Patrick Reid
"'I follow 19 traders on You Tube and 26 on IG. They say buy the dip without a stop because (and I kid you not)
...stops are for the weak.'
When a prospect asked me this question I did something I have never done before. I laughed and cried at the exact same time.
If you want to take trading seriously you need clarity, action, grit and hard work. You need to turn up every day and sometimes you get battered. It's not just mentally exhausting it's biology too. Your guts will turn. Mine did before month-end but that's another story. It is a brutally unforgiving job. Very lonely and nothing matters than your P+L. You will be tested and tried. You'll discover a brand new kind of pain but if you stick with it you'll come out the other side with a lot of joy.
More joy than you can imagine.
Here are 7 tips to address the latest question asked by a prospect a few years ago:
- Do not follow anyone with pictures of fast cars, yachts and white sandy beaches. You should know better.
- Every single bank, hedge fund and asset manager has a stop. I've worked with some of the finest and most successful out there. They all have stops. They may come with different fancy words like VAR or unwind but they mean the same thing. It's called being a grown up and admitting you are wrong. This is really important - even for small retail traders. Ego and pride can prevent you from 'losing'. I tell all my traders to split their capital and margin. I call it the 80:20 rule. If they eat their margin they are finished. That is not defeat that means they walk away with 80% of their capital.
- Trading is a job so work at it. Do you think Nasa pilots immediately go into orbit? No - they work on the ground for years until they are picked.
- Clarity wins every time but try and follow credible people with a few contrarian views. I like JDI, mi2, GMI and Citi techincals. I throw in some healthy contrarian macro that makes me feel uncomfortable. Go against the echo chamber if at all possible BUT respect that chamber.
- Try and be slightly ahead of the curve (your edge and timing) but not too far ahead because you'll get run over.
- Remember - rates above macro and risk above rates.
- Read the first risk/head book I got handed to me on the German Debt desk trading Futures. Mark Douglas Trading in the Zone. I still read it to this very day.
I hope this helps someone."