How to Keep Your Day Trading Career w/Jason Berry

Can you show my screen?

Hi everybody, thanks for tuning in. I wanted to share with you guys some of my experience over the years. I want to share a few stories, but mostly I just wanted to — there was a big Q&A the last time I was talking, and so I really want to entertain a lot of questions and answers on this session. But to kick things off, I'll give you a little bit of background about my trading experience and my trading career. Try to view funny stories from the floor, because that's where all the crazy stories happen — that's when the crazy stories happen — non-electronic trading, trading floors, but definitely on the open outcry floors. And then on top of that, the two opportunities that people have to get into this profession or continue the profession that I work with: Positive Equity, a professional trading floor, and Trader Doc, a simulation environment that simulates our trading floor and gets people who qualify through a similar training program to trade live on the Positive Equity trading floor. But my history is — well, first of all, I'll get into my history piece. Feel free to fire questions in; try to keep tabs on the question bar and answer them as they come through, so don't be shy.

So I started my trading career in 1999. Originally I traded over the phone — I would call in orders between midnight and 10:00 a.m. from an office in Florida, and I would call the Chicago trading floors and ask them to put orders through. I was a one-lot trader, and nobody really wanted to receive my phone call. So it was fun pestering the guys on the other end. But again, the guy who was working was also working the midnight shift, so he wasn't somebody to be picky on whose customers were calling him. I would get to work at around 1:30 and trade the European open and the US open, and at night I'd go home and crash. That was a 2:00 a.m. shift until about 10:00, sometimes a little earlier, sometimes a little later. After that, I moved to London where I was a clerk on the trading floor at the London International Financial Futures and Options Exchange in Cannon Street. I was a clerk for six months for an open outcry trader and traded in the short-term interest rates — the Swiss, the German mark — this is all before the Euro came around, and then eventually the Euro.

From the floor I went on to electronic trading. People wanted to go to Ireland and start an electronic trading business there, so I went there and then basically spent the next 13 years working at two different firms and starting my own proprietary trading firm with partners and a bunch of trader students in Dublin. And since Dublin, I've also been — six years ago moved to Croatia where we've got a small trading floor behind me and continue to operate the two offices in Dublin and Croatia. So my experience is both running a firm and training people, but primarily from your guys' perspective and interest is actually trading in the financial futures markets for the past — it's almost embarrassing to say — 20 years. It goes by quickly. There's been big years, there's been small years. I would like to say there were no negative years, but I can't remember. I think 2004 might have been a rough year. Gangbuster years were, unfortunately, or the mixed emotions of September 11th — the shock of watching the airplanes hit the buildings and the Pentagon, and all the chaos that came from that, the emotional mess of that day, mixed with it being one of the busiest days I've ever seen in my career, and most successful to that point.

It seems all the bad times are when traders tend to do the best. So the recession in 2008-2009 was incredibly good. The bombing in London on July 7th, 2005 was a crazy day. And most recently, probably the most insane open of my career — not from my own trading, but just from watching the markets — would have been the two days: first off, the day after the Brexit vote took place, and the day after Trump got elected. Or at least those mornings — well, I'd say Trump was about a third of the craziness and the volatility, and Brexit the day after, Brexit was just insane. Markets moved more than I'd ever seen move before.

But most of the crazy stories happen on the floor, and I said I'd share a few of those stories. None of them are very high ground. The traders on the floor, if they weren't trading, most from East London, had more or less only high school degrees — some had college degrees, but quite a few would just come straight from high school, would clerk, and then would trade for a trader, or work for a trader as a clerk, and then make their own. Hopefully find somebody to back them. So a lot of the funny stuff that happened on the floor would always happen to the new person. And since that was only six months, a lot of these stories actually happened to me. The classic one is a high school trick: when you're in the pit, somebody comes up behind you and says, 'Oh hey, welcome to the pit,' and you think they're patting you on the back, but actually they're sticking a 'kick me' sign on your back, or some other sign that makes people throw stuff at you for the rest of the day, and you wonder why people throw stuff at you the rest of the day.

