Episode 115 ... Adam Grimes (107:14)

Been in the markets for 20 years
Started out trading small accounts while massively over-leveraged
Day traded S&P 500 futures
Got MBA and did a lot of PhD coursework
Spent time on NY Mercantile Exchange
CIO for Waverly Advisors
Has traded everything over every time frame
"Been around the block a few times"
Appeared on Chat with Traders episode 20
Only looks at price, no fundamentals, no political factors
Trading style is now very simple
Used to have very marked-up charts, not anymore
Tries to understand momentum and volatility
Can't compete with HFT, but:
There is power in human discretion, intuition
P&L tells you if you're learning anything over time
Need money and time to graduate from the "school of hard knocks"
Discretionary traders need to "ask the data" about their ideas
Spend a few hours to learn how to use Excel
Don't need tick data and C++
Easy to identify patterns in middle of chart, difficult to identify at hard right edge
He's a "Numbers Nerd"
Forward test with small trades
Many find their brilliant system never beats buy and hold [Indeed]
To pay for your time and risk, must beat buy and hold by huge margin
Day trading edges usually don't cover transaction costs or the bid-ask spread
Many successful traders don't understand why they make money
Was a professional musician before he started trading
Former composer of music
Quants tend to be too rigid, lack creativity (engineering backgrounds)
Big believer in meditation and breath work
Doesn't base position size on confidence or a "pretty chart pattern"
The market will encourage you to do the wrong thing at the wrong time
Grew up in a farm community, so thought he could trade ag futures (wrong)
He could have 12 hour conversation about any of these topics [I believe it]
Had no math background (a musician) but he learned later on, anyone can do it
Need knowledge first, then develop your skills
People without emotional control rush to become system traders, but:
Not a substitute, system trading has its own emotional pitfalls
Focus on just one thing for a few years at first
Don't be the bee who bounces from flower to flower
Learning curve at least several years
Do a lot of trades, collect a lot of data
Five step plan for struggling traders:
1) stop the bleeding (stop trading)
It's true that you can't learn to trade without trading (but you know you're a loser so stop)
Struggling traders have no written trading plan 2) write a trading plan
3) Start backtesting (yes, they're worthless but you need to find an edge)
4) Start forward testing your successful backtest, but without money
5) Start trading it with real money (vanishingly small size), mainly about collecting data (slippage, commissions, etc.)
Have to earn the right to trade size
Need patience and discipline, trading is a real grind, most can't do it
He's a fan of group trading, less likely to do "stupid shit" if it hurts everyone
Trading journey above takes many many months
Idea of 10,000 hours of practice is misguided
Are you up for five years of consistent losses? Can you structure your life to do this?
If you don't know you have an edge, you have no business trading
Any money you make at first is pure luck
Traders who are beaten up in the beginning have a better chance for success
Has large free trading course at his blog
www.adamhgrimes.com
Twitter: @AdamHGrimes