| As an individual you have one advantage over professional traders: complete control of your capital. This is a huge advantage, and one that should deliver you alpha independent of having an edge, having a super computer, having a huge network, etc... What most folks outside Wall St don't realize is that the job of a trader isn't just to maximize alpha. Most of the job boils down to getting senior management comfortable with risk so they don't walk over one day and give you the infamous "tap on the shoulder." Management's job is to get their bosses (investors in the fund.. often pensions, endowments, UHNW family offices, etc..) comfortable with the risk. Until one day... when end investors pull their money from the fund, and management walks over to the traders with one word: "sell." Often times both management and the traders know this is the wrong trade, but they have no choice. It's important to understand if sell-offs are caused by fundamentals or liquidity... the first part of march was the former, the second part of march was the latter. Complete control of your capital means you don't need to be any smarter than the pros, you just need to know when the sell-off is liquidity related and not fundamentals related. Good luck out there :) |
You are playing with YOUR money.