Follow Up On Quant/Discretionary Collaboration

Follow-up discussion on quant and discretionary trader collaboration.

We discuss:

• How Dave first connected with Bella
• The cultural DNA of SMB Capital
• The challenges of quant/discretionary collaboration
• The importance of being a giver, not a taker

Related episode:
Mike Bellafiore and Nick Coutrakon from SMB Capital on Trading Teams
Creating a Trusted Trading Group

Books mentioned:
Give and Take by Adam Grant|
The Go-Giver by Bob Burg and John David Mann

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Creators and Guests

Host

Dave Mabe

Host

Michael Nauss

What is Line Your Own Pockets?

A weekly show for systematic traders who want to make more money from their trading strategies.

Michael: 00:00

Okay, everyone. Welcome back to another episode of Line Your Own Pockets. This is like we always do, and I I love doing these follow-up to the interview that we had with Mike Belforti and the the guys over at SMB Capital yesterday. For us yesterday, I guess last week for you guys. And I always like doing these because when you're talking to someone, you generally always have like that shower thought later where you're like, oh, I should have asked this or I should have talked about this.

Michael: 00:26

And this is kind of our way of going through that with you guys and just, you know, this is what I took from it. This is what, you know, maybe we'll ask if we have them back, that kind of thing again. But one thing I wanted to start with, and then we'll pop into it, Dave, is you said you had an interesting story on how you met Bella the first time. So let's get into that, and then we'll talk a little bit about the interview that we had.

Dave: 00:49

Yeah. So I first met Bella. He actually reached out to me. And it was because at the time, this is probably 2018 or 'nineteen, I was writing on my blog. This is before it became the newsletter that it is today.

Dave: 01:07

And I was just writing as I would have thoughts about my trading or a system I would come across or just any sort of thing that I thought was unique, I would write an article about it and just put it out there. Didn't have any, you know, wasn't, I didn't have ads on there or anything like I was just doing this to try to get my ideas out there, get some good feedback for people that might read it.

Michael: 01:31

Which by the way, not to interrupt, I think everyone should do. I think everyone should just do with, you know, Substack and all these, it's so much easier nowadays. And I find even as someone, right, anyone knows me, I've got pretty extreme dyslexia, so like writing is pretty hard. So I do a lot of like voice attacks and and and things like that. But just any sort of act about getting your thing in your brain out onto a sheet of paper digital or or physical or otherwise, I think it's just something that everyone should do.

Michael: 02:02

And then, you know, you make it public even if you're just kind of shouting into the void because why not? Right? It it you may come across someone that's interesting. You may find your own audience of people that are that are interested in it. You might, you know, make some friends that are are kind of like minded.

Michael: 02:18

But, yeah, I just wanted to say everyone should like, everyone listening should just start a Substack, it's free, and just start writing about, you know, this is a cool chart that I saw, and maybe I should build a system on this or or, you know, whatever it is that's that's your interest in finance.

Dave: 02:33

Yeah. So that that's I knew that I should be writing, but at any point, you don't really know why you're writing. And that was my thought at that point. I knew there would be some good that would come from it, but I didn't really have something concrete in mind, but I just knew something good would come from it. So sure enough, this is probably, I don't know, months or more into me writing this blog and just writing the interesting stuff or the stuff that I thought was interesting.

Dave: 03:05

And here I get it. I think it was a tweet or a direct message from Bella having read one of these articles. And he's like, Dave, I'd love to have a chat with with you. Can we get on Zoom at some point? So we got on Zoom, sort of struck up a conversation, talked more about, this kind of trading that I was doing, what they were interested in, what kind of traders they were looking for.

Dave: 03:34

And he's like, Yeah, next time you're in New York, let me know. Hit me up and we'll meet up again. So it turns out like I was going up to My brother-in-law was living in New York City at the time. So we had a trip planned. It was pretty shortly after that, maybe a month later, I hit Mike up when I was in New York and I went to his place and we got more into the trading I was doing.

Dave: 04:00

And I remember the thing that struck him. Like I was showing him my results. I was showing him exactly what I was doing. He was like, Okay, what commissions do you pay? And I told him the rate I was paying at IB.

