The Trader Meetup Dilemma (Part 4)

Internal ego conflict could be a main reason why I have a difficult time resolving the dilemma of organizing a trader Meetup. While I outwardly say ego has no place in trading and outwardly refuse to associate with egotistical traders, perhaps deep inside I view myself as one of the same.

Let’s review why I might balk at organizing a free trader Meetup and being fully transparent about the totality of my strategy and experience.

One reason to hold back could be inflated ego. If I am arrogant then I may erroneously view personal knowledge as uniquely mine and therefore highly valuable. I may be willing to share—for the right price—but I would otherwise look to keep it secret. I generally do not believe any new ideas really exist when it comes to investing, which would make this is an ego issue. Holding back would therefore reflect an inflated view of myself.

Another reason to hold back could be because I am actually special. Everyone has access to the strategies I implement but I have survived 10+ years as a full-time trader with no other source of income. With hopes of collaboration, I have looked high and low for other full-time retail traders and have found hardly any. This suggests that I am unique. If I have succeeded where others have failed then I truly do have something of value and I would be selling myself short in giving it away for free. This is about capitalism, not ego.

Another reason to hold back is because too much transparency can be irresponsible. I’m sure many compliance firms would agree. Holding back may therefore be good business sense rather than anything related to ego.

As discussed here and here, SOP is to hold back when it comes to “proprietary information.” Although I have seen strong ego to be common among traders, I do not think this completely explains the SOP because I believe some successful (i.e. special and unique) retail traders do exist and I certainly believe the industry as a whole is successful (mostly due to raising assets). Again, a reliable money-making strategy is to be sold rather than given away. That is capitalism, not egoism.

The source of my reluctance will determine my future course of action. If my reluctance is a matter of ego then perhaps I should seek psychotherapy. If my reluctance is based on other reasons then I need to look further into what I can do (if anything) short of organizing a completely free Meetup.

I must side with the latter because I have laid out three good reasons to hold back that are unrelated to trader ego.

At least for the time being, I will consider this matter resolved.

The Trader Meetup Dilemma (Part 3)

Ego aside, should I be willing to be completely transparent with regard to trading strategy if my historical performance has been enviable? Perhaps concern about others “stealing” my approach is arrogant and inconsistent with a humble (i.e. egoless) belief that I am nothing special. I think I have to accept the fact that I am something special, though. Furthermore, the line seems mighty fine between offering too much information just to stave off any possibility of ego involvement and giving away the house with reckless abandon. In December 2017, a financial advisor who I very much respect expressed concern over other advisors stealing my “secret sauce” were I to seek employment as a portfolio manager.

I also think something is to be said for standard of practice (SOP) as it relates to transparency. In this industry that is all about the money, the SOP is clearly not to disclose “trade secrets” without collecting some of the money. Compensation may take the form of a management (and/or performance in the case of hedge funds) fee, hourly consultation fee, subscription fee for trader education/investment newsletters, cost to purchase a black box system, or even a per-Meetup fee were I to organize.

As I have discussed extensively, unwillingness to disclose verified performance seems to be SOP among a large segment of the financial industry. I would be more willing to share performance details with those not under suspicion of ulterior motives. This requires an advanced degree of trust and would be more characteristic of a small, more intimate group of retail traders than a Meetup composed of tens to hundreds of people—some of whom may participate and most of whom are strangers.

While SOP therefore validates the extent to which I hold back, I don’t necessarily want to be like all the others. I break the mold with what I trade. I break the mold with my longevity as a trader. I do but I don’t want to break the mold with regard to performance disclosure (I am now seeing the other side of this blog mini-series and will expound at a later date). I want to be different but if I break the mold by disclosing everything to everybody then is it not possible Edge may be depleted? This would indeed be “reckless” and although an unlikely consequence, such is my fear.

Maybe this is more about fear and paranoia than it is about ego involvement. Either way, I’m not convinced it is a bad thing and either way, I think you are getting a good sense of the motivation and reluctance that constitutes my dilemma.

The Trader Meetup Dilemma (Part 2)

Continuing from Part 1, I wonder whether I would have any compunctions about organizing a Meetup at personal expense and freely sharing everything I have learned were I to have no ego involvement whatsoever. I do think this is setting the bar pretty high. Even the organizer of the most successful options trading Meetup I know does not do this. Big kudos to him for donating extensive personal time organizing meetings, finding speakers, communicating with members, and maintaining the website content. He has built an automated backtester that he does not share with others, however. He also shares few details about his own strategies. I know he has a separate, full-time job, which I would assume may limit the scope of his trading.

In spite of the fact that my strategy is hardly unique,* I certainly have reservations about sharing the specific details. This also manifests as reluctance to approach financial advisers in hopes of forming some sort of partnership or gaining employment. Short of an audited track record, which I do not have, one thing I believe would be expected is full disclosure of my trading strategy. I worry that such transparency would allow them to bypass me and simply trade it themselves regardless of how reckless that may be due to the lack of my extensive trading and backtesting experience (it’s one thing to see it on paper and quite another to manage the drawdowns accordingly when they occur).

I am also hesitant to disclose trading performance to others partly because in most cases, I do not think people should believe such claims anyway. I regard performance claims offered by random individuals as being different from those offered by registered investment advisors and other entities that likely pay hefty annual fees for compliance.

I hesitate to organize a trader Meetup because I am not convinced sharing everything that I have learned should be free. I have written about this here in addition to the “Giving Back” mini-series. Because I have paid dearly for the lessons I have learned (catastrophic losses included), why should others get my lessons for free? I debate whether these are legitimate reasons to reject the possibility of organizing or simply rationalization to cover up repressed ego.

I will continue next time.

* What may be unique is the way I implement this strategy or the fact that I implement it at all.

The Trader Meetup Dilemma (Part 1)

I spent most of the previous post talking about trading groups. I now want to go into more detail about what holds me back from starting one.

Let me first distinguish between trading groups and trading Meetups. While much of my content will also pertain to general trading groups, the idea I have been entertaining is starting a group (hereafter referred to as “Meetups”) on the Meetup.com website. This is purely for advertising/exposure reasons. I have been to trader Meetups before and I have written about them in this blog (e.g. here). I know Meetup offers the potential to connect with others of like interests. I do not know whether enough people with a serious enough trading interest exist in the Metro Detroit area but if they do then I can’t think of any better way to find them than through Meetup.com.

When trying to explain my dilemma about starting (“organizing” in Meetup jargon) a trading Meetup, one word that comes to mind is “roadblock.” I sometimes feel that everywhere I turn in the financial services industry a roadblock awaits to greet me. I blogged on this with regard to wealth management here. I also mentioned roadblocks here. I will also mention roadblocks later with regard to implementing new trading strategies.

I have a difficult time explaining why I struggle with the idea of organizing a trader Meetup. On many occasions I have written about bits and pieces of this difficulty. It might be easier to just give links to a bunch of posts, but that would probably leave you fishing for the key morsels among a huge brain dump of ideas.

Under investigation will be the possibility that at least part of my challenge surrounding the trader Meetup idea relates to ego. I firmly believe that ego and trading do not mix, and I could provide several links where I have discussed my disdain for those who boast about performance or trading expertise. I am always on the lookout for underlying motives when I see such hubris. Indeed, one ingredient I consider integral to whatever trading success I have had is avoidance of the lofty sales pitch. No matter how experienced the trader, I rarely think certainty has any legitimate place (Bill Miller, anyone?).

I will continue next time.