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Becoming a Successful Trader with Simon Ree

George Grombacher February 2, 2023

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Becoming a Successful Trader with Simon Ree

LifeBlood: We talked about becoming a successful trader, why it’s easy to look good in a bull market, the challenges of professional trading, why anyone can do it but few do, what it takes to be successful, and how to get started, with Simon Ree, Founder of the Tao of Trading, author and coach!

Listen to learn what you can’t do if you want to be a successful trader!

You can learn more about Simon at TaoOfTrading.com, Facebook, Twitter and LinkedIn.

Get your copy of The Tao of Trading HERE

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Our Guests

George Grombacher

Simon Ree

Simon Ree

Episode Transcript

george grombacher 0:00

left with this is George G. And the time is right welcome today’s guest strong and powerful Simon Reese. Simon, are you ready to do this? I am ready, George, let’s go. Let’s go. Simon is the founder of the dow of trading. He has over three decades of experience in financial markets. He’s working to help people have a more joyful life by alleviating alleviating financial stress. He is the author of the dow of trading Simon excited to have you on. Tell us a little about your personal last more about your work and why you do what you do.

Simon Ree 0:45
Okay, thanks very much for the introduction, George. So I’ve been, I guess, interested in and involved in financial markets for most of my life, you know, I developed an interest daresay a passion for the stock market as a in my late teens. I was in my second last year of high school when the 1987 stock market crash happened. And I didn’t have any money invested in the market at the time I was I was too young. But I found the whole thing, just I mean, I was transfixed by the news. And it really just, I guess, captured. Not just my imagination, but the really kind of intellectually curious part of me as well.

So I went on to study economics and finance at university, my first job outside of uni was a futures broker. So I learned about technical analysis, and I learned about derivatives. And it was a it was a good trading training ground. But I just found that trading wheat and gold and frozen orange juice, it wasn’t as exciting or as dynamic as trading, you know, Cisco, or Microsoft, or, you know, the big kind of tech companies that were coming on online at the time. And so 1996, I kind of made the jump and started, started my career in the stock market with Goldman Sachs. Because I had the futures trading background, I kind of built a business around the equity derivatives and options trading. And in 2005, I was asked to found and head up the markets desk for Goldman Sachs in Australia based in Sydney. And our group of the team that I built was responsible for structured derivative trades, all of the over the counter equity, derivative trading, fixed income, foreign exchange, trading, more sophisticated types of things. I did that for a few years ended up moving to Singapore in 2010, to join Citibank, and kind of retired from the finance industry, if you like, well, from the corporate world, at least, in 2017. And I got to the point, I guess, in midlife where I’ve started to ask myself some tough questions about what what was I doing with my life? What was my marginal contribution to society? And I didn’t like the answers I was coming up with. All right, basically, what I was doing, for the large part was helping people who were already incredibly wealthy, stay that way, or get even wealthier. And I thought, I’ve got a skill set here, I’d really rather put that to use to people who could really benefit from it, rather than keep on assisting people who frankly, don’t really need it. So I took a bit of time off, started trading my own account for a living. And then it was conversations with friends and mutual friends. Put me on the idea of of building a course building, sort of an educate online education company, to teach people what I know. And that’s what led me to developing the dow of trading. Nice, I appreciate

george grombacher 3:49
that. So fascination in High School watching the stock market collapse, all the way to opening the derivatives trading desk for Goldman Sachs. That is a that is, you know, I guess fundamentally congratulations. And then recognizing this is good and valuable work, but it’s not really it’s not having the impact that I want to have. I’d like to help more people find that financial peace of mind, levy of financial stress, and I know how to do that.

Simon Ree 4:23
Exactly. And the problem is in the in the finance industry, unless you’re seriously wealthy, I’m talking sort of eight figures wealthy, that the solutions that are available to you are generally not that good, but they are designed to be scalable. That is that the people who are providing the solutions, banks and Wall Street firms, they’re not really that worried about how well they perform. They’re just worried about being able to roll them out as quickly into as many people as possible and charge fees on them and Wall Street has done a very good job of mystifying finance and make it make it in the investing world seem a lot more complex and difficult than it than it really is. I’m not saying it’s easy, but it’s nowhere near as hard as most people probably think. And with a little bit of effort, and the right education, people can really take control of their own financial future.

george grombacher 5:26
We were just talking about how there was a Wall Street Journal article about how a lot of people got into trading, call it 2020, around the pandemic, and we’ve had this rise of apps like Robinhood. And there’s probably dozens of them that have made trading easy. And it’s that promise of doing more of making money escaping the rat race nine to five, but it hasn’t proven out. How do you feel about what I’ve just described? What do you think about it?

