / questions are well appreciated.  


“I want it all and I want it now.”

Boy have I seen this before from developing traders at our firm.  It does not work like that.  What you want and when matters.  What if you just wanted to improve each day? Boy would that matter to your trading improvement.

As Ray Dalio said, “Weaknesses don’t matter if you find solutions.”

Find solutions for your underperformance

This trader is a role model for seeking solutions to his challenges.  This post is worth reading just for the exposure to this trader’s solutions.  Too often traders repeat the same mistakes, or worse, make no effort to improve.  The work we put into our solutions will dictate our future PnL.

Master one product first  

What stands out to me is you are missing trades, missing A+ trades to you.  That is the information that you are spread too thin.  This is the information that you need to focus on capturing your best trades.  Elite traders who missed their favorite setups would flounder as well.

I love the idea of you expanding your PlayBook.  But not at the sacrifice of missing the setups that you trade best.

And example of terrific work by an independent retail trader

I am really impressed with the work of this trader.  His work ethic is tremendous.  His thirst to improve is contagious.  On our desk, we learn from Junior Traders, as well as Senior Traders.  In the trading community, we can learn from independent and retail traders.  This trader is one example of that for the trading community.

*no relevant positions