Be in Your Right Trading Culture

Hi Mike,

I’ve just read your book, One Good Trade and have to say it’s left me more motivated than ever to continue improving my trading skills. Currently, I trade futures for a newer prop firm in Western US. Trading is what I’ve always wanted to do; I saved money working as a waiter to start trading options in my own account during college, and did pretty well. My predicament is that I had a difficult time landing even interviews with trading firms after graduating. I was eventually given a chance with my current firm, was in after my first interview, and I have flourished with them, so far. However, I feel that my current firm isn’t a perfect fit for me. I’ve adapted to their strategy, but don’t feel like I’m realizing my full potential.

Additionally, I’d much rather be trading equities, or highly volatile products like oil or gold (I’ve been putting together in depth analyses of crude oil and 10-year US bonds to develop an understanding of long-term trends to aid in short term movements to submit to my bosses, in hopes of being granted access to trading either product [currently only euro/dollars are traded in our office]). And to top it off, I have few traders from whom I can learn from on the floor (the hierarchy of traders puts all new traders on the overnight trade, with no senior traders in the office). I’ve made a conscience decision that I’ve been given an opportunity to get my foot in the door doing my dream job, and that under no circumstance do I give up that opportunity just because I feel that I’m undervalued at my current position. I’ve decided that I will learn the nuances of trading in general, and develop a strong understanding of what affects interest rate movements, and then how those adjustments are reflected in all other products. I guess my question is, a) am I wasting time, or embracing opportunity by staying with my current firm to continue learning until I feel that I can compete with the top tier traders that will want the same job as me at more competitive firms in NYC? And b) can you offer any broad trading techniques that I can practice applying to the euro/dollar markets that can improve my trading and prepare me for trading any product in the future?

Thanks very much for your time.

@mikebellafiore

In The PlayBook I wrote about the important of finding the right trading culture for you. Here is a snippet from that passage:

Be in Your Right Culture
How you start and what you decide is the best way to begin your trading career are questions of culture. Our culture is that of working hard, building skills, and improving every day. We work as a team. South Africans call this Ubuntu: “I am what I am because of who we all are.” Nelson Mandela explained Ubuntu as follows:

A traveler through a country would stop at a village and he didn’t have to ask for food or for water. Once he stops, the people give him food, entertain him. That is one aspect of Ubuntu, but it will have various aspects. Ubuntu does not mean that people should not enrich themselves. The question therefore is: Are you going to do so in order to enable the community around you to be able to improve?

Those who want to cut corners do not fit well in our culture. There is a dress code. Head out early without prior approval, and that is not permitted. If you do not buy into the work we believe is necessary to become a great trader, we are a bad fit for you. If you think you are going to be the best trader on our desk in month three, we are a bad fit for you. Further, we identify those who do not fit our culture and manage them out of our firm.

To give you an example of how seriously we take our culture, let me introduce Talks a Good Game. This gentleman was an experienced trader of nine years, who was a good friend of a core trader on our desk. In the past he had surpassed P&L of 500k for the year. Talks a Good Game was talked to on several occasions about doing trade reviews to improve his trading game, as he was underperforming relative to his experience. After about the fifth failed attempt to get Talks a Good Game to fit into our culture and do the work necessary for him to improve, our floor manager let him go.

Talks a Good Game sent me a testy e-mail (edited):

Maybe you had something out for me… Work ethic? You just let your best trader go.

I responded:

I am sorry you are disappointed. Carlton was very fair with you. He gave you many chances to do the work that we think is important for our traders. For whatever reason, you could not sustain the energy to complete this work. And when you did the work the effort was well beneath that of our other traders. It wasn’t fair to you, to our traders, to our culture to continue. We were clear with what we expected from that first conversation I had with you. And you chose not to fit in to what we outlined as important.

This was not a decision made by Carlton about your ability, what we think of your personally, or your trading prowess. This was a decision made strictly on culture. We value our culture. We feel everything starts there. We do not feel we have the infinite wisdom on the best culture. We respect those who feel ours is not the right culture for them. It is just our culture, you were not fitting in, and we felt it was best to move on.

I wish you nothing but the best in the future. I look forward to you checking in to tell me you are crushing the markets.

All the best,

Mike

Many traders do not value or have not yet recognized the importance of a trading culture. Where is the best deal? What is the cheapest or easiest way into the world of prop trading? To survive in our business, you must develop rock star trading skills that are sustainable. That only happens through hard work, good coaching, support from others traders, and the help of a firm. Picking your best trading culture is perhaps your most important decision that will impact your trading future.

Pippen fit into our culture, and our culture was a best fit for him. He thrives in an environment where he is challenged to work harder. He sent me a review one day that was not complete. I responded:

This is not an example of the type of review work I expect from you. You can do much better. This is not detailed enough. Your progress each day relies on detailed thought and review of your trading. Should you have been in NAV? SMG? REGN? Your progress starts with these reviews. Do better ones.

He sent another one that was worthy of our culture and his work ability. Some would have been angered by my calling them out. If your first reaction to getting criticized is to feel defensive, then you’re not likely to last in our culture. As for Pippen, he took the feedback as a need to do better work… and he did that work.

A few months later Pippen sent me an email sharing an awesome anecdote representing the importance of learning from our failures. The fact that he sent me this email showed he fit our culture. Pippen wrote:

“I was watching Spain vs. USA basketball on Sunday morning, and this short advertisement really tickled me. Every single day, there are countless of people failing to make it to their dreams. But this little kid, called Timothy, was very special. His thinking process, and how he perceived the world, was so unique, so different from many other ordinary people. When he fell on the ground playing basketball, he laughed.

His coached curiously asked him, ‘Why are you smiling?’

Timothy answered, ‘I can only get better!'”

You can be better tomorrow than you are today!

Mike Bellafiore

One Good Trade

The PlayBook