Elite Trader Insights: Anand Sanghvi
Episode 2: Slinging PS3’s, accumulating millions, and hard-hitting psychology lessons with Anand Sanghvi of @SangLucci
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.
Sang Lucci
This is a man who came through the doors of a prop firm in 2006, with absolutely no trading knowledge. He mashed keys for a few years until the firm later shut shop during the GFC, and then he was out on his own. Gathering $50,000 he rapidly compounded this to $2,400,000 in the two years that followed.
His name is Anand ‘Lucci’ Sanghvi, and that was only the warm up.
In the interview with Sang Lucci on the "Chat With Traders" podcast, several key takeaways and pieces of actionable advice were provided for developing traders. Here are the top insights:
1. Understand the Importance of Patience: Lucci emphasizes the importance of patience in trading. Quick and impulsive decisions often lead to poor outcomes. The market is complex and requires careful analysis and thought before making trades. Patience in learning and executing trades is essential.
2. Trading Psychology and Emotions: One of the most critical aspects of trading is managing your emotions. Everyone has a personality disorder that they need to constantly work on. Lucci talks about the need to keep emotions in check, especially after a series of losses or gains. He suggests that traders should not let their self-worth be tied to their trading performance and should avoid projecting personal problems onto the market.
3. The Role of Ego in Trading: Ego can be a significant barrier in trading. Lucci's experience shows that ego-driven decisions often lead to suboptimal outcomes. It’s crucial to make trading decisions based on analysis and strategy, not on ego or a desire to prove oneself.
4. Adapting to Market Changes: The market is constantly evolving, and traders need to adapt to these changes. For instance, Lucci had to adjust his strategies when weekly options were introduced, which changed the pace and nature of trading. Staying informed and flexible is key to long-term success.
5. Focus on Tape Reading: Lucci’s primary strategy revolves around tape reading – analyzing the bid, ask, and time and sales to understand market movements. He argues that this gives him an edge in the market, as it's a real-time analysis of supply and demand, unlike lagging indicators like charts and technical analysis. He’s looking for signs that big market players are slowly building positions.
6. Setting Realistic Goals and Understanding Motivation: Many traders enter the market with the primary goal of making money, but Lucci advises defining more specific, realistic goals. Understanding why you are trading and what you want to achieve can provide clarity and prevent rash decisions driven by short-term profit motives.
7. The Importance of a Balanced Lifestyle: Lucci stresses the importance of not letting trading consume your life. A balanced lifestyle, where trading is part of but not the entirety of your identity, is crucial for mental well-being and long-term success.
8. Handling Success and Wealth: Success in trading can lead to significant lifestyle changes. Lucci’s experience highlights the need to remain grounded and not be swayed by the trappings of wealth and success. He suggests focusing on what genuinely makes you happy rather than getting carried away by temporary pleasures.
9. Learning from Failures: Lucci points out that failures are an integral part of the trading journey. They provide valuable lessons that can help refine strategies and improve future performance. Embracing failures as learning opportunities, rather than being discouraged by them, is vital for growth.
10. Continuous Learning and Adaptation: Finally, Lucci underlines the importance of continuous learning. The market is dynamic, and strategies that worked in the past may not be effective in the future. Staying informed, learning new techniques, and being willing to adapt are essential for maintaining an edge in trading.
11. Retail Traders are at a Distinct Disadvantage: Most strategies CAN work, but human emotions usually destroy any potential ‘edge’. Lucci is sceptical about the effectiveness of such tools as Technical Analysis in the current market, which is dominated by sophisticated players like market makers, hedge funds, and smart money. According to them, these entities use advanced algorithms and systems that can disadvantage the retail investor. He argues that during the 1980s and 1990s, technical analysis was more effective due to less market manipulation and the absence of complex computer algorithms. However, with the advent of advanced computerized trading systems post-2007, the landscape changed dramatically. The speaker asserts that modern traders are often competing against these sophisticated systems rather than other human traders.
12. Exit Strategy: For his EXITS / TAKE PROFITS, Lucci likes to progressively limit out into strength (I do this as well).
13. News Trading: Lucci believes its difficult for retail traders to effectively trade off news events, in the age of HFT and Algo’s, and believes that these often manipulate traders into a certain position before flushing them out. He waits until AFTER the news and volatility has died down to trade.
In conclusion, this interview with Lucci offers numerous insights into the world of trading. It’s clear that success in trading requires much more than just understanding the market; it demands psychological strength, adaptability, and a balanced approach to life and work. Whether you are a novice or an experienced trader, these lessons can be invaluable in navigating the complex and ever-changing landscape of the financial markets.
Cheers
Marto