Q&A
Since You Asked
Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post it on the Stocks & Commodities website Message-Boards. Answers will be posted there, and selected questions will appear in future issues of S&C.
FOUR DAYS OF THE CURRICULUM
Don, I understand that you and your firm have been teaching trading since the early 1990s. I know trading overall has changed considerably over the years as well. I am interested in what you guys are teaching these days. Is there a chance you could share what you’re doing in some of your programs?
— equtyspec2
Actually, your timing is pretty good for this question. My brother Bob, me, and our top trader/mentors have just redone our entire curriculum. For 2011 we will have a four-day schedule, with a “flexible Friday” for those who would like a private meetup, see how we set up for the boot camps, or just to summarize the four days of training. I will pass along the fundamental concepts and topics, since I don’t believe I have ever gone into this here at Stocks & Commodities.
We start the first day with a “get to know each other” session. Since we have around 50 students, ranging from newbies to seasoned veterans, it helps me to know who sits at what level. I want to be sure not to focus on any particular level of expertise or previous trading histories. I like to know what percentage fit into a handful of categories. I try to encourage interaction between the students and the trader/instructors to develop a comfort level. Then I go into a brief history about my brother and me and the firm to establish where we come from and how we got to where we are today.
We review a laundry list of trading terms, with definitions, and then show how the definitions may vary from the actual usage. We all need to speak the same language going forward to make the most of this training week.
At this point, we get into order flow and order routing. These topics have jumped greatly in relevance and importance in recent months, with all the high-frequency trading, subpennies, and so on (see my S&C March 2010 column for more on these topics). We review the current state of affairs from both a regulatory and trader standpoint. These topics seem to be in a state of constant change. Traders must keep up. What we taught last year is 180 degrees from what we are teaching now.
We cover the differences between retail and professional trading. We want everyone to realize that although the education we offer will help most everyone, not all strategies and techniques can be performed by the average retail trader. We will review the edge that we have over some other market participants.
Then I will explain how market mechanics work from a trader’s standpoint. For most actions, there are several market reactions; some may seem basic, some almost without description. We’ll start with leading indicators and explain why markets move the way they do. We cover some of the basic calculations for premium and discount to fair value and how we use these numbers from premarket and throughout the day.
My brother takes over after the market closes on this first day. His topics include how to use some basic tools like relative strength and momentum. He then gets into fundamental analysis, basics of pairs trading, and using leveraged exchange traded funds. Bob’s afternoon sessions continue throughout the week. He will discuss global economics, geopolitical concerns, and other news items that affect our current trading. His 40 years of profitable trading, in all time frames, brings a lot to the table.
On day 2, we bring in 12-year Bright Trading veteran Rob Friesen, the Ceo of our affiliate, PairCo Llc. He will discuss the foundational ingredients of pairs and pair construction. He manages a large group of Bright traders as well as facilitate our special Joint Venture Club and Bright Trading mentoring. In addition to pairs, Rob demonstrates efficiency calculations and productivity ratios for individual stocks and baskets of stocks against Etfs.
We get into risk control heavily, both from an individual trader and the firm’s standpoint. Our risk manager shows in detail how best to handle risk.
Not only that, we fly in the manager of our largest group of remote traders to share how we interact with our “Bright-at-Home” traders. Cash Coyne shares some of what he’s learned from his 15 years’ experience with us, his programming skills, and overall view from his perch. He is always very well received and is often chosen by new students to be their direct manager.
We also bring in a couple of our most successful (currently) traders to share their methods with the class. These sessions are again very well received by the students. We don’t bring in those who “did” make money, only those who “are making” money.
In addition, professionals from Briefing and Interactive Data fly in to share their latest products that our people use on a daily basis. These short sessions are purely educational, no sales pitches allowed.
I come back in day 3, premarket, to explain and show how we handle our premarket checklists. There’s actual live trading with narration at the opening of the day. I get into the trading platform and all its benefits as well. We show live indicators and how we use them.
Day 3 continues with trading, in-depth review, and a lot of Q&A.
The fourth and final day is where we showcase top traders and their techniques. My brother generally ends the session with a full day’s worth of examples of his personal trading as well.
Afterward, we invite everyone to join us next door for sodas, snacks, and socializing!
We continually change the topics and instructors while keeping all the required basics. Hope you can join us at some point. There’s more at www.stocktrading.com/training.html.