“Meaningful work and meaningful relationships aren’t just nice things we chose for ourselves- they are genetically programmed into us. Working effectively with others is critical to getting what you want out of life.” -Ray Dalio, founder Bridgewater.
These days, anyone can connect to a trading chat room, a chat where trading ideas are shared. But do they really help?
What value can you gain from connecting to a chat room during the trading day? Does it help you make more PnL?
And do the pros really use them?
Let’s answer these questions and arm you with better information to give yourself the best of success as a trader.
The pros on our desk do. Let me share the value they receive, which will surprise you.
I asked three traders from our proprietary trading firm what value they received from their audio chat. Their responses need our attention as traders.
Now for some context on these traders. They are all homegrown 7-figure-a-year traders. They create value from their audio call better than any other team at the firm. Their call is as good as it gets at SMB. They talk all day long about trading ideas.
Here is the value they receive:
Let’s dive deeper into exactly what this value looks like for you as a trader.
Makes trading more fun
There are periods when the trading session is slow. It is fun to have some other traders with whom you can banter. Discussing trading opportunities with others throughout a trading session is also more fun.
At least three times a day, I hear laughter from one of these traders in NYC from his audio chat. Sometimes he is just busting up about something said by one of his colleagues on his audio chat. Often I walk by and ask, “what the heck are they talking about that is so funny?”
They are not only making bank. They are having fun doing so. They are having fun doing so…together.
Improves trade selectivity
Sharing your trade ideas with others helps you take good trades. Others on the call may talk you out of a poor trade, and explaining why you are taking the trade may force you to take only good trades.
What is so interesting about this team is that each of the 3 traders bring a unique talent and skill to the call. One trader is a bundle of ideas. He inspires the idea generation. Another is super selective with his trades. He tempers the others from being sloppy with their trading. He keeps them focused on their PlayBook, their setups with edge. This trader does not like taking trades that do not meet his criteria. This spreads to the other traders and improves their selectivity through his role modeling. And finally another trader is super systematic about his trading and the trading they do together. He keeps them committed to taking the right trades, and with the right size, and at the right moments. It is the coming together of these three and their three unique talents that makes them all better.
Introduces different points of view on a trade
You may be missing something in a trade. Others on the call may see what you are missing. They may see risk you are missing. They may see variables you are not considering that make the trade less appealing.
Helps cover more trades
One pair of eyes cannot spot as many good trades as many sets of eyes. Others on the call can call out trading opportunities that you are not able to spot.
Support
At the end of my discussion with these three traders on the value of their audio call I asked, “is there anything else?”
One 7-figure-a-year said, “Yeah, Bella,” and then proceeded to share one of the most important ways a call can add value. But more than that, it is an important way for traders, to the point Ray Dalio makes above, to build meaningful relationships and lean on these meaningful relationships. Relationships can get you through periods of struggle that you just might not be able to get through on your own as a trader.
I have said this before. Of all the star traders developed at SMB almost all have needed help at some point in their trading careers. From my seat, they wouldn’t have made it just on their own. And that help made all the difference for them. This help came in many different ways. But for some, it was meaningful relationships.
As an example, two developing traders just made killer trades in a big trading opportunity. This was so much fun to see. Both of these traders credited the mentoring of Senior Traders in real-time on their audio call for their success. One trader wrote to me, “…Dan G and Graham have been the utmost of helpful to us. Being on a call with them each day for live feedback in real-time, as well as helping with conviction on big ideas. Dan really pushed us to hold size for the bounce trade, and his experience gave us the conviction to hold for the bigger move.”
Trading is hard. Trading is filled with ups and downs. Trading can be frustrating. Even elite traders experience periods of trading losses. Having someone to talk to provides support. They can pick you up when you are in a trading slump. They, uniquely, understand what you are going through and how to help.
Increased risk-taking
Others on the call can help you take more risk in your A+ setups. You do not want to be the one who isn’t big enough in an A+ trade in front of your peers. You don’t want to be the trader who made 5k in an A+ opportunity as the rest of the traders on your call made 50k. But, also, when you hear other solid traders like the A+ trade as well this gives you more confidence to responsibly increase risk.
Accountability
Teammates on the call can hold you accountable to follow your process. You have developed a system for your trading. They will know it. When you veer from it, they can remind you to follow it.
Exposure to other trading strategies
Traders develop unique trading strategies. Being connected on a call with other solid traders exposes you to their profitable trading strategies. You can experiment with theirs and see if you can make them a part of your PlayBook.
You will make more
Oh and I asked all of them if their audio call helped them make more PnL. They all said, “Yes!”
Conclusion
So go ahead and chat away. It will improve your chances of success as a trader. As we say on our desk, “Trading is best done…together.”
Mike Bellafiore is the Co-Founder of SMB Capital, a proprietary trading desk, and SMB Training, which provides trading education in stocks, options, and futures. Bella, @MikeBellafiore, is the author of One Good Trade and The PlayBook. He welcomes your trading questions at mbellafiore@smbcap.com.
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