12/17/2025 - So here's what I'm going to do at the SMB Trading Summit in March: I'm going to ask all participants to bring their best and their worst. That means that every person will review their trading in Q1 and identify what they did really well and how they did it--and they will identify what they did poorly and why it happened. Then, during my talk and during the get-togethers, I will happily meet with attendees and provide coaching re: what links the best and worst and what can supercharge their performance in the second quarter. Best of all, everyone will be able to learn from everyone else's lessons and suddenly we've created a team environment! It takes a bit of courage to lay it all out there, but no one ever achieved greatness amidst safety. Let's go for it! (And, yes, I'll bring my best and worst as well!!)
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12/16/2025 - One of the first things I recognized when I began working with truly successful traders and portfolio managers was that they viewed markets differently from others. They looked at different things, gathered different information, and came up with different trade ideas and unique combinations of trade ideas. That was my first recognition that creativity is essential to trading psychology. The successful traders were excited about the hunt for fresh information and ideas and this energized their trading.
Recognizing this, I began to hold craft beer gatherings in Connecticut and Westchester County in New York. I selected the brewers crafting the most unique beers and the sites serving the best selection of distinctive brews. (
DeCicco's stood out in that group!) Traders and money managers from different firms joined me for an exchange of ideas and a selection of amazing beers. The creativity of the brews definitely stimulated the creativity of the ideas shared and discussed. Most important of all, the outings ensured that participants were not trapped in isolation and could see new and different things and gather fresh information and perspectives. That was much better for the trading mindset than any self-help exercises!
When everyone shares, everyone goes away richer. The great enemy of trading is isolation and stale ideas and perceptions. Creativity is a team sport.
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12/15/2025 - When I first began working at large, successful hedge funds, I was surprised to learn that the top portfolio managers--ones managing hundreds of millions if not a billion or more--did not have win rates much greater than 50%. This was particularly true in macro investing, where teams sought to exploit economic patterns across asset classes and regions of the world. The reason they made money was that they were very good--and consistent--at risk management. They didn't have a large number of big losing trades, and they didn't have big losing periods. If they saw they weren't seeing things well, they were unusually quick to pull back and reassess.
But there was a second element to their success. They were quick to recognize when a good idea was becoming a good trade and pouncing on it with large size. It's not that they sized up favorite trades from the outset. It's that they tracked their initial positions and observed when price/volume was going their way (or when catalysts made the good trade even better). They then had the courage to take very large positions to exploit the opportunity--and continued to manage the risk tightly. As a result, they had a few truly large winning trades/periods during the year, many smaller wins and losses, and very few significant losers. Their profitability came from a relative handful of occasions when they had the perspective--and the courage--to take significant risk.
Years ago I met a very famous trader. He was quite generous and asked if he could help my trading. He asked me what the ratio was between the size of my largest trades and the size of my average trades. I replied, "Maybe two or three to one". He gave me a very direct look and said, "Consider ten to one". I didn't fully appreciate his mentoring at the time. But now I see it playing out with top traders at top firms. Just as important to trading psychology as controlling negative emotions is the willingness to commit to opportunity.
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12/14/2025 - Courage is not something we hear a lot about in discussions of trading psychology. To find new and different opportunity and pursue what others don't see and discuss, requires considerable courage. To refine your strategies and use your losses to persevere and improve what you do: that, too, takes courage. True entrepreneurs are courageous: they invest in their vision and accept the risks of failure. No one has ever achieved distinctive success in a "me too" mode.Indeed, what gives us the courage to take risk and harvest reward is the presence of a vision: something that grabs us with its uniqueness. When an idea feels special to us, we commit ourselves to seeing it through. A positive psychology comes from vision, not from self-control exercises.
We've seen some amazingly rotational environments in the recent stock market. What might look "choppy" when we view the broad market indexes suddenly becomes clearer when we examine price and volume action sector by sector, subsector by subsector. A trend is a directional movement of an asset. Rotation is the different directional movements of related assets. Rates traders understand this well: there are environments where central banks are in play and interest rate instruments trend, and there are environments where central banks are sitting on their hands but individual instruments will move relative to one another. A key to success for a rates portfolio manager is knowing when to trade trends and when to trade relative value.
Many, many times large institutional participants are not broadly buying stocks or selling them, but are moving money from certain parts of the market to others, from certain countries to others. Seeing the relative movement and finding opportunity in trading it requires a willingness to do something different from the crowd. It requires a unique way of structuring trades. It requires courage.
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