But the worst was somebody came up behind me early in the morning, and we all wore suits back then, and I had — evidently unbeknownst to me, you only wear black or navy blue suits in the City in London, and I had this black and white horrible double-breasted thing that I'm embarrassed about. But anyways, it was my first job out of college. And somebody taped a tampon to my back and had written on it with red pen, and I carried that around on my back for most of the day. That was really pleasant. Thanks guys, great experience on the floor. I couldn't wait to leave the floor. I'd go trade electronically at the end of 1999, 2000. Most of the electronic trading — most of the old floors started to either slow down or the volume started shifting from the floor to the electronic trading environment. That was my cue.

Before I left Dublin, I worked for a company called Griffin Trading that was right in the City in London, and they were taking traders from the floor onto the screens. And wrestling with that experience — a lot of people would come from the floors and be fifty-lot or hundred-lot traders using bones, and they would expect to be a fifty or hundred-lot trader on the screens. So this transition from old-school trading to new-school trading happens throughout the electronic trading environment as well. But this was probably the biggest shift in most traders' careers, or a generation, or a lifetime — that you go from open outcry to an electronic trading environment. And that change pretty much cleared out, I'd say, about 90% of traders. The people that survived moved on to the electronic trading place, and that process continues every year where the markets either get faster or more complicated or more difficult, and the people that were making money last year, the year before, five years ago, ten years ago struggle to maintain their advantage and abilities in the market and wrestle with that process.

So when I was on the floor and moving to the screens, I would see people who were fifty-lot traders, hundred-lot traders, and they're like, 'I'm going to trade fifties and hundreds on the screens.' But trading on the screens has no preference — you don't get any preferential treatment. On the floor, if you have a good buddy who's a broker, the broker says, 'Hey, here's a nice trade,' and you take them out for a beer after work. But on the screens, you're anonymous. And these guys, a lot of people really struggled. So if you came in every day and you were trading fifties, you were blowing through cash, you didn't last very long.

So I'd say my biggest and first lesson — and I'm using the floor-to-electronic trading platform as a very clear and stark example — is that when you're struggling in the market, do not stay on the same size that you've been trading previously. And one of the secrets to my — not really a secret — one of the lessons or takeaways from my career is that I've never been embarrassed to go back down to trading one-lots. And most recently, in the last ten years or so, you can trade on simulation. So there are markets that I still, when I start trading them or trade them again or am trading badly, I'll go on and trade one-lots, or I'll trade them on simulation. And there's nothing wrong with that. People who struggle with swallowing their ego, or swallowing their experience, whatever it is — unable to be humble about making that transition or making that change, or doing the right thing of reducing your size — makes it very difficult for them to stay in a career when they're losing money.

So probably one of the biggest things that has kept me in this career for as long as I have been — embarrassingly 20 years — is being able to go down to one-lots, to trade in small size, because it keeps you alive when you're trading that way. And then once you're trading well again and you've picked up the edge, you can pick up the size. Most recently, in a market this year that I've been trading for four or five years and haven't had great edge in, I found some really good edge. And over the last year, I'd say my max position was thirty lots or forty lots. I found some edge in January and I increased that up to fifties for a couple of weeks. The edge continued, I increased it up to seventies, and now I've got a hundred lots and I'm double-clicking and getting two hundred and three hundred lot positions. And that goes from what I was trading in January of just thirty lots. So there's no excuse for going down to small size, because you can always ramp it up when you're trading well. And it's really important that you increase size when you've found an edge, because those edges don't stay around for a long time — it'll eventually get figured out by the market and it won't work as well.

So second lesson: be able to increase size massively when you find an advantage in the market that you can count on.

