Wednesday, December 26, 2007

Virtual Trading Groups: Getting to the Next Level

One of the most common concerns I hear from traders is difficulty "getting to the next level". Many have a sense that they've made progress, but can't quite take that next step toward consistent, significant profitability.

A tremendous advantage of trading within a firm is that you have multiple potential role models for getting to that next level. Within trading firms, you have colleagues who can discuss ideas with you, help keep you positive and motivated during dry spells, and inspire you to greater accomplishment.

Within a firm, also, you get regular feedback on your performance, assistance with risk management, and recognition for accomplishment.

All of these things are lacking for most independent traders.

I do not trade for a firm, but my work as a trading coach/psychologist brings me in contact with many traders and trading institutions. I cannot tell you how much I've learned simply by being around experienced, skilled traders. In such environments, you cannot help but absorb some of their knowledge and wisdom.

Does one need to actually join a trading organization, however, to benefit from group interactions with other traders? The popularity of chat rooms and Web 2.0 trading communities suggests that independent traders are using the online medium to create "groupness" and some of the advantages of affiliation with other traders.

But why not carry that forward yet another step and create actual virtual trading groups? Certainly the technology is readily available (instant messaging, Twitter, online conferencing) to facilitate interactions between and among traders in real time. If a truly committed band of traders decided to openly share ideas and trades, learning from mutual successes and setbacks, the gains in performance for the whole could be far greater than anything that might be achieved in isolation.

Such virtual trading groups would not require investments of capital or added risk. The only demand would be complete and total openness with trades, trade ideas, and trading results--and a willingness to both learn and facilitate the learning of teammates.

To be sure, such groups would require the right kinds of participants: ones sufficiently experienced to offer value to others, ones sufficiently committed to putting time and effort into learning, and--perhaps most of all--ones sufficiently secure to maintain an open kimono and share all the successes, failures, lessons, and letdowns.

A while ago, I conducted real-time postings of market observations, including my own trade ideas and trades. I then hit upon the idea of offering readers the opportunity to take turns leading these sessions via the blog, so that we could all benefit from multiple role models, myself included. Between 2000 and 3000 unique visitors access TraderFeed daily. How many responses do you think I got to lead even just one trading session by posting real time comments?


Given that result, it's perhaps not so surprising that we don't see more virtual trading groups.

The most painful part of my training as a clinical psychologist was having to play tapes of my sessions for my supervisors. Every mistake, every missed opportunity was laid bare; there was no escape. In group supervision, getting a student to volunteer their tapes was torture. After initial hesitance, I pushed myself to volunteer; the worse the session, the more I forced myself to put it out there for learning.

That's what it took for me to get to the next level as a psychologist.

And that, I suspect, is why so few traders make it to that next level.


Performance and Profitability


Anatrader said...


I can see where you are coming from.

The large number of visitors/readers is generally inverse to the number of contributors at any blog, as from my own experience.

As you said, without full participation, it is hard to take the 'Virtual Trading Group' to the Next Level.

Brett Steenbarger, Ph.D. said...

Hi AnaTrader,

Actually I'm very happy with reader participation in the blog and have found it stimulating, challenging, and informative. It's when people have to share actual trade ideas, trades, and results that I notice an amazing level of insecurity among independent traders in general. The desire to keep one's ideas secret is a nice cover for that insecurity. Perhaps one advantage at a trading firm is that results are known all the time, which makes it easier to face shortcomings and learn from strengths.


Jeff Pietsch CFA, Esq said...

Thank you. - Jeff

Lasertrader said...

Dr Brett:

You are spot on with your discussion of virtual trading groups. I have been trading for several years as part of one or another virtual trading group. Each had its own personality and style of trading. I found myself moving from one community to another through friends I had met along the way as I continued to bring myself to "the next level".

Although I continue to learn and hone my skills with the goal of being the most effective trader I can be, I have found myself for the past 2 years in a Virtual Trading Group of 4 or 5 very professional traders and good friends that trade with a similar technical style to myself. We communicate through an instant messenger as well as through voice using Skype. A couple of us create an open Skype conference call and leave the call open all day long. Although we trade independently in our own private locations, we can speak to each other continuously all day long just as if we were sitting next to each other. The value of having extra sets of eyes to take a look at a trade and give you feedback before you execute it is very powerful. Additionally, the continual flow of trading ideas from other sources can bring many more opportunities and insights to you in real time.

Your comment about being open and honest is the heart of making the most of your Virtual Group. We are all trying to help each other be successful. We win together, we lose together, we share each other's frustrations, all while coaching and encouraging each other to learn from our losses and get back in the game with a positive attitude. There are no secrets in our group. We have all made some very costly mistakes at one time or another and are not afraid to be honest with the other members/friends in the group.

What I have learned from this environment is that when you can explain to another member of your group exactly why you are going to take a trade you increase your success level significantly. Also, when you are able to share both your wins and losses with the members of your group you become able to confront your mistakes and be honest to yourself about them thus becoming a more alert and better trader.


otterby said...

thanks for starts..

