Mr. Padre is a senior trader trying to hit home runs with his trading. It was not working for him, both psychologically and with his PnL.The more famous “Mr. Padre” was the late Tony Gwynn of the San Diego Padres, who built a hall-of-fame career slapping singles. He consistently hit above .300 and got on base at a clip of 39%. Instead of focusing on hitting home runs he was a singles machine. He is a role model for traders overvaluing the big trade for many profitable smaller trades.
Back to our Mr. Padre.
Mr. Padre is up 20k and pressing it to make 50k. And then falters into the close.
There are some days where he finishes up over 20k but then there are some days when he finishes negative 20k.
A 5 day streak might look something like this (*hypothetical results).
-22k
+25k
10k
-12k
flat
For several months he is about flat in his PnL trying to hit trading home runs. Yet he has all those big days.
Consistency is underrated in the trading world versus the big trades. There are books and movies written about them, think The Big Short. And we have been working with Mr. Padre to sacrifice home run PnL days for more controllable and consistently profitable trading days.
We dig into Mr. Padre’s edge.
- We find there is larger edge in Mr. Padre’s AM trading.
- We find that when he trades with a thesis AND a news catalyst AND price confirmation AND fights for price there is edge in his trading.
- We find when Mr. Padre just trades a thesis there is not edge in his trading.
- We find that there is rarely an edge holding opening gains into the midday.
- We find that Mr. Padre can have many more 10k days and less negative 20k days if he focuses on consistency over a huge day.
If a trader can gain consistent results, they can scale from there. They can get bigger doing exactly what they are doing, just more often and with more size. But you cannot scale from a negative or flat PnL. Also, it’s much more sustainable psychologically to be positive 3/4 days a week than perhaps one.
The results? So far with his focus on singles, his results have noticeably improved.
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*no relevant positions
Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks, options, forex and futures. He is the author of One Good Trade and The PlayBook.