One of the other stories from the pit — and again, I'm using these stories from the pit to the screens because it's such a clear example of how to stay relevant — is about innovation and coming up with creative ideas to keep you in this job and in this career. And one of these is technology. Probably the biggest change and the biggest skill that's most advantageous for traders nowadays, or ability to work with that skill, is being able to program. Back on the floor, there was a trader who was super successful. And on the floor, you didn't have screens in front of you — when I sit at my desk, I've got six screens and I'm looking at markets all across the world. Back then, when you were on the floor, you would have only the markets that were on your floor, and then you would have the US markets but you'd have them up on tickers across the top of the exchange floor. So people would watch the tickers, but there's a delay from when it happens in the pit in Chicago. So where I was, we were watching the US 10-year and the S&P, and there's a delay between when something happens in Chicago, somebody types it into the ticker technology, sends it across to London.

And one of the traders — and this is the point about staying relevant: in this profession, you need to embrace technology and innovation and do new things that other people are not doing. This trader had — and it sounds super simple today, but back then he was a genius — he would place an international phone call, a dollar a minute or two dollars a minute, when phone calls were super expensive. He had a little earpiece and he put it into his ear, and he would listen. He had a friend who — and this is just when mobile phones were starting to take off in the late 90s — he had a friend who was in the pit in Chicago, and he would listen to the shouts and screams through the phone. Not of his friend, but of the actual pit. The guy actually didn't say anything, or every once in a while he would say something, but he listened to the pit.

So the third advantage, or the third thing you want to do to stay relevant in this career, is innovate — new ways to do things, new ways to find edge. You don't get obvious ones like that anymore, but there are still a few ways to innovate and find new things. One of the biggest is definitely programming — the ability to be either a programmer or to work with programmers, because programs can execute five, ten, fifteen, twenty, as many different things in a second, whereas an individual trader can only click a few times every second. So being able to build automated and semi-automated programs, or use automated/semi-automated software to trade, is an essential part of being a successful trader today. Any questions so far? I do see something — I'll take a little break here. Let's see if I can get my — yeah, I can see one, but I can't fully see the question. You might have a technical question here. Oh, Jerry got expanded now, got it. Good to go. Okay, just read through the questions here so you can pick up some good ones.

What languages do you use? C++ is the one that immediately jumps out. There are a couple other ones out there: C#. The main ones really — VBA is useful for manipulating Excel better, but C++, C#, C++. Questions have come in — no typing guys, no taking up the lot.

All right, can you please define what a trade you can count on is — from Andrew. What is the one thing you see that makes you think, 'This is a winner'? So the difference between trading and gambling is that — maybe not the difference, but one of the things about trading is that from observation — and this is, let's call this the fourth piece of advice of staying relevant over the long term — is staring at the screens and watching your market and intimately watching your markets. I don't mean just sitting at your desk and checking your phone and looking up and taking a look at the screens and see what's going on. I need to shut down my own screens here because I keep looking over out of habit. All right. So staring at the screens — and this is a tough skill because it requires patience and dedication — but your ability to watch the screens and notice what's going on in the markets, see patterns, see how market order flow is moving, see how stuff is trading, is probably one of the number one ways to discover edge and to become intimate and understand the markets.

And it's very difficult. Our training program is, let's say, on the basic side, a two-year process of developing edge and advantage in the market. The first three months is just training — you don't like going back to school — and then it's on simulation for nine months to a year. And on that simulation, the trainee's job is to stare at the market at specific times of the day, or all day, or at times where they think there's opportunity, and to religiously watch the market and learn and write down notes. So the question is: how do you know when you find a trade that you can count on? You should, through observation, be able to discover order flow trends, volume indicators — and I don't mean technical indicators, I mean you should be able to see volume trading. You can tell when the S&P is about to go, it's going somewhere, because they're trading through every big — bang bang bang bang — whereas on slow days it's different. But when that thing feeds up into fifty or so, you know it's going somewhere, and you can count on those trends. So without getting into specific edge, observation and looking at your market teaches you when there's a trade on that you can count on, and you go after it.

Besides, Adam Novak, you've got a lot of questions about Trader Doc. I love them. Probably the best answer I've got for you is to contact the guys at Trader Doc and the gangs, or all those ones, and for sure there's a chat that you can message them.

