A couple of weeks I wrote about the benefits of working in a trading office alongside other traders. Though I realise not everyone is able to get into this type of arrangement – whether it’s a case of being able to find an office venue, traders to move in together with, or simply living in remoter areas where no others traders abound (or anywhere in Belgium apparently!).
The next best thing to being in a trading office is something along the lines of a “Trader Buddy”. I decided to write about this today because I got into a trading buddy relationship just recently and it is already paying dividends for both of us involved. And I think many aspiring traders could benefit from this type of arrangement.
Even though I am now working nearby some other professional traders (see photo for my view from my desk on Friday morning!), I figure it is smart to also create alliances elsewhere if this can be easily achieved. Further a conversation with two professional German traders earlier this week highlighted the importance of working together with other traders.
Huge benefit of working together with other traders
Don’t take my word for it ! This week I was fortunate enough to sit down with a couple of German traders who have been trading since the mid 1990’s in a raft of banks and funds. They now also run a program preparing attendees for passing the various exams for the German stock exchange, as well as a program for developing prop traders. The success rate of the latter program is low and successful attendees on average will need 18 months to become profitable, but that is in the context of full-time training being surrounded by successful experienced traders and coaches and with a fully set up curriculum.
Next, they told me that they considered the chances of independent traders succeeding in the market to be fairly close to zero.
Any retail trader should really take heed of these words!
However, they then suggested that traders should seek out to work with other traders wherever possible, as this would provide the chance of progressing faster, of learning other perspectives and of reducing the likelihood of giving up.
Thus, clearly traders working around other traders have a much higher chance of success.
Various possibilities for collaborating with other traders
Setting up an independent trading office is one. Joining an existing arcade or prop firm is another – examples of this nature are Tower Trading and Marex (though costs may be prohibit this option). And of course, a trader may be fortunate to actually be employed by a hedge fund, bank or other financial institution as trader with a salary and bonus!
However for all other mere mortals, a very practical, inexpensive and easy setup is to get a trading buddy.
What is a trading buddy?
It is simply an arrangement whereby two or more traders get together on a regular traders and talk about their trading work. I had the idea of getting into such an arrangement late last year after I heard Paul Wallace say that he used to regularly meet with other traders at the beginning of his trading career for reviewing charts and trades. The benefits are huge:
Many of the benefits are the similar to the ones achieved when working in a trading office.
- Traders are forced to articulate and talk about the challenges they are facing – this helps them to understand their own issues – and often a problem shared is a problem halved.
- It is inexpensive – whereas trading mentors or coaches can be costly – trader buddies are completely free!
- Traders can benefit from each other’s varied experiences and knowledge of techniques and resources
- It makes traders accountable to each other for their trading actions and meeting objectives.
- It reduces the chance of giving up
- If needed traders can also message and call each other in between meetups, to share the good, the bad and the ugly when necessary.
A few tips
- Keep the number small – each person should have ample of opportunity to talk about their recent trading challenges and experiences – and also be encouraged to share their views on what is being shared by the other trader(s) – this becomes exponentially more difficult to achieve the more traders that take part
- Meeting in person is most likely more fun than telephoning or skyping – but do the latter if there is no other option
- Traders should think about what they want to talk about beforehand to help bring structure to the meet-up and to get the best yield out of the meeting time
- Make some brief notes on what was discussed and of any objectives that were set for other traders
- Traders should be somewhat similar in experience and skill levels – else it likely quickly evolve into a mentor/student relationship
- If you have a choice then try to get with someone that you think you will click with generally – but often the choice is far and few between – so be adaptable and make the most of what is available to you
- What happens in Vegas stays in Vegas – this allows traders to be open and honest with each other
- Start on a trial basis and re-assess how things go after a couple of months
- Meet frequently, at least once a fortnight
- How to go about finding a trader buddy – use online trading forums such as Trade2Win or EliteTrader to find traders in your area
I hope the above motivates you and makes you think about getting into a trader buddy arrangement. Good luck and share back if you have some success (or big fail!) stories!