Dave: 04:17

And he said, holy crap, I don't I'm not sure if a lot of our guys could even do it at that rate because they get a much better rate Yeah. At

Michael: 04:28

And just to talk about kind of why, right, is that they're it's basically like buying things in bulk, right? If you go to a firm like SMB, and it was the same as at the firm that I worked at back in the day, you say, Listen, we're gonna put through, you know, millions and millions of dollars worth of order flow a day and and tons and tons of shares, you're gonna give us like a wholesale rate as opposed to as opposed to a retail one. And, yeah, the the rates that these guys get quite often without going into the whole maker taker fees and whatever, there there's a lot of traders out there at these prop firms that will actually pay kind of negative commissions in the long run because they're getting rebates and things like that. But, yeah, super common in the industry, and they pay just so you know, that a lot of prop firms, I would say, near zero commission rates over the long run.

Dave: 05:18

Yeah. So we kept talking. He connected me with a couple of their top traders. I mean, they're the two probably sort of a couple of the top traders at their firm, some of the best traders I've ever dealt with. And we've got a we have a collaboration since then.

Dave: 05:40

And we So I've worked with some traders at SMB since then. And we've just had a whole collaboration. I've gotten to see sort of an inside view of how operates. I've gotten to see an inside view of how Bella operates the firm. And I'm totally impressed.

Dave: 06:01

I mean, it's a great firm and there's just a lot of great things going on there. The thing that's the difference between a prop firm like that and retail trading is, this is what they do for a living. Every trader there, they're doing it for a living. They're the most serious of the most serious. There's no hobbyist there.

Dave: 06:26

It's a whole different mindset when that's your situation. And it's a really cool environment to be in.

Michael: 06:35

I I think there's again, for me working at the prop firms in the date back in the day too, there's a competitiveness, I guess, you you could call it where, you know, you're surrounded by people who are are doing well and the ones who don't, because it's it's you're there every day and that's your only living, they come and they stay for a bit and then they leave. So the ones that are are there remaining, it ends up being a pretty interesting place where everybody there, A understands that, you know, this is an easy game and, but they're all sharing ideas and kind of pushing each other. And even if you're not kind of really collaborative, you're still seeing them, right? And a lot of firms will have, you know, like a leaderboard or something and you just kind of know the guys that are doing really well. So there's that kind of, well, I'm looking at it and I know this guy, go to drinks with him.

Michael: 07:27

He's not, Albert you Einstein or anything, and he's making a butt ton of money. It just kind of pushes you in that direction to say, well, if he can do it, you know, I can do it as well. So it's a really, really cool environment to be with other people that are just focused on the same thing like that.

Dave: 07:43

Yeah. So I'm convinced that this whole collaboration I've had with Bella and the friendship I have with him, it is, I'm pretty sure a 100% because I wrote those blog posts back in the February. How old Which is kind of interesting. So let's go back to, let's talk more about the discussion we had with them. Just to reiterate, SMB is a discretionary trading firm.

Dave: 08:15

That is their bread and butter. And I think it always will be. And they do really, really well with that. But so the systematic side has always been, it probably will always be secondary, but there's pockets of people I've worked with there that I know are dramatically improving that side of the business. And it's just a matter of time before that really comes up on their radar.

Dave: 08:48

And if you do it right, the discretionary can feed into the systematic side in such a beautiful way. So I'm really glad that they're thinking hard about this. And I think it can only improve with the changes they're talking about making to the makeup of their teams.

Michael: 09:12

Yeah, and that's interesting. And one of the things that you know is it'd be interesting. I haven't thought about this because I'm in the prop space for a while, but you know, you say that it is, you know, they'll always probably be more discretionary and and all of that and and they do do very well and they they make a lot of money from it, but I was just wondering is that going is that best, you know, in the long run? If they were to slowly transition to more or or even completely systematic, would these guys end up doing even better? And I always just wonder that just by looking at a lot of their traders and and trying to figure that out if there is some sort of aspect of they do it because they've always done it, or is it that they do it because it's truly kind of the best way to trade, at least in that environment, that kind of problem environment?

