Sunday, November 26, 2006

Rise of the Educators: Vegas Expo Thoughts

Last week's Traders Expo in Las Vegas left us physically spent with no time to regroup before following up on opportunities and celebrating Thanksgiving. The Expo revealed surprising and encouraging trends that we are now tuned into and will watch to see develop. Let's hear from you whether you agree or not:
  • Existing tools among vendors get better at what they already do. Charts contain more functionality, order execution comes with more options, background 'plumbing' gets faster, etc.
  • Examples include Fidelity's improvements to Wealth Lab Pro, E*Trade's expanded free research and better conditional orders, Carlin Financial Group's improved spread trading technology, and OptionsXpress' penny pricing for options spreads.

  • Companies continue to weed out tedious, manual steps from the trade process in new creative ways. This includes not just the extreme of automated trading, but a lot of other partially automated options where the trader can simply move from trade idea to execution more quickly. (Ed.: read the comments for a clarification on this point)
  • Examples include the importation and creation of symbol lists in a platform on the fly (See Stocktickr), linking among tools within and outside of the trade platforms, and (our sweet spot) trade idea generation and pattern recognition.

  • Educators, coaches, mentors, and trainers are catching up to their advanced students' knowledge of trading technology and are using such tools to improve their market analysis and performance. Those married to or associated with a particular platform now identify what gaps exist and increasingly look to fill them with third party tools like Trade-Ideas and others. Education and mentoring must be a continuing part of a trading plan. I'm more convinced of this as I read more of Dr. Brett Steenbarger's latest book, Enhancing Trader Performance.
  • Perhaps I'll do a more detailed review of who I see as adding value. We will initially include in our reviews the following: Linda Raschke, Toni Hansen from Trading from Main Street, Rick Swope from The Market Guys, Adrian Manz, and a few others
In fact let's build the interview questionnaire together. I can think of a few to start off:
  1. Who are the giants whose shoulders you stand on? Who most influenced your teaching philosophy? Your trading philosophy?
  2. Who is your ideal type of student? teaching environment?
  3. How has your lesson plan or trading principles changed from your first student?
  4. What tools do you use in your trading and that assist you in the execution of your trade plan?
  5. How do you keep abreast of new tools, technology, etc.?


Brett Steenbarger, Ph.D. said...


You have some great ideas there.

My concern is that much of the new technology we're seeing for traders is designed to help traders trade.

It's not designed to make them money.

Traders, IMO, do not need more ways to trade faster. They need better trading ideas. And, as a rule, they need to trade less, not more.

But, of course, that is not necessarily in the best interest of brokerage houses, vendors, etc. So they prefer tools that make trading *easier*, not smarter.

Your Odds Maker is an excellent step in the direction of helping traders trade smarter.

The idea is not to trade. The idea is to make money. Thanks for the excellent post--

Brett Steenbarger

D TradeIdeas said...

Dear Brett,

Thank you for your post! You are exactly right of course - many ex-traders destroy their trading plans and capital with nothing but an arcade mentality in the trading chair. Education, discipline, and technology that can point out probabilities for good trades are the true "speed bumps" that are there for a trader's longevity - not brevity. Sources like TraderFeed, Bill Cara, Trader Mike, and many others are just a few examples where to learn.

Brokerages should realize this too - that's in their interest to keep clients with them for longer periods of time than to get them trading more. Ideally brokers want a client who is both these things. But to favor a reckless frequent trader over a lifetime relationship is indeed short-sided.

From my experience I've brokerage firms measure their success internally with two measures: DARTs (Daily average revenue transactions) and net assets under management.