Brandon Wilhite said...

Dr. Brett,

I am actually part of one such group. There are three of us, and we have actually gone to the extent of pooling some capital (we're formed as a partnership) and we also have a common research program. We also have separate personal lines of R&D and we share those with each other too. I can affirm a few things 1) it's certainly possible to do this with the new technology, and 2) having other people to work with has numerous advantages. It is very hard to find the right people to do this with, but the payoff is worth it.


JMJAtlanta said...

I'd have to say I'm against sharing ideas in "public." Past examples of this can be seen all over the often childish forums of ""

To prevent such, finding a group at your same level and using your methodology is important. But how do you find such individuals when you trade in isolation?

Hmmm. Perhaps there's an opportunity to play matchmaker with Web 2.0. meets trading meets Is there such a beast? If not, perhaps someone could build one.

Bear said...

Dr. Brett,

Agreed, a virtual trading group would be beneficial to moving to the next level as a trader. I've found it challenging to find such a group and have given some thought as to why. A few random thoughts:

* I would guess many of the visitors to TraderFeed are part-time traders like myself who have yet to make it to a level where leaving the day job is a realistic option and remains a goal.

* I would in turn guess many of these traders are intermediate term traders as their trading work is done in off-hours.

* Traders willingness on most of the "subject" boards, on Yahoo for example, to open the Kimono is almost non-existent. I would guess this is a function of being in an open forum with no belief in return effort from other participants as well as noise from less than positive participants.

* Small group size without random, unknown visitors would also seem to encourage open sharing of trading ideas and experiences.

Perhaps the solution is a matching service where traders can locate other traders with similar areas of focus, experience, financial resources, etc. I for one would be more likely to open my kimono if I knew something about the other members of the group and shared similar market interests with them and knew they were employing similar financial resources.


Mike said...


Do you know of any Virtual Trading Groups for novice traders?

Lugo said...

Altough I'm a bull I agree with Bear :-) I'm a part-time trader too.

If Dr. Brett start a Virtual Trading Group I'll be there all the time I can.

If there are other Virtual Trading Groups when can join free I would love to hear.

I trade maily stock and currency futures.


Brett Steenbarger, Ph.D. said...

Thanks Bruce and Brandon for sharing your experiences re: virtual trading groups. Glad to hear some motivated traders have managed to band together and create synergies. I don't know of any such group for novices; my sense is that virtual trading groups are most appropriate for experienced traders who have much to share as well as learn.

A matching service for traders interested in affiliation is a great idea. If any traders wanted to connect through this blog, I'll be happy to post their inquiries as blog post comments, bulletin board style.



HPT said...

Hi Dr. S,
Over the last year and a half I've experienced 5-6 different real time trading chat rooms, not including the time earlier this year when you started your real time comments on the market(I did a lot of window refreshing to see what you had to say next). I found that I ended up spending too much time typing responses to other posters and making comments about what I saw in the various sectors and indices. It was more of a distraction at the time. I think an online chat room with audio via skype would be best so I don't have to take my eyes off the market and so I can get into conversations more easily with the other traders. There are some chat rooms that have a mod that is the only one that speaks, for good reason, but, for the more experienced traders it would be nice if there was an online skype community of traders. I'm going to look into starting my own skype room now that you bring this up.

Anatrader said...


After reading what your other readers have to say, may I just add one more comment?

I feel a 'virtual trading group' would be more viable with a post-mortem post rather than to chat during actual trading time, which can be distracting or irritating to some.

My thinking.

Adam said...

Brett ~

“Getting to the next level,” is something I’ve grappled with all year. Having come a long way since beginning full-time trading several years ago, this year I seem to have reached an operational (not intellectual or psychological) ceiling.

I’ve read all the usual suspects, made many beneficial mistakes, and can make Excel jump through hoops. On a risk-adjusted basis, results have improved year-over-year, each year. Despite this, I sense there’s a level of craft just out of reach over a horizon I see only dimly.

In trading, I’m an autodidact. Like all self-taught people, in some areas my knowledge is deep, in others shallow. Said another way, while I stand on the shoulders of giants, I’m short. It’s a condition made more acute by working alone, and like all self-taught people at times don’t know which questions to ask a problem to tease out a profitable answer (negative results are also important).

In other lines of business, collegial dialogue has had exponential benefit. The same could be true for others and myself in this line of work. To this end, I’ve visited trading chat rooms and forums. Labor required to weed out noise from music makes their benefit doubtful.

A virtual trading group would appear to offer a solution to my and others’ quandary, given participants’ willingness to as Bear wrote, “open the kimono.” Participants wouldn’t be peers in every aspect of the work, but each would have to have something specific to contribute to make trading knowledge worthwhile.

I agree with AnaTrader that the post-mortem aspect of a virtual trading group could yield material benefits.


Brett Steenbarger, Ph.D. said...

Hi Adam,

I think you've got it exactly right: given the right mix of people and experience, collegial interaction could yield exponential benefits. I like the Skype idea and suspect real time interaction may be more effective as learning tools than retrospective review.

