Elite Trader Insights: Tom Dante
Episode 7: Competitiveness of trading & skill sets for profitability
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.
Tom Dante, a London-based day trader, is renowned for his candid approach to the trading world. Known as @Trader_Dante on Twitter, Tom's journey from struggling to find consistency in the markets around 1999 to becoming a proficient trader is nothing short of inspirational. His experience spans across trading stocks initially to mastering the intricacies of futures and the Bund market. What sets Tom apart is not just his trading skills but his ability to articulate the harsh realities of trading with unfiltered honesty and a touch of humour.
Key Learnings and Takeaways from the Interview
1. Persistence and Resilience: “You have to be wired a certain way to be able to make money. This game requires a specific skill set...you have to be able to cope with insane pressure.” - Tom highlights the importance of resilience in trading, emphasising that success often comes to those who are not only skilled but can also endure the emotional rollercoaster of trading.
2. Understanding Market Structure: Tom stresses the importance of understanding the market's structure and dynamics over simply following patterns. He discusses his approach to anticipating market movements by identifying areas where the market has to probe to facilitate trade, often going against conventional expectations. He likes finding areas of ‘Trapped Traders’ to exploit.
3. The Importance of Patience: “Patience is a basic and essential skill that you need.” - Reflecting on his own journey, Tom underscores the necessity of patience, both in waiting for the right trades and in the broader context of a trading career.
4. Trading Journal: Tom advocates for maintaining a trading journal, not just to log trades, but as a tool for self-improvement. He suggests continually asking oneself how to make more from winners, lose less from losers, and generate more trading ideas. “If you’re not working on your Edge, someone else is”.
5. Trading Size Consistency: He shares a critical observation about trade sizing inconsistency leading to failure, even with a positive strategy. Consistent sizing aligned with a well-defined strategy is crucial.
6. Learning from Mistakes Quickly: “The longer that it takes you to acquire a skill, the more likely you are to drop out of the game before you eventually get where you want to be.” - The capacity to quickly learn from mistakes is a trait Tom identifies in successful traders.
7. Risk and Reward Awareness: Tom discusses the importance of understanding the evolving risk-reward ratio during a trade and not imposing unrealistic expectations on the market. Ie: The Market doesn’t give a shit about your Risk Reward ratios! He also doesn’t believe in ‘Breakeven’ stop losses – another example of trading the market, NOT your P&L.
8. Adaptability: He highlights the necessity of being adaptable, able to commit fully to a position while ready to reassess and change stance as new information emerges.
9. The Real Cost of Trading: Beyond financial loss, Tom talks about the emotional and physical toll trading can take, emphasising the need for a support system and methods to manage stress.
10. Continuous Improvement: “You can always, always improve...nobody out there can't improve in this game.” - Tom encourages traders to continually refine their strategies and understanding of the markets.
Unique Perspective:
Tom's unique perspective is deeply rooted in his belief that trading success comes from more than just financial gain. It requires a deep understanding of oneself, the markets, and the psychological resilience to navigate the highs and lows. His candid discussions on the realities of trading serve as a sobering reminder of the dedication required to succeed in this field.
Tom Dante's journey and insights offer invaluable lessons for day traders. From the significance of psychological resilience and adaptability to the practicalities of trade sizing and journaling, his advice encapsulates the essence of trading not just as a profession, but as a continuous journey of self-improvement and learning. I also really like his analogy that you’re trying to ‘Paint a Picture’ of the market, and using a multitude of tools to interpret that picture, be they reading the tape, technical analysis, macro, or statistical analysis.
Cheers
Marto