Are you saying that discretionary point-and-click traders will die out? Now that's a tough question. That is a tough question. But markets are always going to go up and down, and there are always going to be people who started ten years ago and who are going to struggle to be relevant two years later or four years later, or whatever it is. People who start today are going to work really hard, build up an edge, but then a lot of people — and this is probably one of the other reasons that I've been successful for so long — a lot of people struggle through the process of developing edge, work really hard, work harder than they've ever worked before, do the two years, three years, four years of developing edge, and then they stop. And they expect that past one year, two years, three years, four years to carry them on for the rest of their career. Whereas the people that are able to say, 'I'm no better than a trainee, no worse than a trainee, I know that I need to be in trainee mindset all the time' — in terms of knowing that anything I develop today possibly will disappear tomorrow, in a week's time, in ten weeks' time, in a year's time, in two years' time — I know for certain that stuff that works today will not work at some point in my career in the future. So I need to be consistently developing new strategies, new markets, and new technology that helps me stay relevant.

Anybody that forgets that or doesn't do it on a regular basis is definitely going to be a point-and-click trader that just doesn't make it. Will point-and-click traders die out? No. The markets are always going to go up and down, but they are going to change, and they're going to change in a way to make it ever more difficult. And the people that are able to adapt to that continue to be successful. Now that said, the point-and-click training career has — I don't say it's become more difficult — but the overall trend of the total number of traders that are in the profession is definitely down. There are lots of traders that trade different ways than what was available years ago. There's algo traders now, there's programming traders, there's semi-automated, there's automated trading. There are more automated ways to trade nowadays and more creative ways to trade that point-and-click traders don't do. But that also means there's other opportunities for people to take advantage of algorithms that don't trade properly.

Overall though, the number of proprietary trading firms, and I think the number of successful proprietary traders, is down. I know that most of the people that I started trading with aren't trading anymore. I know a good percentage of the people I've trained over the last two decades have gone on to find other careers. There are still lots that are trading.

And I think this would be another one of those lessons: if you find a good place where you're surrounded by smart people and people interested in your success, that's a place where you want to stay. I know that most of the traders that sort of hopped around from place to place trying to get an extra few percentages here or a little bit better on their round turns — most of them did not survive for the long term. But the people, when I think back, the people that stayed in one place or stayed in two places and were able to focus on their career and they're surrounded by successful people — they have been able to have a larger degree of consistency and long-term success over their careers. I wouldn't say that a lot of my success is due to having trainees around me who turned into successful traders, and our ability to work together on different trading-related projects of innovation and research. And always working with trainees reminds me of how hard I need to work in order to stay relevant in this profession. More questions.

Do I feel the role of AI will be the next big change to happen in markets? Yeah, it's definitely — I don't know if there's actual AI out there that works. The cars are really just algorithms. But if somebody figures it out, it's going to be an edge for sure.

We've got — oh, I think you know this guy, a guy named Jody saying, 'Give us some edge, Jason!' Jody, you know where to get that edge — come on over, buddy. Other plans to increase the buying power available — that's, I don't know. Back again on Trader Doc, you just reach out to the Trader Doc guys, you know how. How in general do you observe an edge? Good question. Again, it's a simple answer but a difficult thing to observe: you watch the markets at specific times during the day consistently. So if you're in the US and you're up at 8 o'clock, always watch 8 o'clock to 10 o'clock every day, or 8 to 11. And that's your first block of consistent staring at the screens. I guarantee that it will take a while to see stuff, but after a while you will start seeing things that other people just don't see. If you can have the discipline to focus and stare at the screens — I personally struggle to do more than a half an hour of extreme total focus; it's exhausting, and then I need a break, and then I come back and do another half hour. A shot at a time. So how in general do you observe an edge? It's finding a repeatable trade or event in the market that you can rely on.