Dave: 10:02

I think it's the best way for that firm to trade, given their background, given the makeup of the founders, given the success they've had over the years, given the educational aspect, the program they put together for new traders, it's just in their DNA. And so I always step back and think, there is no holy grail trading system, but there's also no specific type of trading that every firm should be doing. Each firm should be unique how they approach the markets. Otherwise, you're just gonna be copycatting somebody else. You really have to know yourself, and that that that goes for traders, but that also goes for firms.

Dave: 10:54

And I think that's the I I think that's what we see here.

Michael: 10:57

Well, it's funny for from my work in the hedge fund space. The the best hedge funds out there were always the multi manager funds. Right? With and it for those who don't know, multi manager fund is, you know, say they have a billion dollars in investable capital. Instead of just having one guy manage it, they have multiple people, right?

Michael: 11:16

Maybe they have their own hedge funds and they're allocating bits to it or whatever. And yeah, having some discretionary, right? Some macro, some long short, some some whatever. But I think that was the answer that I was gonna think as well is that because they've been doing it for so long, that's where their edge is, is kind of building these discretionary I just wonder if I were to start a prop firm from new, Would I I would probably focus on the other side? And again, that just could be the style of trading that you do going in as the the guy who's starting it.

Dave: 11:50

Yeah, yeah, think that's absolutely true. Yeah. If I started a firm from scratch now, I'd want to have my unique take on it. So hopefully, it better be something unique. It better be something different than what's out there.

Dave: 12:03

Otherwise, why are you starting it? But yeah, I think they're in a really unique position to have systematic trading be totally additive to what they're doing. And for the discretionary traders that are making 95% of their profits from discretionary trading and swinging the bat hard, as they say, when they see the right pitch, it can be totally additive, but it's only going to make that better if you do it right. If you have the right collaborations and like I said, I'm really glad that they're talking about this and I can really see how specifically the change you're talking about making will improve things.

Michael: 12:56

Yeah. And that's kind of if you had to do one major theme of the interview, it was that it was Bella talking all the time about how that's how these guys make their money is is and we've even done a podcast about this where, you know, do you take a ton of small trades a day and and exploit a small edge over and over again, which is kind of more how we would work as as systematic traders, or do you just periodically take one big trade going forward? And I was really interested in hearing him talk that my systematic brain went right to, you know, what if you could alert that discretionary trader of whatever setup they run, say this is the one and have some sort of confirmation to do that. Because when you're doing that discretionarily, I could see a lot of kind of mental problems that would kind of maybe trick you into taking that big hit, you know, maybe you're having a bad month or something, you're anxious, all these mental tricks that say, yeah, I need to swing big. It would be very interesting to see you as they go down this exercise, if there could be a very simple system that says, okay, right, this is all the stars are aligning on this one, go big, and will that allow them to take maybe even more risk, or at least on the ones that they're taking that large risk on, they have this kind of this go button that says right now is the time to potentially do that.

Dave: 14:18

Yeah. So this reminds me of I've seen the way Bella operates that firm. I I was reminded of this when I listened to this podcast recently, and it was an interview with a conductor of an orchestra, a a very well known conductor. There's a very good interview with him. And so, you know, he's the one in the front.

Dave: 14:42

You know, it looks like maybe he's not doing anything or just waving his arms, but he really has the control of the entire orchestra and is in charge of the entire performance. And he has a lot of responsibility up there. And there was a couple of things that struck me about his interview. One was he said that everybody in the orchestra, the flutists, tuba players, the violinists, everybody has a specific way that they respond to eye contact. So everybody has a unique way that they respond to eye contact from the conductor.

Dave: 15:28

And he said when he goes into a new orchestra, like they say, they have a performance in a few months, they do a lot of practicing. He said the most important part of his job is figuring out the unique preference of everybody in the orchestra and the eye contact that they need to get the most out of them during a performance, which I thought was really cool. But it reminds me of how I've seen Bella operate in SMB. He's kind of the same thing. He's not the one playing the instruments, but he is totally in control and making sure that everybody in that firm is getting what they need to be the best trader they can be.

