How 20 Years of Trading Has Changed Myself & My Approach

Trading and Investing Helping Traders
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The year was 2004. I was in my second year of college at University of Oregon not knowing what I wanted to do, let alone study. A few years prior my brother moved to Chicago in his beat up Subaru to pursue his dream of trading and making millions. My sophomore year came to an end and I decided to make the same move when a trading position opened at one of the largest firms at the time, Kingstree Trading. I was 20 years old.

I bought a one way ticket to Chicago and shipped my computer along with my other belongings. I had no money but was happier than I’ve ever been. Moving from a small town to the center of the trading world was more exciting than I thought it would be, despite having to sleep on a twin mattress on the floor and having nothing more than a few changes of clothes and a $50 desk I purchased from Good Will.

The first day at Kingstree was overwhelming, meeting with the owner and top traders was intimidating to say the least. I had zero trading experience, but that’s not what they were looking for. They wanted traders who could adapt, learn quickly in a competitive environment and show consistency. All of these things I already knew I could do.

When we were in the process of choosing what market we wanted to trade, I remember being asked if I knew I could be profitable trading spreads in the Bond market vs the unknown in the indexes, what would I choose. I answered I’d still trade the indexes. I wanted the challenge, the excitement and more specifically, the huge upside potential I thought was so easy to obtain. When I went live with my massive 1 lot maximum, reality started to hit in. Turns out it wasn’t as easy as I had thought it would be.

But I persevered through the consistent losing days and continued to stare at the markets to try and figure out what I wasn’t seeing that so many successful traders were. Trying different things, working on risk management and absorbing as much knowledge as I could to hopefully one day turn the corner and make money.

Looking back it didn’t take as long as I thought it would. I eventually was consistent and chose my trades with more precision. My 1 lot cap turned into 2, then 5, going all the way up to being able to trade 100 lots in the mini S & P. I was 21 trading along side some of the most successful traders in the world. It was the best feeling in the world at the time.

As time went on, my perception of what “trading” was completely changed. I always had the idea that anyone involved in the financial markets were people that wore suits to work, maintained a professional composure and firms only hired the “smartest”, best educated people possible. But when I saw Harvard graduates leave the firm because they couldn’t turn a profit while other traders walked in with flip flops and stoned 20 minutes after the open, only to leave 2 hours later up $400,000, I started to question what “trading” really was.

There was no rhyme or reason as to why someone succeeded and someone didn’t, at least at the time. It was baffling to see. It went against all the beliefs I had of you have to work harder than the next guy, or be smarter than others, or come to work with your best foot forward. It completely warped my reality. MY reality. I say it like that because that was only my thinking of what made someone a good or poor performer in whatever they did. But that wasn’t THEIR reality.

From that point on trading turned into a journey of personal realization and awareness. It turned from who knows the markets the best to, who knows themselves the best. How does someone react to situations when real money is on the line. How SHOULD someone react to market conditions when real money is at risk. I quickly realized that the best traders are the ones that know themselves the most, not the markets.

While my time at Kingstree was just about a year and I could easily say it’s where my trading career started and ended, my trading journey really started when I left. Because trading is more about yourself than it is the markets or anyone else. It’s about being in a mental state that allows you to absorb information objectively and without emotion. It’s about trading the same way you would if you’re down as you would if you’re up.

There’s no question that I learned a ton about the fundamentals of the markets, what to look for and things that work and don’t work. I was fortunate enough to be in an environment that encouraged high frequency trading. It wasn’t abnormal to make 150 to 200 round turns a day, and while that was ultimately what ended many careers for traders during that time, it also built contrast for the future.

My posts will be covering my journey back into trading with my exact strategies and completely transparent results using the tools and strategies I’ve developed for nearly 20 years since then. Not only in the markets, but more importantly personally and mentally, because where the truly successful traders are made.

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@Ben_M Thank you for sharing your journey so far.

No question that trading as a skill requires a lot more than academics.
It’s a discipline that requires DNA of risk tolerance, attention to detail, and the ability to persist with analysis even when the P&L is not the greatest. If you look at the world of CTAs and prop shops you truly trying to form the picture of how long drawdowns and persistently negative numbers can prevail.
These challenges could not just be overcome in a short period of time.