You mean making the research results fit the results of the market? So take a moment to think about that. I mean, it's a classic research dilemma, in any kind of research — never mind market observations and market research — is making sure that you aren't just cherry-picking results that you want to see because you think there's a pattern there. The classic research process is: you come up with a hypothesis, you take in a bunch of data — clean data that has no bias — and you see if that hypothesis holds. And the most dangerous thing to do is if you have a hypothesis and you're fighting for that hypothesis. The job as a trader or as a researcher is not to fight for a hypothesis, but it's actually to let the data do the talking. And a lot of people think they come up with a good idea and they fight for that idea, whereas you really need to be coming up with the idea and then letting the data tell you whether you're right or wrong. And a lot of — I think it's an ego problem a lot of times with people — is that they think that the idea is their idea, and if that idea fails, then they fail. Whereas you really need to look at it in terms of: it's just data. The market doesn't care, nobody else cares. You just need to let the data do the talking.

And over the years, that is probably one of the number one things that I've seen for people that are looking at data in order to put trades on. Past success does not indicate future success. So I guess that'll be my thoughts. Does that ring a bell? Does that make sense? No? Yeah, that's good, perfect. Thank you. Let me check out some questions here, let me see if I missed anything. On my notes I'll talk a little bit about some of the old-school traders that I've seen. There's some interesting stories. Probably the craziest one — one of my trainees to become successful was a Chicago guy, and this was before spoofing was a crime. This guy was a EuroStoxx trader and he was trading bigger and bigger EuroStoxx and was manipulating or moving orders around to execute trades in the market, and effectively was spoofing. And this guy did that, moving the markets around 1,000, 2,000, 3,000 lots when the bid-offer was, say, 300-400 lots, and making millions.

Either once it became a law to stop doing it, or the way that he traded and spoofed the market — people started calling him on it. As soon as he figured out that he was getting called on a lot of moves, he just stopped and ended his career. And ended his career with a huge bank account and decided to only do other stuff. So his edge lasted, let's say, for three or four years, and he made a ton of money off the edge. And he just called it a day once that edge ended — figured, 'I made enough, I'm getting out of the game.' Maybe like a mercenary who got the last job done, made a bunch of money, and then just brought out another.

There was a trainee of mine who was not successful, who actually couldn't cut losers. When he was working for us in Chicago, we had to let him go. We gave him a whole bunch of warnings: 'You gotta stop not cutting your losers, you gotta cut your losers, otherwise it's not a career anyway.' So we did let him go. And then a week later, two weeks later, I heard that he made like two or three thousand bucks in a day at this other trading firm. I was like, 'Did I let this guy go? Did I not see something?' Then a couple days later, another rumor came back saying this guy made another three or four grand, you know, like every day for a couple of weeks. And then another week later, this guy's making like ten grand a day. And then finally the last story I heard was that he was down 250 grand, was spoofing with a thousand lots in the Nasdaq and had been caught on a thousand, two thousand, three thousand lots in the Nasdaq. There was a whole bunch of tapes outside the trading firm. The lady at the front was struggling to get out of the position, and the guy lost 150 grand or 50 grand — I don't know, I lose track.

All right, let's see some more questions. One guy's asking if by finding edge do you mean arbitrage opportunities? No — I mean edge is an advantage at a specific time where you have an advantage over other people in the market, either through your own observation or through some technology or through a spreadsheet or through something you've observed in the market. And that edge usually only lasts for a certain amount of time during an individual day, and it also only lasts for a certain amount of time over the space of a long-term period. So something that you observe in the market is not going to be available in the market forever — an edge that you find in markets might be available for, you know, forever. So is edge arbitrage? Arbitrage is a type of edge. It's difficult in an electronic trading world — it's exceptionally difficult, because any real arbitrage is instantly smashed out by fast-moving computer programs.

