The best traders I know didn't study finance. They learned how to learn.
The best traders I know didn't study finance. They learned how to learn.
Dave and I broke down last week’s SMB Capital interview with Garrett, and one thread kept coming back. The best traders almost never come from finance.
Garrett was a touring musician. His dad coached an NBA player. He didn’t study quant or physics. What he had was the ability to learn how to learn, and the attitude that goes with being around top performers. That attitude is mostly about what they don’t do. They don’t blame the ref or the market maker. They don’t ask if they can do it. They figure it out.
The cover band problem stuck with me. You can copy another trader the way a band covers a song, but you hit a ceiling fast. The mean reversion and momentum phenomena are just out there in the market. Anyone can borrow them. The edge comes from putting your own spin on it, because that’s what gives you the confidence to hold through a drawdown. A copied strategy gives you nothing to fall back on when it stops working.
And it will stop working. Here’s the part most people get wrong. It doesn’t nosedive. The drawdowns just get a little more frequent, a little deeper, and you’re left with a judgment call that’s never clean. That decision is brutally hard when it’s your only strategy. It’s easy when you have ten. Any single strategy matters less when you have others to lean on.
Trading isn’t linear like the gym. You can’t put in screen time and expect a straight line up. You work the process and have faith the payoff comes later. The guy I’m thinking of at SMB is grinding on his process right now and making less than last year. He’ll come out of it. Process is the only thing you control.
17.30% max drawdown over 25 years while the S&P drew down 57%. That comes from running many systems, so no single one dying ends the business. When one goes into drawdown, members hear about it directly in The Drawdown Memo.
Free 25-Year Backtest PDF: https://www.statsedgetrading.com/the-25-year-backtest
Stats Edge Pro at $149.99/month with a 30-day money-back guarantee, or $1,499.99/year. Founding tier at $3,000/year for traders who want a 1:1 onboarding call.
— Michael Nauss, CMT, CAIA, CDMS