Looking back at my early days on Wall Street, I can confidently say that one of the most crucial environmental factors that helped me get to where I am today is COMPETITION. With my type of personality, I don't like to be the loser. I want to win. I want to always come in first.
At my trading firm Worldco, the company had an intranet system that displayed the TOP 10 P&L's (Profit & Loss) and the BOTTOM 10 P&L's of the day. Everyone at the firm could see how much the biggest traders made each day, as well as how unfortunate the worst traders lost each day. Trader names were not published along with the actual P&L numbers so everyone would try and guess who made what.
At the end of each trading session, I eagerly checked the system to see how I fared that day. My daily goal was to place in the top 10, and pray to god not be on the bottom 10 list. To me it was a competition. Make the most money out of the firm's 800+ traders and call yourself Gordon Gecko for the day! Placing in the top 10 each day pretty much guaranteed that you will probably be one of Worldco's top 3 money makers of the year. I think without this Top 10 daily score card to check, I would not have pushed myself to become a better trader. 'Better' meaning after mastering being green at the end of the day at least 9 out of 10 days, I would push myself to trade bigger sized positions while still maintaining a trading profitable consistency. Instead of trading an initial $30,000 position, I would do $40,000. Then when I was comfortable with a $40,000 position, I would do $50,000 and so forth. Of course position size is also correlated to the liquidity in the stock so I am referring to very liquid names that trade 5+ millions shares a day. And later on I would try to trade 2 positions at once, then 3, then 4, etc.
Seeing someone make double or triple what I did on the Top 10 P&L list pushed me to become better in two distinct ways. First, it made me realize that it is very possible to consistently make 5-figures a day daytrading with hard work and talent. Second, it made me try and figure out what trading strategies the other successful traders were doing that I wasn't. For example, I used to drive down stocks via 'bullets' (I'll write more about the 'bullets' strategy in a later post) and thought no one could be making more than I was at Worldco. But when they implemented the Top 10 list, I was wrong. I had to do some digging around to see how these other big time traders were making their loot and see if I could replicate what they were doing to increase my earnings potential.
For those who are not fortunate enough to trade at a prop firm in New York City, being around other successful daytraders will help you excel. If you don't know anyone who trades, join a stock chatroom like the MookTrader chatroom. You will be exposed to veteran traders and ex-Wall Streeters and they will provide you the competition and motivation you need to help you want to achieve your financial goals. I think of it like golf. You do not want to play with 3 other people who shoot worse than you. You want to play with people who shoot in the 70s or 80s so that you can learn from them. The same goes with daytrading. Surround yourself with highly profitable traders and you will eventually understand what they see in stocks and the markets. Competition improves performance.
- Hubert Tsai