If a business has a clear understanding of what they do well they can spend time and energy fully developing these things until each becomes a competitive advantage that will have a direct impact on their bottom line.  In the world of trading it is fairly simple to measure the impact of certain behaviors on our bottom line because we keep score each day.

One of the things that SMB does well as a firm is share relevant factual trading information.  It is an idea that was drilled into my head when I was a novice trader in 1996 and has become immersed in SMB’s culture.  Traders throughout the day will call out major support/resistance levels, unusual buying/selling activity and other important information in the stocks we are trading.  As this information flows through the desk we collectively make more money.

We realized a few years ago that some great information was slipping through the cracks so we developed new ways to make sure information was being dispersed on the desk.  We began to offer audio calls for our traders to communicate with one another so even if they were on different parts of the trading floor they could discuss the stocks and levels they were trading with one another.

The audio calls were a great addition but because there were several calls occurring simultaneously some of the best trading ideas were not flowing through to all of our traders.   The answer to this problem was our “intraday alerts” software which allows traders to quickly input important price levels and trading ideas to be sent out to all traders on the desk.  Then it became apparent that some traders were so focused on their trading during the day that they would forget to input ideas into the intraday alerts tool so we tasked interns to walk around the desk collecting alerts throughout the day.

The above information paints a pretty clear picture that we believe it is important for our traders to work together to make more money individually.  This idea comes full circle when I host our AM Meeting and share some of the ideas that our traders have generated based on their prior days trading experience.  As I wrap up this blog and take a look at the risk monitor I can see that the majority of our trading profits today were on important trading levels that our desk shared during today’s AM meeting.  That is a competitive advantage.

Two examples below: 1) We shorted WFMI below 26.80 today 2) We were prepared for an LVS breakout above 18.  This developed right at the close and should offer a lot more upside tomorrow.