Elite Trader Insights: SMB Capital
Episode 1: Blowout Loss Creates a Cold-Blooded Killer · Shark (SMB Capital)
Each week we try to unlock the collective wisdom of the Trading Elite. Strategies and unique insights from hours of interviews with top traders, sliced into bite-sized pieces and delivered to your inbox for your pleasure.
KENNY SHARKNESS
In the interview with Kenny Sharkness on the "Chat With Traders" podcast, several key takeaways and pieces of actionable advice were provided for developing traders. Here are the top 10 insights:
1. Start Small and Be Patient: Sharkness’s transition from video games to trading underscores the importance of finding a career that aligns with your interests. He recommends starting small, acknowledging the initial phase where you’re learning and not making profits. This patience in the early days prevents deep losses and allows new traders to focus on skill development rather than immediate gains.
2. Structured Learning is Key: He emphasizes the value of structured learning. Paying for training at SMB Capital was an investment that taught him good habits from the start. For beginners, finding a structured program or mentor can offer the same foundational benefits.
3. Progress Incrementally: Sharkness practiced incremental progression, which is critical for building confidence and skills in trading. He set process-oriented goals, such as feeling uncomfortable with trade size, to push his limits responsibly.
4. Develop a Goal-Oriented Routine: He suggests setting measurable and attainable goals. Breaking down these goals into daily actions helps maintain focus and makes improvement tangible. NOT P&L related, but process orientated, and he would grade himself each week.
5. Build Consistency Through Reflection: Consistency came from daily reviews of his trades and emulating successful traders. Understanding the reason behind each trade's success or failure, whether due to market conditions, tight stops, or not holding winners, facilitated continuous improvement.
6. Adapt Strategies Over Time: As the market evolves, so should your strategies. Sharkness moved from playing small range breakouts to adapting his approach to cope with algorithmic trading and exploring options for hedging.
7. Embrace Significant Losses as Learning Experiences: I bang on about this all the time.
He views his substantial loss in the KBIO trade as a pivotal learning experience. It was a lesson in risk tolerance and built his resiliency, which is crucial to long term success. “When in doubt, get out”.
8. Use Options for Risk Management: Sharkness uses options as a hedge to manage early entries in trades. This strategy allows for flexibility and control in trades, and although the aim is to lose on the hedge, it serves as a safety net.
9. Leverage Technology: Although 90% of his trades are discretionary, he incorporates technology and creates custom tools to assist with trading decisions extensively. It helps him sift through information and focus on what's essential.
10. Guard Against Complacency: Despite his success, he warns against complacency, which can lead to a stagnation in performance. Continuous improvement, competitive spirit, and humility are necessary to stay ahead.
11. Edge: He believe his edge lies in his competitive spirit, combined with a humility to know when he’s wrong and exit quickly.
Sharkness also points out that having a balanced life has improved his trading, suggesting that personal well-being is as crucial as professional skills. He prepares for the new year by reflecting on past performance, setting goals, and ensuring he is not burnt out. As his life circumstances have changed, like becoming a parent, he emphasizes the importance of adapting goals to maintain a work-life balance that positively impacts trading performance.
His journey shows that while market success is not guaranteed, a disciplined approach, a strong psychological foundation, and an adaptable strategy can lead to sustained success. Sharkness encapsulates the essence of trading as a career that demands not just financial acumen but also robust mental resilience and strategic flexibility.
Cheers
Marto