Simon Ree 6:04
I think it’s not surprising. The fact is a bull market, a market that’s where stock prices generally rising makes a genius out of every one. All right, in a market like we saw in 2022 really sought out I guess the the amateurs and the punters from the people who take this rather than more seriously. People really underestimate the role of risk management in trading and risk management is crucial, because losses are part of the game in trading they are, they are your major operating expense. They are unavoidable. People don’t realize this. So it is risk management that keeps you in the game for the long term. People also greatly underestimate the role that psychology plays in trading, because taking on a few losses in a row can be mentally debilitating, particularly if you’re not managing your risk properly. So, risk management is essential if you want to be successful long term. And then adapting, adopting the optimal trading psychology, a winning Traders Mindset really is the final frontier between, you know, an aspiring trader and somebody who can actually do this for a living.

george grombacher 7:22
So there’s been so much talk, probably forever about active investing versus passive investing. And, you know, to a degree, imagine that passive investing is what you were talking about how Wall Street, big financial needs to make it scalable, they pass that down to people. And in some ways, that’s bad in other ways. It’s, it’s, it’s not necessarily bad, because there’s probably a lot of people who just are not interested in it. So they have a vehicle that can help them to do it. I have an analogy that I’ve thought of, and you could tell me if you think I’m right or wrong or close to it, that there are people that play, there are people that play in the NFL, that play professional football, I’m a person but there’s no way I’m ever going to play in the NFL professional football, because there’s just I’m not going to put in the time of the work. But that doesn’t mean that there aren’t people that can’t do it. So there are people that beat the market, they do it all the time. But that doesn’t mean that you’re going to do that unless you put in the effort.

Simon Ree 8:23
Yeah, I think that’s, I think that’s a good analogy. I think trading is probably the bar is much lower, I don’t think you need any particular genetic predisposition to become a good trader. Whereas to become a professional NFL player, you probably need to be genetically gifted. In some respects. I think anybody can become a successful trader with the right work ethic. And it’s not that it takes tons of hours a week to do it. But what it takes is consistency. And that’s what most people lack. And it’s consistency through the good times, which is easy. But also consistency through that the less fun times is showing up every day, following the process and falling in love with the process and being religious about the process and not being attached to the outcome. And this is all part of I guess that the psychology that I alluded to earlier, these are all really important points. Trading. Successful trading is it’s not particularly exciting. I mean, I enjoy it, I enjoy the analysis, but I always make sure that I’m never feeling excited, and I’m never feeling scared. I always say if my emotions stray beyond mild contentment or mild disappointment and trading too big and I got to start reducing risk. So you know, some people say that they get into trading for the highs or you know, the the emotional kick they get from it, and generally those people will not have a long career.

george grombacher 9:55
And it strikes me that that’s really one of the big flaws behind some of these online trading platform. farms that are working to incentivize you to make more transactions, all social media and make you feel excited. And here we go kind of a thing and the enthusiasm and exuberance of cryptocurrency and huddling and all that stuff sort of sounds like it runs contrary to what you just said.

Simon Ree 10:20
Yeah, big time, I think the gamification of trading is it’s very dangerous trading is, it’s a job. And it’s if you treat it like a job, it will pay you the way a job can in terms of generating that consistent paycheck from from month to month. The problem is, people often take one of two approaches to trading, they either take the video game mentality, and I think certain providers have encouraged this, again, with the gamification that we talked about, or they they approach it with, like a lotto ticket mentality, you know, people say, Well, you know, all I want to do is turn my $1,000 into a million dollars in six months. You know, it’s, you might have heard about one person do that. And he may have been, he or she may have been lying about it as well. But stories like that are incredibly rare. If you treat trading like a job, in terms of if you do the work, your chances of getting paid fairly for it are pretty good. That is a sort of attitude, and I encourage people to have when it comes to training.

george grombacher 11:30
But I don’t want a job of trying to escape that how much how much time? How much time is this new job going to take me?

Simon Ree 11:37
Well, I mean, initially, like anything, when you’re learning the ropes, it will require some additional effort. And I would usually say to people, you know, if you can set aside 15 hours a week, you can get up the curve within a few weeks. Beyond that, once you’ve, I always say that the first 100 trades, that’s like your apprenticeship. But once you’ve completed 100 trades, you kind of figured out the system, you figured out your brokerage platform, you’re kind of you’re still basically a novice, but you’re a novice who’s got a clue about how things are running. So after your first 100 trades, you can probably get it down to on average, about 20 to 30 minutes a day. Now, there will be some days where it takes more time, it might take you an hour, there’ll be other days where it might only take you five minutes just to check your positions and run a couple of scans and realize that there’s nothing to do that day. But once you’ve, if you think of a golfer who’s grooved your swing, if you’re a trader, that’s grooved your swing, and you’re you’re really at one with the process 20 to 30 minutes a day is probably about right. If you spend more, you could be you could be overtrading, you could be, you know, tooling around with marginal setups that perhaps he shouldn’t be doing. But if you’ve trust the process, follow the process and respect it, then there’s no reason why you can’t do it in a very time efficient manner.

george grombacher 13:05
I think that golf is probably the PGA Tour is probably a better analogy than my NFL. So thank you. I think that makes a lot of sense. So we say the first 100 trades how how long theoretically, is that is that weeks is that months,

Simon Ree 13:24
I would say generally months, I mean, you know, my style of trading, it would probably take you you know, four to six months to get to get to that point.

george grombacher 13:35
Got it. And so tell us about your style of trading.