Okay, how do you find your edge, and is there a clear boundary between finding an edge, seeking for alpha, and insider trading? Alpha is the result of good edge. A simple edge could be just simply wait around for a trend to establish itself in the market, and then for you to get in. And if it keeps going, you stay in, and you stay in for X number of ticks, or until the trend nets, or if it reverses a certain number. And that can require you to sit there and patiently wait for a trend — wait all day, wait all day — but oh yeah, there's my trend, I'm in. And you have to define: how many periods do you wait of the trend going before you get in? And then for how many periods after the trend is ending, or it looks like it could end, or has ended, do you get out? So what's the boundary between edge and insider trading? Well, insider trading is illegal, and edge is the thing that you want. Yes, inside information is a huge edge, but in the futures market it doesn't really exist — unless you're getting order flow from a broker or somebody telling you client records. But again, that's illegal. So no, edge is not insider trading.

Comment here — maybe not a question: you are essentially describing knowing when a poker game becomes soft. Exactly like that, yeah. The one edge in playing blackjack is the ability to count cards. I don't think they like count cards anymore — they can throw you out if they find you counting them. But yeah, edge is knowing when the odds are in your favor. And there are plenty of times when I think the odds are in my favor — I think my edge is kicking. Just today I had a trade where I was like, 'Boom, I see my trade,' got in with a hundred lot, and it quickly didn't go my way. I got lucky and I scratched it, but the opportunity disappeared immediately. So edge is like knowing when in poker you have the advantage, and that is what it is — knowing you have the advantage at what point during the day, and how long it's going to last, or if it's just a moment. And that's your edge, and you're in, and you see where it goes. The same guy says, 'The S&P is always going somewhere.' It's true — there's time when it's always going somewhere, and it's really going somewhere.

There's another comment: is the commonality with certain discretionary traders to exploit inefficiencies with computers? Yes, I see computers screwing up not every day, but frequently enough — or programs that are just badly programmed that I can take advantage of. Yeah, absolutely.

Okay, I'm not sure I understand this question, but I'll go with it and interpret it how I think: how much time do traders give themselves generally at your firm to determine when a regime change has truly occurred versus temporary aberrations? So I'm going to take that as: when does your edge change, when you no longer think it holds? A lot of that comes from your — and this will be another big lesson, you can write this down: how do I stay relevant for the long term? You need to analyze your trades, and you need to analyze your trades religiously in a spreadsheet, so that you can track the performance of individual strategies and opportunities. So say you trade the open of the S&P, and say you trade the S&P overnight — you need to keep track of two sets of data: one, your performance of the open of the S&P, and the other one, your performance of trading the S&P overnight. And you collect data for one week, two weeks, three weeks, ten weeks, whatever number of months, and then you look at your data. Now, if you're in the collecting-the-data mode because you're not sure of your abilities to make money at those periods, you should probably be doing it on sim and collecting the data on sim to see where your success is coming from or where your losses are coming from. But you do that through analysis.

Last night — because I just saw that the guy who asked this question has left — but how long do you sit around and throw money at something? I don't sit around very long. You can see the edge is working or it's not working. And if it stopped working, I'd say for me, three days — if it's three specific opportunities — and then I'm sitting back and I'm getting a little more hesitant. But again, it's going to be different for everybody. But the real secret is to use the analysis to tell you whether it's working. On Positive Equity, do we provide programming training for trainees? We do for some — not everybody takes to it. It used to be core; some people don't do it as much anymore, but it's definitely an advantage and we encourage people to do it. Being able to program is a big advantage, but being able to program doesn't guarantee that you're going to become a successful trader. But if you've got all the other attributes to become a successful trader, being able to program is going to help you do that much better.

Okay, one guy says — this could be a silly question, Andrew — there are no silly questions, but: so long as you hold the security, do you close out all of your trades at the end of the day? I would say most of my outright positions are closed at the end of the day, except for maybe some long-term calls on stocks, or I held British pound for a very long time after Brexit, mostly because it was underwater so much. But most of our positions are closed at the end of day, or when they're hedged with some other instruments so that I don't have any outright exposure, because markets really do move overnight.

