At the start of year, our firm meets with our traders to review their goals for 2019.  We trade in teams so we meet in teams.  Each trader goes over their goals before their Team Leader and other teammates.  Our Floor Manager, Dr. Steenbarger and I participate and offer feedback.  Let’s give you an inside look into what we learned from these conferences.

In this post, I will share what lessons we can learn from these meetings to give you ideas to improve your trading.  Certain themes for how traders have improved and/or are trying to improve arise that you might find helpful.  As always, we hope the work that we are doing as professional traders on our desk can help the trading community.

The best traders innovate.

Last year our top traders did not just trade bigger, but they traded differently.  They took their edge in equities and expressed it more often and larger with options.  In one trader’s words, “I surpassed by goal of 2.5-3m by trading options.”

Consistency first please.

One developing trader dreams of being able to trade as big as his elite Team Leader, but smartly noted he should focus on being consistent first.  This is so smart and ought to be copied by new and developing traders.  Appropriately, that huge Team Leader was expert at being consistent when he first began and grew into a very large trader.

The best traders are coming.

At a prop firm. if you put up let’s say 300k in trading profits it is said that “you are not moving the needle”. There are a handful of traders at the firm, trading with impressive consistency and edge, but not putting up huge numbers.  If you are trading with edge and consistency, you could be coming.  One trader we sat with put up only 300k in 2016 and will most likely be the next new Green Shirt Trader at the firm (1 million in net PnL for the year).  He was not on the radar a few years ago of huge traders at the firm.  He will be.  He is coming.  So are others.

So if you are trading with edge and consistency, that is excellent work.  With coaching, capital, technology, senior traders around, sizing, those smaller gains can become huge.

Trade what you SEE.  

Active short term traders are expert in SEEING that a move is about to happen.  We are not expert in anticipating what will happen.  Active traders tend to get in trouble when they anticipate what will happen, which is not their expertise.

A good example is the Christmas downmove in the market.  If active traders waited to SEE IT, the market turn back up on the day after Christmas, they made bank and did not draw down.

There is upside in automated trading.

All traders saw upside automating select setups.   All!  At our firm, you can develop an idea, back test, forward test, and run live all from your desktop.  Some saw increases from zero to twenty percent of their PnL from automated ideas.

Fees matter.

I was on the phone recently interviewing a retail trader, who was having a great deal of success and paying taxing transaction fees.  We do not upcharge our traders on execution costs at the firm.  This allows traders to build many extra strategies that cannot be employed at other places.  It allows them to trade more and keep more.  But also fees like short locates, and interest expenses for overnights can add up.  And for some a deep dive into curbing those costs is a part of their PnL improvement in 2019.

Effective best practices turned into habit will drive your improvement in 2019.

A plan to exercise is well-meaning.  Placing on your calendar when, where, and how you will work out manifests a successful habit.  A daily routine developed to make progress this year is well-meaning.  On your calendar with the when, where, and how is what brings success.

Be your own trader

Do not look for the highest PnL trader and copy them and expect success.  Look for winning traders and learn how they think through trades.  See trades as patterns and look for the patterns that you can trade best.  That Senior Trader may spot excellent trade opportunities in stocks that you would trade very differently.  Match your trading strategies with your personality and cognitive strengths.

Slow down.

Many of the elite traders who I coach can get too aggressive in trades.  They are good.  They want to excel.  They trade big.  Being early in a trade can be the difference between a large gain or large loss.  With many of these traders, we are working with them to slow down.  Self-talk in real-time helps with this.

Plan to improve in 2019.  You can and with effective habits you will.

*no relevant positions