Your journey, growth, and experience would be valuable to this community, and I hope you are asked many questions.

I have a question for you: Many traders want to be independent and become full-time traders.
When you transitioned from a prop environment to becoming a self-directed independent trader, what changes did you have to go through mentally (discipline), cash-management, and did your strategy change?

Looking forward to your trading journal!

Thanks,
Matt Z
Optimus Futures

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@Mod-MattZ, great question.

I always say that you learn the most about something when you aren’t doing it anymore. For instance, you’re at a job for a long time then leave. It’s that reflection time that really makes you think about what happened, what you enjoyed and didn’t, what could have been done better, etc.

The great thing about being at Kingstree was the experience and the repetitiveness. Like I said, we traded 150-200 times a day. Some traders don’t do that in 2 years.

But that allowed me to really, truly understand order flow and think about the orders that were coming into the market. Even watching it over and over again, always thinking and observing. Now, my goal is to only take high probability trades and trade when I can really see it. That might mean 1 trade a day, or 1 trade a week.

You could compare it to any professional sport and the “final” game. You practice, practice, practice, always reflecting. It’s all preparing you for that final game which is the one that matters the most.

For how I approach the market and myself, that took years and years of reflecting not only on the markets but also life. Any trader can only control themselves, not the market. The market doesn’t care about you, it doesn’t move “against” you to piss you off or try to fake you out, it just moves. Removing emotion and personal needs is the biggest advantage any trader has while remaining in control of THEMSELVES, not in control of the market.

Risk management has to be 100% spot on. No exceptions. You create a rule and you follow it. If you don’t, you’re changing to many variables at once that can give you inconsistent feedback. If you’re unsure on something, reach out to people who have been trading their entire life and pick their brain. It’s amazing what you can find.

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At the end of the day, nothing beats experience over time, and praticing is part of it. Most of the time (in my opinion) the practice part is repating the same discipline/behaviour/routine over and over again. This is what many have a problem sticking with: Boring Routine. This is why we see in the retail space traders jumping from method to method instead of focusing on one.

Well said. This is a GREAT point how many get tangled in their own emotions as if the market was a one-on-one when in fact there are thousands of players and participants.

I find that positive expectancy is a result of risk management. Many traders focus on a “Signal”, or “indicator” not realizing that every trade that they take there is someone who takes the opposite trade.

One question that I want to expand on is whether trading on your own versus a group setting. What adjustments you had to make psychologically and strategically now you do not have a Prop “boss” or anyone to consult with(?). Did you have to impose new rules to govern your day to day trading?

Thanks,
Matt Z
Optimus Futures

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Blockquote
One question that I want to expand on is whether trading on your own versus a group setting. What adjustments you had to make psychologically and strategically now you do not have a Prop “boss” or anyone to consult with(?). Did you have to impose new rules to govern your day to day trading?

Yeah, Kingstree was so open and free, probably to their fault. There was a risk manager but I honestly don’t remember a particular class or lesson, strategy on risk management. Which is crazy to think about now.

So now, it’s all up to me. A ton more personal accountability. In addition, I’ll be taking less, WAY LESS, trades because no I know there’s no room for error. Which this is something I forgot to mention:

With us doing so many trades every day and that real life practice and repetition, it made us experts in what spot to enter the market. I could join a bid and get filled and NEVER have that price go against me, literally no risk. We focused on order flow and not much else, it’s like learning a language. Very odd to learn at first but then you become fluent.

So fast forward 20 years, I can still read order flow like I could, maybe even better because I learned how to remove my bias and emotions. That combined with the fact that I know scalping is not what works for me, I completely change my strategy and look for just a few points a trade/day/week, whatever the market provides.

So I remove all the low probability trades that I relied on order flow to limit risk or break even, and focus on the best trades while still perfecting order flow entry.

Basically changing environments has completely my strategy but in a good way. I know that being profitable and consistent is the most important, because you can ALWAYS scale.

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Thank you for sharing. It’s always great to learn from experienced traders. I’m so glad to be on this platform

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