Okay, here's an excellent question — who also left: why do successful traders who work in prop firms and who leave to work independently fail? Is it primarily risk management? So some of the things I've already alluded to a little bit. One of them is: when you're on your own, you don't have smart people around you, and having smart people around you is just a better scenario to be in. Not everybody fails when they go out, but it's too big a percentage to take the risk. You always want to be surrounded by other smart people. People on their own may not have risk management professionals watching them, and so they need to manage risk themselves — and most people can't do that. Not having smart people around you, and then not having people to inspire — I guess that could be part of the smart people around you. And for me, having trainees around me — trainees around you just show you all the things that you need to do, both in terms of risk management and in terms of innovation, and working to stay relevant, and working hard. You can think you're the big shot when you're on your own and you don't realize the level of work that you need to be doing. You can also have a huge day and think that you were awesome, but in reality you probably should have made two, three, four times that — and if you had people around you, you can see what a good day is compared to what you think a good day is.

Do you normally use C++ for live execution and C#? Yes. VBA is for Excel. We don't do trades ourselves. Can I make it as a remote trader? The odds are against you. It's always better to be working with a firm that helps you with edge and provides edge and has got trading ideas that they will share with you when you work with them. But there's a price to pay for that, and that is you share profits. Is it possible to win in the market on the long run? Again, I've been doing this for 20 years. You're only as good as your last trade, but knock on wood, I'll have as many more years as I wish to be in the profession. What would be the best way to apply directly to PE? Just go to the website. Does Positive Equity offer internships in Croatia? I'm not going to answer too many of these directly because they're all about Positive Equity.

How do you suggest individual retail traders find community, and is that essential to long-term success? Again, I think one of the real keys to cracking this and to being successful over the long term is being surrounded by other smart people. Doing this on your own is just difficult, and I will just let the numbers speak — I've had a lot of friends and colleagues who have done this job over the years, and the majority of the people that have gone out and done it on their own — that doesn't mean everybody — hasn't made it in the long term, has had to give up the job. There are a few people, and I've got a few friends that are doing this by themselves in private offices, but for the most part, people that are trading with other people — that is an exceptional advantage for long-term trader success. But everybody always thinks when they're going out on their own that 'I won't be that guy, I won't be that person.' It's like the drug dealer scenario — every teen that becomes a drug dealer always thinks, 'I'm going to make the money, I'm going to be the top guy, and I'm not going to get either arrested or shot.' But lo and behold, most drug dealers either get arrested or shot. Very few ride off into the sunset. So that's the same thing for trading — very few people think that they will be the person that doesn't make it when they go out on their own. But the numbers speak for themselves: most people, when they go out on their own, will be stepping onto a road of finite length, and it's not a matter of how — it's just a matter of how long it will take before their edge wears out and their ability wears out and they have to quit.

So trading on your own is exceptionally difficult. What's the best thing for a retail trader in terms of community? If you can find somebody that's also trading successfully — I know that a lot of guys in our office obviously work next to the people at their desk, but also have headsets. If you want to have a community and you don't want to work with a firm that has that — which I would recommend, because there's a big advantage — get yourself a headset and be on the headset with somebody on the other end. But you can only have so many people on the headsets. All right, one more batch of questions. Good questions, guys, I'll forget all of them.

Do you vary the time frames for the instruments you trade? Absolutely. What markets do you trade? For the most part — if you work with me, John, I will share that information with you. But they call it proprietary trading because the information is proprietary. But I will tell you: I trade equity index futures and bond futures. No currency. Currency is for a different guy.

So do you vary the time frame for the instruments you trade? Absolutely. Some things with low volatility just don't go very quickly or go anywhere, so you've got to have a longer time frame. And vice versa — there are certain times of the day when you hold trades for small amounts of time, and there's certain times when you need to just sit on your hands and run the winter. I think the guy in Reminiscences of a Stock Operator said it best — I made most money when I was just sitting on my hands.

