What does it really take to become a successful trader? Well, most have tried the shortcuts, the free trials, the learn to trader $1 links, the emails suggesting 95% win rates. Some for 10 or 20 years. That’s the topic of this Trader Talk.


(audio only version at bottom of the page)

In this discussion, we looked at the actual WORK required to become a profitable trader.

Rob from DTG is an industry professional with experience ranging from outrights & spread scalping/market making/arbitrage as a proprietary trader, and also a principal of a quant research firm focused on longer term strategy and risk model development. So he’s an interesting mix of short term discretionary and long term quantitative.

Peter from Jigsaw has one foot in trading and one foot in the tools business, so spends time with a huge range of traders with different styles both professional and retail.

The two have known each other for years and regularly have calls where they:
– discuss the markets, what’s working well (and not so well) at the moment
– Traders they are working with – both the successful and not so successful
– The ‘shenanigans’ they are seeing at the retail end of the market…

These discussions last quite a while and recently Rob suggested that people might want to listen in and indeed participate in one of these chats. So on 27th July, they did just that!

It’s a Trader Talk, we covered

-Quantitative vs Discretionary Trading – is one better than the other? Is it a simple choice? Why are retail traders to attracted to systematic trading? What are the pitfalls of each?

– Why do so many retailers struggle to become profitable? Is it psychology or technique? Does the average retailer even have a reasonable expectation of what outcome is likely with their trades?

– Why so little focus on risk? How much edge can you get from the risk model itself over time? What about efficiency of capital? Is it always better to trade smaller?

– Realities of ongoing adaptation with single market short term strategies. How to know if your strategy is struggling or performing to expectation. Importance of ongoing research.

The common thread here is that retail traders will try all sorts of things to try to simplify their trading. But it can’t be done because on any given day

And this last bit is really what will make a huge difference for most traders. The markets switch gear all the time. That’s a fact, so a “one size fits all” or “do the same thing on all markets on all timeframes on all days” is not possible.

Which is why people spend 10,15,20 years trying to trade – basically avoiding the one thing that would really turn around their trading – adding rules for different market conditions. Not rules that take 10,15,20 years to develop either. Some of it, like using correlated markets isn’t that hard. It just requires practise and some screen time to understand it. New Proprietary traders do it in a few months.

So it seems to be a choice – look for something simple for 15-20 years or accept that market conditions will evolve and that you need to adjust for them.

The goal of the Trader Talks is to dig a little deeper beyond the usual focus of strategy specifics into the often brushed over but critically important considerations which tend to be the difference between success and failure for most aspiring traders.