Michael: 16:11

Well, and I think that's common across pretty much everything. Right? The the best coach in in pretty much everything you think of isn't the best player. Right? It's it's a different skill set entirely.

Michael: 16:22

Right? The guy who coached Michael Jordan wouldn't would get stomped by him in in every degree possible and then same with pretty much every sport out there. So I thought that was very interesting as a way to, you know, looking at him and saying, okay, this might be a really good way for someone who's more kind of back and looking at the overall orchestra, or in this case, the those pods of traders to implement more systematic trading where he's not going to be too concerned on on the nitty gritty about how it gets done. But it's I think it's gonna be a lot about pairing the right discretionary trader with the right kind of quant and try to make sure that that's going back and forth. Because I could see, especially in this industry and especially with traders, a pretty substantial, like power grab or ego trips or or things like that to get involved.

Michael: 17:17

So, you know, he he harped on collaboration a lot, and I think that's kind of has to be the way that it does is because if you went in and and right off the bat, I was thinking that the, you know, you have the main, the trader, and then the quant is like support, but you couldn't really frame it like that. You'd have to frame it as you know, these guys are doing doing it together. And, you know, splitting that splitting the glory, splitting the loss, that type of thing, think is it's it's very, very interesting. I've never done, like, group trading like that, but it makes me interested to try something to that respect just to see if there is some kind of an edge there that I haven't explored.

Dave: 17:56

Yeah. Well, I knew as soon as Bill and I talked about this topic or potential topic for the podcast, and when I realized and we both realized, okay, this is a good topic for it, I knew it'd be a very good companion to the podcast we did several months ago of creating your own trading group. If you haven't listened to that, please go back and listen to it. A lot of the same things, but it's for basically retail traders. And it's a way to come up with a trusted trader group.

Dave: 18:31

And that's really what you're doing when you're creating collaboration. A lot of it's built around trust. And trust doesn't just happen overnight. That happens over a period of time. And you can foster trust by like what we said, being a giver, not a taker.

Dave: 18:52

So many people in the world, especially the trading world are takers. You want to be a giver if you're going to build trust and create one of these groups for yourself. That's going to be excellent for your trading. Literally I mean, there's no downside to to doing this. So

Michael: 19:12

What did you think of just talking about this give or taker thing that that Nick brought up, and I've been thinking a lot about where it is harder to get collaboration from a systematic trader. And and the reason for that being that when we write something, and and especially if you're someone like us who kind of lets robots or systems do the entire trading Yeah. Part of it, and you're not involved in that side of it all, at the end of the day, when the code is finished, it could easily be kind of taken and and and, you know, modified or or taken and copied or something like that. So that he found that systematic traders have a little bit more, you know, cards to their chest. I I didn't think about that, but the norm the moment he said that, I'm like, oh, well, that makes perfect sense.

Michael: 20:03

Right? If I Yeah. With my systems, if I just put all the code out there, then, it's it's anyone could take them and plug them into whatever they want. And then I also thought a little bit of and and this is why I think that trust that you mentioned is so important. You could do kind of like a lot of predatory things with that, right?

Michael: 20:19

If this was a low volume system, and maybe you were putting out a limited X price, and they just did the price is right thing where they just kind of, every time they knew you were going to put an order, they would just bid you like one in front or something like that. It became interesting. And I I don't envy their way around that because I could see that being a problem, going forward where if you're a discretionary trader, you're more treat you're teaching like technique, You're teaching, you know, this is the thing I look for. I'm watching the tape here. I'm doing whatever.

Michael: 20:50

But at the end of the day, when you're a systematic trader, it's it could all comes down to the here's my code base that I built and right? Please don't take it kinda thing.

Dave: 20:59

Yeah. I thought that was a great point that Nick made. I I think that so so I'm I I go back to something that a very good trader said to me. This is somebody I've worked with for a while, probably the best trader that I've worked with. He's been in the industry a long time and he's done really, really, really well.

