I recently started reading One Good Trade: Inside the Highly Competitive World of Proprietary Trading and so far I’m really enjoying it.
I’m very selective about trading books so any book that teaches a trading method I tend to stay away. I do enjoy books that tell me what it’s like to be a trader or teach me general principles of the markets (Dalton’s books come to mind).
I’ve always wondered what it’s like to work in a prop firm and this book has described it in great detail. I enjoyed meeting the traders, learning about the selection criteria, and which ones made it and which ones did not.
He also talks about getting out of a losing trade, averaging down, and other bad practices that I can really relate to. One trader would never exit a loser. Day after day he’d hold one. They’d talk to him and ask him his exit point and he’d tell them and then when the price went there he just couldn’t do it. It seems so funny and silly reading about it but I can say that it’s happened to me personally.
The main theme of the book is that we should look for “one good trade” and then “one good trade” and then “one good trade”. It reminds me of FuturesTrader71’s message that we should not trade for money, but rather “to trade well”.
I did a lot of self-examination and I realize that I often take trades that are not that great. Or I focus on too many things. Or I focus on things other than the market. Now I’ve learned that I really need to be focus on finding “one good trade” and then just keep repeating it. If I lose money that’s ok as long as it was a good trade.
The other thing I learned about myself is that I’m not working hard enough. I’ve been taking advantage of the European lunch time to do other things. I work 2.5 hours in the morning, then 3 hours in the afternoon (US morning session) and then 1.5 hours in the evening (US afternoon). That makes about 7 hours. It was nice for me to “only” work 7 hours because I’ve been putting in mega-hours over the past 3 years. But I realize by reading the book that my competition is working more than me. He talks about how they arrive at 7:45am (NY time). that’s over 90 minutes before the markets open. And they stay past 6pm which is 2 hours after the close. They have a saying “the day’s not over until the closing bell rings”.
So I decided I need to work more. If there are no trading opportunities during the European lunch then I can go over my trades. Do my ES homework. Study previous days. Work on my trading plan. Read a trading book. There’s lots of work to do. I do think it’s good to take an hour off to exercise or play piano or get some groceries, but my “hour off” turned into 2 hours and then 3. So I’m going to crack the whip a bit. I do need to be better prepared, especially now that I’m following a few other markets in addition to Bund & ES. The SMB guys trade stocks and that requires more time because they have to find the “stocks in play”.
I’ve asked myself if I should apply to a prop firm. I’m not sure if there are a lot in Paris and I don’t want to move to London or New York. One one hand I’d learn a lot in a team environment. On the other it’d mean very long days (commutes to Paris are 30-45 minutes each way) and less time away from the family. With two young kids I’m opting for making it on my own. But if I had it to do all over again I would have started my trading by applying to prop firms.
So that’s several things I’ve learned about myself so far and I’m only halfway through the book. I think every trader can benefit from this book, and the SMB Blog is very good too.