Can you teach swing trading without sitting in front of the screen for hours — interested in scalping, interested in your thoughts. Okay. Can you learn how to trade without spending hours in front of the screen? Again, you might be able to, but I don't know that way. The way I was taught and the way I teach is complete immersion in the markets and complete staring at the markets and learning the markets. That old cliché of becoming one with the markets — because the longer you spend looking at the screens, the more edge you will find, the more opportunities you will find. And it's simple math, really. Who do you think is going to have a better chance at becoming successful over the long term — the person who spends two hours a day or the person who spends eight hours, ten hours, or fifteen hours a day working in the markets? It all goes down to that. I can't remember which book it's in, but the whole concept of 10,000 hours to become a professional or to become really good at something — let's say 10,000 hours is not the exact number, but it is a number of large timeframe where once you get to that 10,000 hours, you have seen a lot of other things and a lot of opportunities that somebody that's only seen, say, a thousand hours is going to learn. And the opportunities and the edge that you'll be able to find after looking at the markets for 10,000 hours — maybe 12,000 or 8,000, you get the idea — is going to be a lot more apparent to you because of all that experience. So there are no shortcuts, is the real answer.

So we're getting close to time. Let's see if we get any more questions. Okay, yeah, we're almost at the bottom of questions. Some are market-oriented, so I'm just going to pass over those. You know, if I knew the answer to some of those market-oriented questions, I'd be Brazilian Air, but I don't. There's a lot of interest and opinions.

Do you remember the biggest individual loss at PE, and which market was it? Let me think. I haven't had any really good standout. We had a trader print down maybe 140, 150, and at the end of the day it was 70 or 80. But again, it was a big loss for the trader, but it was within the neighborhood of his performance — so it was definitely smaller than his best day, though. And again, I don't answer questions about the markets because that's proprietary information.

A pretty good question here: how long would it take me to make money as a trainee? Our process is really a year and a half to two, two-and-a-half years. Some people go a little faster, some people go a little slower. Not fast enough to relieve the long end of it. It's not as fast as it used to be. I started live when I started trading — we didn't have simulation and you just went straight in. But again, the market was easier back then, slower. I think the fastest I ever saw — again, that was in 2005 — the guy was making money after six months. But I haven't seen that for many, many years. So generally the number we say is anywhere from a year and a half to two and a half years. And again, when you start making money at a year and a half, you're not making a lot, but it's really in the third year where you start shifting up gears, and this job becomes really lucrative. It's like going to school, going to college. This job — we teach you, it's a degree in trading basically. And there's a lot of reading, a lot of writing, and then there's tons of hours of simulation where you're heading towards that 10,000 hours. But the people that make it to those hours — the traders that have been with us for five, six, seven years — it's a life-changing experience. But it takes a long time to get there.

I think the quote I like to say most is: in this career, you can get rich, but you do not get rich quickly. All right. There are a few more other questions. If you guys want to send in a few more — I think that's the bottom of them. See if I get any other notes before I sign off. Yeah, no, that's it.

I guess you heard probably six or seven of those big things to stay relevant in a career. One of them is: treat yourself like a trainee and always be working hard. Be working hard on innovation and research, and don't let something that you discovered today be the thing that you hang your career on for the rest of your career. You've got to be finding new opportunities. Treat yourself and your career as a trainee. New opportunities — adjust and adopt new technologies, new markets, and new strategies. And surround yourself by other smart and successful people. Find a place where you have all those elements, and don't leave it to go out on your own. Again, there will be some people that make that, but the risk, in my mind, it just doesn't make sense to go out on your own. You should be able to find a place — there's value to being surrounded by other smart people. And then the obvious one is risk management. I didn't really throw it in there, but being tight on the risk is essential.

All right, well that's it. I can see it's three minutes to the half hour in whichever timezone you guys are in — it's three minutes to 11:30, 27 for me at night. So I hope you guys enjoyed that. Feel free to reach out on either the Trader Doc websites or the Positive Equity websites — we've got more questions about what I talked to you guys about this evening. Or on Facebook and Twitter, you can find us — Twitter, Positive Equity, and you can find me, Positive Equity on the Facebook site as well. And I'm happy to answer more questions or point you guys in the right way. And thank you to those last two — not questions, but saying thank you. You're welcome. Thanks for your time, guys, I really appreciate it.