Dave: 21:28

He's very driven. And the one thing he said was, man, if there's one mistake I've made, it's that I haven't shared enough of what I've done over the years with people because he knows that in the he's been in the industry a long time. He knows that the more he shares, the more he's gonna get back from people.

Michael: 21:52

And

Dave: 21:54

that sharing of information, that collaboration, I mean, it's just hard to overstate how powerful that can be. I mean, especially, I think, when traders have some success, like I've always said, the only thing harder than creating your first profitable trading strategy is creating your second one. I think once you create one, you kind of feel like, okay, I figured it out. I know what trading is. This is what works.

Dave: 22:23

People get into a rut like that. It's surprising to me how often this happens, how many traders trade one strategy really well, but they really struggle to come up with a second one. It takes them a while to realize how much they're struggling with that. And it's partly because they're in this rut. And they imagine that they'll be able to come up with the ideas.

Dave: 22:46

But I've seen it time and time again, just in my own trading, Like there's that you're just not going to be able to come up with the ideas. And once you do some collaboration and share with others, you're going to find some ideas that you're like, man, why didn't I think of that? But that's just the way it is. Like, you're just not you're going People have different experiences. People have different ways of thinking about the markets.

Dave: 23:09

You're never going to be able to come up with all the right ways to think about the market. There's just not enough time to do that. So that's why collaborations are so important.

Michael: 23:18

That's what I was thinking of a lot when they were talking about, right, discretionary versus systematic is that as systematic traders, we spend more time kind of, like, in the code and in the, you know, back testing and statistics and that kind of thing. Whereas a discretionary trader spends the whole time kind of in the charts and and more in the market itself. So I thought it would be really cool and and something you'd probably see a lot of is someone say, hey, I've seen this thing happen five or six times, and, you know, I've made money from it or whatever. And, you know, giving yourself more of a chance as a discretionary trader to kind of fall into ideas, and then passing those ideas off to someone who's a little bit kind of more systematic after that I thought would was a really, really good idea. And it makes sense because I find myself doing I've mentioned this a few times before I have a small discretionary trading account that I still take shots in, and I find that's where a lot of my best ideas end up coming from.

Michael: 24:18

You know, that is, you know, I take that trade and I'm like, oh, that's interesting. I wonder if that's something that, you know, will work in the long run. Then, you know, you go in and start doing that. So I think that's a really good idea to or something that would be a huge benefit of that synergy and sharing it is that, right, this guy is staring at 30 charts all day. It's not something that we want to do, but there's good information to be gleaned from that.

Dave: 24:41

Yeah, well, think that there's a discretionary trader like we said, a well, let me back up. It takes a specific kind of quant to make this work really well, these collaborations. There's a lot of quants out there. You almost have to unlearn a lot of the stuff that you learned because there's a lot of quants that are really drawn to machine learning models. They've never met a machine learning model they didn't like.

Dave: 25:15

And that's just not going to resonate with a discretionary trader. And maybe it will for a little bit, but you're going to put a ceiling on how good your collaboration can be if you don't answer questions in the collaboration from the discretionary trader in a way that the discretionary trader can understand and really get behind. I mean, what we're really talking about, know, we talk a lot about paths to confidence. What's your path to confidence with a strategy? Getting on the same page between a quant and a discretionary trader for the path to confidence is really hard, And it takes empathy.

Dave: 25:59

You have to be able to understand what is the discretionary traders path to confidence. It is probably going to be figuring out the really fat pitch where they can hit the ball as hard as they can. And that's going to really be orthogonal to a lot of quant traders. That's going to be completely opposite to the way they think. So, the quant trader that is working on machine learning models, basically black boxes, maybe it's not a black box to the quant, but I can guarantee for the discretionary trader, it's gonna be a black box that they can't really understand.

Dave: 26:40

They don't have a path to confidence, which means they won't be able to trade that strategy with a lot of size. So there has to be some give and take here between both of them. The quant really has to understand what the path to confidence for the discretionary trader is. It not only goes for the quant, the discretionary trader also has some responsibility here because think about the models that you would come up with. The treasury trader is gonna have a lot of ideas.

