Huge HT to @traderinterviews, the place to listen to profitable, experienced traders share market lessons, for sharing an important video on trust. More specifically on trusting your teammates. Or to us on trusting our trading teammates. Please watch below.
Let’s walk through logically why it is so important as traders to develop the skill to gather trading ideas with your ears and then trust your teammates. I know this sounds funny. But your ears are an important skill to develop. Like your ability to read charts, read the tape, or discover patterns based on fundamentals. I can tell by the inflection in Spencer’s voice, my trading partner for the past so many years, how good the stock he is trading is. GMan cranked up the futures pit feed the other day because, “it helps me tell if the breaks are real.” One of our new traders chirped a few weeks ago, “Watch GLD Bella I just got short.” I got short. One of my better trades this year was a call out in TM by a brand spanking new trader. There is money to be made by hearing and then trusting.
Now here is what happens to those with underdeveloped hearing and trusting skills. You hear valuable trading information. You place a trade. It doesn’t work. You get pissed. The next time you don’t make the trade. This does not make sense. Trading is a game of percentages. Of course sometimes when another firm trader, or trading teammate, shares information this will lead to a losing trade. Your job as a trader is to make One Good Trade and then One Good Trade and then One Good Trade. The results of a trade do not necessarily indicate that you made a poor trade.
Your month is based upon how much money you make minus how much you have lost. For active traders the more trades we make where our risk/reward is favorable then the more money we will make. Trading opportunities are our oxygen. And there are only so many we can find by ourselves. We need help. Being a part of the right trading team can ensure the most trading opportunities. Then we need to trust our teammates.
It is not a one day process to develop this skill of hearing and trusting. You are not gonna go in Monday say I am gonna listen to Iceman or Lil Mike from now on and start making more money. You must learn what audio you can use to make more money based on how you trade. For example there are trades Spencer squawks that are not right for me. I can just tell how he is talking about the stock. But that does not mean I do not need his audio. It means I must use this Spencer audio to my advantage, develop this skill of hearing and then trusting.
When the markets are more difficult as they have been of late, desks get quieter. One successful prop firm owner made this comment about another prop desk he had visited this month, “It is as quiet as a church.” No one wants to belt out incorrect info. A few weeks ago I declaratively announced the market has just broken to the downside and I was focusing on only shorting. As if my comments cued the market the market reversed and finished near the high. But then again I also announced recently the strength in AMZN as it then bounced ten plus points, and the strength of CTXS as it finished at its high. You will be wrong with your call outs (though my intraday breakdown recent call was so bad I joked I was firing myself). Let your teammates decide what to do with that information. But as a trader learn who you can trust, what information will add value to your trading, and add trading opportunities to your P$L.
One more thing….if you goal is to become the best trader you can. And hearing and trusting can add valuable trading opportunities for you. And you do not have a system for hearing, trusting and trading, then are you as good a trader as you can be? And if our goal is to be as good as we can as traders, then isn’t this underdeveloped skill an area to improve?
Tip: Share actionable trading opportunities and not opinion. For example, BIDU is at an important long term resistance level of 76.50. I am short.
5 Comments on “Hearing, Trusting and Trading”
Nice post Bella..I have a voice chat that I listen to/participate in during the day with other experienced traders and still find some difficulty sifting through the “noise”. What you said is very true, people on the chat don’t want to make bad calls. This can lead to “time machine” call outs..For example, a trade is working and they call it out only after the trade starts to develop and work in their favor. This is why I think the last sentence in the blog post is really important, don’t share opinions like “I really love this stock short”..Share “This stock is approaching an important level”. It’s often hard to decipher on voice chat what is a B or C trade, from an A trade as these are different for different traders. This is the main reason I only share my “A” trades on the voice chat/stock twits stream.
Dave B,
Thxs for the thoughts. Loved your contribution.
One of the best traders “back in the day” was notorious for the “time machine” call outs. It was usually this: “I am long 5,000 XYZ a point in the money. Looking good.” As opposed to your suggestions which add value. When you are helping others make money then they gain confidence and lean on you. An increase in confidence leads them to develop better ideas and then share them with you. So calling out excellent opportunities is in the end in your self-interest. Not to mention is always more fun to be a part of a team.
Bella
My pleasure Bella..Most people don’t have the luxury of an audio feed, and this is the beauty of stocktwits. I personally always punch up the ticker I am trading in stocktwits before entering the trade. I have a group of people whom I am always following on twitter (Johnwelsh, weeklyTA, alphatrends, geckler, steven place,trader florida, today trader..etc). The same way you can tell the quality of idea by the inflection in spencer’s voice, I can tell the quality of my idea’s by seeing who is posting on the stream/what side of the trade they are on. This is a very valuable tool to gauge the conviction of my ideas.
A good example of this is $RIMM last week. On my voice chat we had been talking on Wednesday & Thursday about RIMM, and how would be an excellent risk/reward trade if it could get and hold above 56. A simple check of the stocktwits stream would show you that a bunch of “suggested” trader’s held that same view. So when it finally did hold above 56 on Friday, I was able to capture a very nice multi point move because I had strong conviction. The chart was setup very nicely, and other experienced traders were thinking the same things I was thinking. This helped me hold the trade for a substantial move. This was an A trade for me.
I thought you might like that video Bella.
His discussion about continuing to trust your system even when you lose several times in a row was an important point for traders. Taking that 4th or 5th trade even if you have lost 3 in a row is important, because if you don’t it will inevitably be the one that would have been a winner.
As much as I hate to discuss gambling and trading in the same sentence, there are some interesting similarities in both execution and psychology.