On Don Bright & his trading methods
- Thread starter Lucias
- Start date
OK, one more inaccuracy, although I can understand why. My discussions of directional trading are usually modified by "stubborn" - I have seen more traders blow up due to holding naked posiitions for either the wrong reasons, or for simply too long. Everyone takes a direction, and we show our traders that. Especially when we really push "crutch pairs trading." Use all the input you can (FV, prem, even fundamentals, etc.) to pick which side you enter first...and then, if you're right in the short term...why pair it off? Take the profit on the one sided trader, save commissions, and lock in actual profits vs. theoretical profits. We did the same thing on the options floor for years, if we could by calls or puts back for a good scalp, we wouldn't bother putting on the (possibly) more lucrative, theoretical spread.
FWIW,
Don
FWIW,
Don
Don, one could say this about anything. Take a position....if it shows a profit, take it off. Don, I have not been in this business as long as you have, but it's my understanding, at least here in Chicago, the majority of spectacular blowouts have been from guys in spread trades, not directional. Especially yield curve trades. There was a time for years here where prop firms were doing massive size in mean reversion stat correlation crap and everyone was on the same side of the market. When the curve would blow out, due to the massive size these guys had on, firms could get destroyed. The funny thing is of course they were just trying to make a few ticks, hence the reason they had huge size on. Usually, directional guys trade much smaller and are more nimble.
Now retail traders I would agree with you. I know many guys who are dogmatic in their directional views and they will refuse to cover a loss and will blow out their accounts. But that is in the retail world. In the professional world that is much less common.
As a side note Don, most the guys that have blown out at option firms for that matter are market neutral guys, not directional guys. The problem with being "hedged" or "neutral" or whatever buzz word you want to use, is it causes traders to let their guard down as they think they are "safe and hedged". It also causes one to trade bigger then perhaps they should because they are "hedged". Anyway, just wanted to take a few minutes to disagree with you. It's part of my daily diet you know. LOL. Also, your doctors said it was OK for me to throw some light punches now.
My only response is that teaching traders to enter a position at the right time (at least a "good" time) is obviously important...and having an offsetting position, as a fall back.... a "pair" if you will....is another reason to feel comfortable taking the trader, again, same thing as in options. If I could buy Dec 30's cheap, in the "book" - then I was happy to sell Sep 30's all day long...either buy them back, or spread them off.
Remember, you and I think all this is just common sense, many are unfamiliar with the overall markets.
All the best,
Don
Remember, you and I think all this is just common sense, many are unfamiliar with the overall markets.
All the best,
Don
Yeah Don I get that many people are "unfamiliar" with the markets and those people should be no where near a market. Although I guess I should be happy they are unloading their life savings to us traders who actually are "familiar" with it, but still do you think as a prop firm you should be letting those guys trade?
This is a tough job Don, this is war. You were in the marines. When your drill sergeant told you some men don't come home from war, they were being serious. It was real. Just as the losses are real for those guys at Bright Trading who are not very "familiar" with markets. Don, you need to BE that drill sergeant.
Thank you for understanding that, Mav....so few do.
Long ago, I could have just said (when being "bashed" or whatever, as a firm)...that it compared to a guy getting a loan from a bank to start a restaurant...going broke with the restuarant, and then blaming the bank for loaning him the money, LOL. We really do try to be more than just a bank or whatever, and I guess I kind of like it that way.
And, yes, I have "persuaded" many to simply not trader...some just will never get it...but, I have bees surprised at times.
Go make some money my friend...
Don (Semper Fi 1969-1975.... not sent overseas, but proud to have served with many who did. ).
One more inaccuracy? The fact is you do not like directional trading.. that's your choice . sure.. why not a pairs trade . a lower risk for the trader & higher commission dollars for your firm. win/win right. not logical for most experienced traders that have differrent styles & are capable of picking the direction of a stock based on their skillset is my point. your firm frowns upon about what you call naked positions. most firms can care less about what approach a trader uses as long as they manage risk .. trade all you want . the way you want . & keep your account positive is the way it works . most experienced traders don't need or want to be babysitted on how they should trade considering they have risk capital in their account . skin in the game. a misconception that many people think. traders do not work for the firm but rather have a trading relationship with the prop firm to have access to the marketplace. plain & simple. those that can't trade usually teach in this business.
Our traders keep naked positions, many for too long as I mentioned. The "babysitting" part is simple risk control for both them and the Firm. Just last week really wanted to keep a naked long RIMM position, way in excess of the normal 5 or 10 times equity...we had him cut it back, he has been thanking us....sure, we monitor risk...and, sometimes we simply ask the trader to simply bring the position back into a fair parameter. I don't see the problem with that. As far as pairs and more commish, check what I wrote above...I would prefer they take the profits and save commish...we prefer they be here for decades, ..... many have been with us nearly 18 years now..... anyway, I understand what you're saying..and as long as their "skin in the game" is reasonable, then we are fine with that. We actually understand that traders with no "skin" - seem to trade much differently.
Don
i was referring to daytrading strictly for directional trading. holding overnight positions, smart idea to hedge yourself to control risk. logical approach that many don't bother to consider i guess. BY the way i am glad your feeling better. your back in the game again on et at least sharing your views. many ways to skin a cat. let's keep the ass kissing down to a minimum ok guys .. lol..
Hey...how about a trading question. How did (or "is" due to follow up), the Russell Imbalance play this year? Curious as to how others play it... nice to talk trading in itself...I enjoy that.... how did you guys do?
Don
Don