Dave: 27:12

To They be discerning enough about those models to decide which ones are modelable and can be created systematically and which ones aren't. Because you're gonna have a split like that. And sometimes it's not exactly clear which side it's on. But when a discretionary trader gets really good at figuring out the type of model that can be systematized from their own ideas, that's where really the magic happens. When you have a quant that can recognize that and understand the way that a discretionary trader can have a path to confidence, that's really where the magic happens.

Dave: 27:51

And I can totally see the way S and P has been doing this because they've basically trained somebody as a discretionary trader and said, okay, now it's your turn to be a client in this group. That's not really going to work very well. It'll work. You'll make some progress. But I think the way better approach is to come at it from different angles like they're talking about.

Dave: 28:17

And that's because, as I mentioned, you're gonna have higher variance outcomes when you do it that way. So some of the collaborations are gonna be kind of duds maybe. Maybe they aren't really able to talk each other's language, but some of them are gonna knock it out of the park. And that's what you want. You know, that you want a fewer number of these collaborations to really hit it out of the park.

Dave: 28:44

That's really their whole model. And what's going to make their business work is having the huge home runs that come from a small number of traders. That's literally exactly what you're looking for. And I think that's exactly what they would get if they focused on this model for an extended period.

Michael: 29:05

Yeah. And, you know, it's funny. It's regardless of the trading type, regardless of trading size, seems like it's always that principle or whatever, right? It's gonna be 20% of the traders there that are really gonna make an absolute killing. And I like what you talked about with the path to confidence because that would be the biggest problem is because the quant couldn't just come in and say, hey, look at all this data.

Michael: 29:27

Right? You know, I back tested it on a 100,000 trades and this is what happens. As soon as you have the first like losing week, that discretionary trader is is out of there. He's just not interested, even though it could be a normal pullback, it could be something that the quant is totally fine with because it's inside the, you know, what the backtest should have done, because it's, you know, someone else's kind of system or someone else's idea, and he doesn't understand why it should work. I think that would be the big thing as the systematic trader.

Michael: 29:55

If I was working in this, it would be to because he would have some idea of this setup works because of and then have some sort of reason behind And and being able to translate that this is why it works, therefore, you know, this is the is the thing that we're going to build. As soon as you were able to back up the why with the data, I think you're a 100% right. But yeah, it would be trying to explain to someone because you can say, well, at my Monte Carlo simulation. He's like, well, don't give a shit. Gonna be like, you know, this this strategy works because of this kind of psychological reason or or market participant reason.

Michael: 30:32

And to be honest, I think those are always the better systems anyway, is that, you know, there is a there is something that happens and it makes perfect sense why it happens, and then you can model it out from there as opposed to, you know, I've I've thrown a bunch of indicators at the wall and it seems like this combination does well. Both can work, but I again, I think that these strategies with a very good why are gonna be ones that are gonna work better in the long run, And you're going to understand if and when they stop working, why as well, right? If it's one of those that, you know, it's this psychological phenomenon that's occurring in the market over and over again. If that stops working, I think it'll be easier to identify the change that has occurred there as opposed to XYZ kind of moving average crossover or something like that.

Dave: 31:18

Yeah. I love that. The why. I love that. The way I also put it is does it tell a coherent story?

Dave: 31:25

Does your strategy tell a coherent story? Do the filters and the rules you apply to it, is there a coherent story there? Or were you just following the data because the data said so? When you got a coherent story, you've got a path to confidence. And that's very important for this.

Michael: 31:44

Yeah. It's yeah, it should be kind of the forefront. Was funny. I was talking to a crypto systems guy. I'm interested in building some crypto there as well.

Michael: 31:56

And I asked him kind of how he approached it because as a whole, the cryptocurrency just, you know, community or or data as a whole, still really new. Right? You've got Bitcoin that's maybe ten years old, and then, you know, for actual active trading. And then you got a lot of these other coins that are way newer than that. And I said, well, how do you get, you know, confidence in data that only goes back a little bit of time?

