From the Desk Of A Trader #9
"Traders are wrong all the time. You have to face the reality of the market, in order to prevent blowing up."
Support and resistance levels and our daily, weekly and monthly bias on BTC, GC, OIL, ES, and NQ as well as our favorite altcoins:
Today, we are happy to share the thoughts from the desk of a soft commodities trader. The following views are that of Martijn Bron and do not represent the views of his employer.
Some key attributes of any #trading desk head came to mind reflecting upon the events and commentary related to the FTX collapse.
Honesty, ability to face reality and accountability.
In the summer I posted a popular series "So you wanna be a #commodity trader", which I need to complement with the required soft and hard skills.
But let me start with attributes which are specifically relevant now.
I read this week a puff piece in the FT about Coinbase CEO Brian Armstrong with the header "I am still as bullish crypto as ever". So he has been bullish crypto the whole year.
The crypto market crashed 75%, Coinbase stock crashed 90% and their trading volumes crashed 40%.
Today a puff Bloomberg call aired with Cathie Wood, crypto promotor and Coinbase investor, repeating her 2030 Bitcoin price forecast of 1 million dollar (US, not Zimbabwe). A forecast not supported by any math nor common sense, unfortunately giving coiners unwarranted hope.
Cathie's Arkk ETF, similar to Bitcoin, crashed 65% this year, trading at multi year lows.
1)An honest trading head creates respect from juniors, and comfort for business leadership.
Honesty is the foundation of trust.
Making mistakes is not a problem, trading is all about mistakes.
You need to be honest about it, course correct, learn and move on.
Covering up or denying mistakes is one of the worst things happening in a trading operation, and is not tolerated.
2)Traders are wrong all the time. You have to face the reality of the market, in order to prevent blowing up.
I made wrong trades many times, but I have never made the types of losses people apparently accept in the crypto and highly speculative tech space.
That is not trading.
It is reckless gambling, not willing to face reality, risking their whole franchise, going against customer (investor) interests.
3)Accountability on a trading desk means that everything that goes wrong ends with the desk head, and everything that goes well is reflected upon the juniors.
Juniors always need to be covered, and business leaders are too far away from the market to be held accountable. They are accountable for who they place in the hot seat of course.
Accountability means that when things go wrong, desk heads explain what the initial analyses was, what happened in the market, how the desk dealt with the exposure and course corrected, and what the learnings are.
Blowing up a desk, and endangering the broader franchise is not acceptable. So well ahead of such situation the desk's #culture and risk management processes should prevent that.
You cannot accept and sweat out extreme losses just because you don't want to lose face, deny reality and it is not your own #money.
Armstrong and Wood are unfortunate role models who reflect all the things wrong in the crypto space. Just like SBF
They don't understand #markets, #riskmanagement, lack the required attributes to be trusted, and neglect their customer and follower interests.
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