Ever Thought About Trading as a Team?
Forex trading is generally thought of as a solitary endeavor. Traders typically pay for their own desk, take their own trades and take the responsibility and pressure that comes from trading their own account.
However, solitary trading is not always such a good thing. It can be a lonely profession and you have to hold yourself to account at all times. A poor emotional condition can then lead to erratic trading, gambling and chasing losses.
It’s for this reason that traders should at least consider a different approach and trade as part of a team. Lots of hedge funds are set up in such a way and there can be huge benefits to doing so.
It’s not completely understood why, but many people perform better as part of a team. The team dynamic fosters greater responsibility and discipline since you know that your actions will affect not only your own trading account but the teams account as a whole. Each trade you make will contribute to the team’s overall P&L, giving each trader the incentive to pull together.
You won’t want to be responsible for other team members losing money and that means you’ll likely put even more effort into making the right trades.
Diversification smooths returns
Often, if you trade alone, you will experience big swings in equity as your strategy fluctuates around the conditions of the market. No one strategy can work all the time but if you have 4,5,6 different strategies all pulling together at once, the chances of one or two of them working at any one time are greater. This means that the swings in equity can be greatly reduced, thus achieving better diversification across a team of traders.
It takes two to tango
Sometimes, trading performance can be improved from working with just one other. Trading often requires different skills so splitting up tasks could be beneficial to both parties.
One partner could be responsible for building systems and the other for taking the trades.
Or one partner could monitor risk and make sure that the other only trades within set boundaries or certain times. Good traders are usually risk-takers so it can often help to have someone more risk averse to watch over them.
Greater emotional control
Possibly the greatest advantage of trading as part of the team is the increased support that it brings. When bad times hit, the team experiences them as a whole, which means they can support each other and help others get through the bad periods. This fosters a less stressful trading room and is only ever beneficial to team performance as a whole.
Have you ever traded with someone else? Whaat do you think the difficulties would be with this setup? Let us know your thoughts in the comments below.