Michael: 32:23

And his idea was, well, you know, you you look for the same psychological phenomenons you find in the equity space. And he's like, take a strategy that I build in the equity space, and then I apply it to the crypto space, and if it still holds true, then, you know, I'm more I I have more of an idea of of where it would work. And that's kind of how I see it as well, where one of them, you know, the the whole quant side of things would be so foreign to, you know, these these discretionary traders just looking at the data. But if they can say, this is something that I do and I know why, again, as soon as you get the data behind that, I think that's absolutely key.

Dave: 32:59

Yeah. I like that. So the other analogy that I've thought about for this for good collaboration is you're going to be surprised, but yet another cycling analogy. So I do this really hard bike ride on Wednesdays, we just did it this past week. It's a group of really fast riders in town and it's during the middle of the day, so everybody's taking time off of work to make this ride happen.

Dave: 33:31

And it's what's called a baseline ride. So we always do this one section. And as a group, we're trying to do this as fast as we can to break the record each week. And it's like a 28 mile section, maybe 27 miles. And each person takes us a turn at the front for a minute.

Dave: 33:58

Usually it's a minute, depending on how many people are there. They take a turn on the front, and then about a minute, they go off and peel off and they come into the back. When you do this and when you do it cohesively, everybody has to be on board to do it really cohesively, but when you do it right, you can go so much faster than you ever could by yourself with the group. And if you look at the makeup of the group, some of the guys in the group are way in way better shape than others. But they know they're still, if they work together, can get way further, way faster in the group than if they just went out on their own.

Dave: 34:39

And it's pretty striking when experience this. And it's really beautiful when it happens because it's just it works like clockwork. And the more cohesive the group is, the more collaborative, the faster you go. So, I mean, we'll average like this last past week, we averaged 27 miles an hour for an hour. If I were to do that on my own, maybe I could do 22.

Dave: 35:06

Like, it's so dramatic how much faster you can go with a group. And it's the same kind of thing with these collaborations. When you do it right, when everybody's on the same page, even somebody that's way better, a way better trader can really still get a lot of good stuff out of a collaboration with even, you know, quote unquote lesser traders or traders with different experience. So it's a really cool thing and it's you see it in all different aspects of life. But this cycling allergy, I think, a particularly good one for the trading group's analogy.

Dave: 35:44

You're muted.

Michael: 35:50

Sorry. Quick technical difficulty. I don't don't know why it's muting itself. But, yeah, I was saying that Bella talked about that as well. Learning from new traders, learning from inexperienced traders I can sometimes help out really huge there as well.

Michael: 36:05

What I'll say, okay. So let's turn this into action. Right? You're someone who's a a systematic trader. You're a budding systematic trader.

Michael: 36:13

Obviously, you should go watch our our episode that that we both love so much on building that trusted trading group. But just for a little bit, for the people who've tuned in for the end here, I have some ideas of of ways to get started, and then I'll go to you for some ideas way to get started to build this kind of collaborative environment. The first one we already talked about, I think it's right. Right. Start writing.

Michael: 36:35

Start, you know, you know, putting your things down on on pen, paper. You don't have to share your code, but you could share your entire thought process on how you come out of it. I think that's going to naturally kind of gravitate a little bit to you. Then the other thing that I thought of kind of while you're talking there that might be interested is go to discretionary traders who are who are writing or or on social media or something like that. Probably people with smaller followings would be would be better.

Michael: 37:01

And just look at what they're doing and and see if there's a way you could systematize that and maybe set up a meeting or or something. Say, hey, you know, I noticed that you like trading this specific candlestick pattern. Well, I've I've modeled this out and I have something that I think would be interesting. How about we we chat about that? I think that might be a good way to kinda to get started.