And, BTW, the psychological benefits of touching others' lives, which you mentioned in a prior comment, is not a separate topic from the issue of virtual trading groups. It would be quite a group if all the participants understood that.


Anatrader said...

What a pow-wow, Brett!

This suggestion to form a 'Virtual Trading Group' opens up deep thinking which not only touches upon traders' needs but also the needs of the less fortunate, which Adam rightly pointed out.

Recently, I also commented at blog:
To maintain my State of Mind for trading, I also find time to move away by doing something totally different, such as, working on a pet benefit project which I hope to carry through. Unquote

ainkurn said...


I have thought a lot about a "virtual trading group" to facilitate the efforts of traders. Most of the traders that I have contact with in chat rooms and blogs are working alone. A few traders are working prop, but there are a lot that are "loners".

My brother and I trade together full-time shoulder to shoulder every day. We have often discussed the benefits and costs of working together and sharing ideas. A trading community would be a tricky thing. Trying to match trading styles, personalities, time-frames, instruments and goals would prove to be difficult. However, if someone could find the right combination, the community would be very beneficial.

I think that a community like this would require many different options to facilitate the needs of different traders. Having a live room where traders actually mark their entries and exits on a group chart in real-time would be highly beneficial for futures trading. Being able to see how many other traders are buying and selling contracts at different points would be highly beneficial.

cashonly said...

Hi Brett,

This article is SO correct! I manage a group of proprietary traders and have tried to put together \"virtual communication groups\" so that we can communicate with each other and share ideas. Unfortunately, each time I have met with little success. This always appears to be the sequence of events:
1. Start the group - everyone\'s excited.
2. First day - people are in the room (using conference software with audio so as not to require reading screens and moving eyes from trading screens), everyone is excited nad numerous comments are made.
3. I start things out bringing up topics. Experienced traders make comments, less experienced ask questions. Day goes well and info is exchanged.
4. Next day, same thing happens. I solicit all traders to do things like call trades, tell what they see in the market, discuss their trades, good or bad. Experienced traders still disseminating info, less experienced many just listening or asking questions with few discussing what they\'re doing/seeing.
5. Next day, not many experienced traders log on. It\'s quieter with me doing much of the talking to keep the activity up. Fewer people calling trades, telling what they see in the market sharing ideas.
6. Next day, maybe one experienced trader shows up. I\'m carrying the room. Inexperienced traders are still asking questions and still not contributing much.
7. Next day, I\'m about the only experienced trader. I\'m still soliciting other traders in the room to share, but it\'s like pulling teeth.
8. I can\'t devote my whole time to this to make it beneficial enough to those that are in the room. It needs to be a collaborative effort with all involved contributing what they can. Room closes down. Experiment fails.

The experienced traders weren\'t getting anything out of it and didn\'t feel like sharing without getting something in return, so they didn\'t hang around. The less experienced weren\'t contributing, they preferred to listen and didn\'t feel confident to discuss their trades. They never even got to actively discussing what they were seeing in the market in terms of stock action, news, etc. I ended up being about the only one providing content.

I have tried this many times over the years that I have been managing traders without any lasting success. If you or your readers have any suggestions on making it work better, I'd love to hear them!


SunshineMicha said...

I like the Virtual Trading Group concept. Here is an idea on how to find other traders with similar styles:

I recently joined the website, where you can track other investors/traders. The site also offers the opportunity to interact and find fellows with similar trading characteristics.

Brett Steenbarger, Ph.D. said...

Hi Cash,

Your comment--sad to say--is right on the mark. I think that if you assemble a group of traders of mixed experience, the results will be as you've found them. That is why I think it's important to conduct virtual trading groups with smaller groups of experienced, motivated traders who have much to bring to the table and a similar commitment to sharing and teaching. Finding the right people is 3/4 the battle!


DreamJOBZ said...

Dear Cach, I would like to contribute something for your gathering.

Dear AnaTrader,

I agree with Brett, I am willing to share, yes, I also experienced same feelings what Brett is sharing. Finally after 10 years search for the knowledge & willing to share it elevated me to certain level. But there is also kind of insecurity regarding "3 market idiots" people are too much fearful & skeptical, which sometimes irritate the senior to share with new comer. Here it requires lots of people skill too.

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Be Awesome
Raj, DreamJOBZ

JF Trader said...

I've been getting some real pearls from your book THE DAILY TRADING COACH. I've been trading for five years and have often experienced a sense of isolation. I can see the value of interacting with another to facilitate trading improvement. My wife doesn't want to hear about trading anymore.
I would like to find one or more people to interact with.
I've been day trading full-time GC,SI,DX,6E, mostly. My winning percentages are very high, but my profits are low. My weaknesses are taking profits too early, missing opportunities, and taking little risk.
I'm confident that with the help of your book, daily diligence, and intention, that I'll correct these shortcomings.
I'm putting it out there that I'd like to team up with someone to work with in furthering the process of better trading.