I had the pleasure of moderating a panel of expert traders and educators this week at Windy City Workshop sponsored by the Diversified Trading Institute (DTI). Because the panel was so diverse I tried to keep the discussion on general themes as opposed to specific strategies and it was surprising how much unanimity there was.
The panel included DTI founder Tom Busby; Dan O’Neil, EVP of Optionsxpress; Dr. Frank Stanley; professional traders Lewis Borsellino and Damon Pavlatos; Ray McKenzie, VP of ICE Futures and Fausto Pugliese, president of Cyber Trading University.
The word that kept coming up to the audience (who paid big bucks to be there) was discipline. General themes included having a trading plan and sticking to it, not trading if your mind was on other things, preparation, cut your losses short and let your profits run and trade only liquid markets at the most liquid times of the day.
While all these are obvious and some cliché they are all tied up with discipline, which may be why DTI included a licensed clinical psychologist on the panel. They are obvious but so too often are our mistakes and it is comforting to hear experts in the field discuss how they still continually struggle to overcome bad habits.
There were more anecdotes about losing trades than winning trades, which is appropriate because those unfortunately are where the hard lessons are learned.
Lewis Borsellino, a former floor trader who once accounted for 10% of the S&P 500 futures volume and famously earned more than $1 million during the 1987 market crash provided both a warning and comfort. He no longer trades because he does not have the edge that he had when he traded from the floor. He stated that the markets our much fairer today with electronic trading evening the playing field. This expert trader no longer trades because he doesn’t have an edge.
He pointed to the audience and said you put all of us traders out of business. As I noted, that could be seen as both comforting and the ultimate challenge.