Michael: 37:23

But like, you know, and and I think what's important about both those things is they're the whole giver thing that we talked about, right? Is you're some value out there, and then what you're hoping for in return in the in the long run is that by putting enough value out there, you just kind of naturally attract people that are interested because if you say, hey, I I built this guy's setup and and it's part of what I do now and part of whatever, and, you know, I gave him a scanner or I gave him, you know, a part of a code that helped him systemize his trading, then you'll have other people come to you and say, this is what I do. And then I think that's naturally a good way to kind of get started of of that idea generation. I don't know if you have any other ways that you would get

Dave: 38:07

Yeah. More So that reminds me of somebody that I've worked with that is doing exactly that. He has struck up a little collaboration with a discretionary trader. And he's basically systematized his model and given him an automated trading system basically that they can look at together. He's given that for free with the thoughts of, hey, I don't know what's going to come of this, but I think there will be some good that comes from it.

Dave: 38:37

And I can see this collaboration coming together and working in exactly the right way that I see has a lot of potential. But yeah, so I'll mention the same book we mentioned that Creative Trust and Creator Group episode, Adam Grant's Give and Take. That's a good one. There's another one I just came across and just read. Actually, I just gave this to my daughter.

Dave: 39:03

It's about basically business, but life in general, sort of the same concept. It's called go giver. Instead of go getter, be a go giver. It's a pretty well known book. It's a quick read.

Dave: 39:16

It's a story about somebody in business in sales that's sort of hitting his head up against the wall, and how he goes from that to being more successful being a giver. And it's a really interesting, so we'll put that in the show notes too.

Michael: 39:33

Yeah. And it's funny. I believe the Trusted Trading Group thing started from our interview with Brett. And then now with an interview with so these are our two people that are have been in this industry for an incredibly long time, and have built an insane amount of success. And they're both saying the same thing, right?

Michael: 39:54

They're both saying that, you know, you're way better off doing this with coaches and with groups and with friends and whatever than going in it alone. And it's funny because, you know, naturally trading is a pretty lonely thing, right? You're just sitting here and, you know, going through your routine, right, setting up your bot in the morning and tracking what it did in the evening. And it can be right again, incredibly lonely thing, it looks like that pushing outside of that, however you can do it seems to just be kind of the, you know, the best way forward. And, you know, it'd be interesting to see how many people got into trading because they're kind of introverted in some way.

Michael: 40:36

And then, you know, to to tell those people, hey, you'd be way better if you you kind of fought that. Some people might be, you know, kicking rocks and not too happy about it, but I I definitely think you you can do it, especially again with the age of the Internet, just start putting content out there. People will see eventually.

Dave: 40:52

You heard what Bella said. He he thinks there should be some sort of surgeons warn you know, surgeon general warning for traders. Don't trade alone.

Michael: 41:01

Mhmm.

Dave: 41:02

I think I think that's totally true.

Michael: 41:04

Yeah. I liked how too he was saying that he was they've been, I guess, you know, experimenting more and more with these trading pods over time, and he's getting really confident to say that traders, most traders in particular, especially discretionary traders should all be sharing an account. And that was kind of something that he was just on the cusp of saying, he doesn't want people to do that alone. So that would be very interesting if they make that shift entirely where listen, no one has no one has their own kind of personal funds or or or personal account anymore. It's all shared.

Michael: 41:40

And it would be really cool to see, you know, fast forward a couple years if they do make that transition just as individuals and then as a firm, how much more or less money people have made now that they've been, like, absolutely forced to. Right? You do not have your own thing anymore. If you're hitting a button, you're hitting a button as part of a pool in which a lot of people are taking part in. Very, very interested in that.

Michael: 42:05

Again, from my hedge fund days, those are the ones that I noticed that did the best. So I wonder if that's gonna be something we see in the prop world, and then maybe even in the retail world somehow in the future.

Dave: 42:16

Yeah. That would be interesting. I'd love to do a follow-up and after some time goes by and they they kind of see the results of how they've changed the makeup of some of these groups, I think it'd be really interesting to do a follow-up at some point.

Michael: 42:29

Yeah. Well, it was a was a great interview. And, we should link the whole trusted trading group if you wanna get deeper into that in the the show notes in the description. And we appreciate, as always, everyone for tuning in. But until next time, I'm Michael Noss.

Dave: 42:45

And I'm Dave Vape. We'll talk to you next week on Line Your Own Pockets.