Simon Ree 13:39
So my style of trading is what’s known as swing trading. So I’m not a day trader, I hold positions overnight, and my average holding time. So my average holding timeframe has gotten shorter certainly over the last year as markets have become more volatile. But ultimately hold a position anywhere from say three days to three weeks. That would be about average for me. So I am holding positions overnight. I’m not staring at the screens all day I put the orders on in the morning session and then I checked them at the end of each day. And it’s a very low stress way of trading I do all of my analysis when the markets are closed and my emotions are not being spiked by you know announcements and flashing red and green lights and that sort of thing. And yeah, I’m I go into a trade knowing exactly when I’ll get out of it if it goes wrong and with a pretty good idea of where I’m gonna get out of it if it goes right. And that way it’s a sleep well at night kind of trading method. My Risk maximum risk is always controlled. i If I follow my risk management rules, I can never blow up my account.

george grombacher 14:54
Nice and what is what is what is the goal of Have your

Simon Ree 15:00
trading. So my goal, my personal goal is to make 5% per month. Now, some people will hear that figure and they will say, That’s ridiculous. You can’t it’s not possible to make that money. You know, my financial advisor tells me 10% per annum is all I can expect to earn anything more than that is gambling. There will be other people who will hear a figure like that and say, well, that’s not going to turn my $1,000 into a million dollars in six months. So why would I bother right now and I get both reactions to to that number. But that’s, that’s my personal goal. And what I guide people to is, if you’re, if you’re trying to figure out how much money you need to trade to kind of make a living or replace your income back solve for 5% a month, because that is a figure that’s, you know, it’s it’s a, it’s a realistic, achievable, albeit slightly stretch target. But I’ve got, you know, dozens of people who are hundreds of traders who are making those types of returns, I’ve got some traders who are doing much, much better than that as well.

george grombacher 16:06
So I think that that’s a, I think that that is an exciting thing, it sounds reasonable to me. I think it’d be better Simon, if you could figure out how to do the 1000 2 million in six months deal. It’s a whole different conversation. But

Simon Ree 16:21
yeah, that would be fun. But yeah, I haven’t cracked that nut yet.

george grombacher 16:27
So all right. So I imagine the idea behind your work, the book, the courses, the coaching is that is that somebody can come to you and and learn everything that we need that I would need to to be able to do this.

Simon Ree 16:45
That’s right. So what I’m what I’m teaching people in my online academy, if you like, the call it options Academy. It’s really the distillation everything that I’ve learned over the last 30 years. So there’s, there’s over 20 hours worth of videos, and it’s sort of broken down into bite sized 15 or 20 minute modules. But in about 20 hours, you’re kind of getting the condensed version of what took me about three, three decades to kind of experience Sunday for myself. I’ve made a ton of mistakes in the past. And you know, my goal is to help people make as few of those mistakes is possible by learning from my mistakes. Yeah,

george grombacher 17:28
yeah, i One can only imagine. I mean, there’s probably an endless number of mistakes you can make when when working in the field that you’re working in and thinking about the stuff that you’re thinking about. So So who do you think is is? Is there a certain temperament that somebody has to have, who is who is a good candidate? I think

Simon Ree 17:51
the less emotional you can be about your trading, the better off you are. I always encourage people to approach trading in a very unemotional manner. If you are feeling emotional, carry position, size, reduce your risk, and you’ll generally find that you’re on a more even emotional keel. But I think emotional control would be the key thing that people struggle with. Another thing that people really struggle with is this desire to be right. Most people would rather drink bleach than admit that they were wrong. Unfortunately, in trading, admitting that you are wrong, early and quickly, will save you a ton of money. Alright, and being wrong in trading, like I said, it is all it’s just part of your operating expenses. The thing is, in trading a 60% win rate is actually really good. You know, if you if you’re winning 60% of your trades, you’re doing well. There are not many jobs in real life outside of trading, where being right only 60% of the time is going to win you a heap of accolades. All right. And this is one of the ways in which the trading world is very different from kind of the real world or the non trading world if you like. But if you can win 60% of your trades, and you make twice as much on your winners than what you lose on your losers, you can make a really good living that way.

george grombacher 19:13
That makes sense. Well, Simon, thank you so much for coming on. Where can people learn more about you? Where can they find options Academy? Where can they get their copy of the dow of trading?

Simon Ree 19:25
So you can follow me on Twitter. My Twitter username is Simon underscore ri E. I’m on LinkedIn at Simon re you can follow me there too. My website is www dot Tao of trading that’s TAOFTR ad ing.com. And George what I’ve got is a special for your listeners. If they go to tower trading.com forward slash lifeblood. They can find out a little bit more about me they can download the first chapter of my book for free, and they can access a pretty sizable discount on Some of our programs

george grombacher 20:01
Excellent. If you enjoyed as much as I did share some of your appreciation and share today show the friend who also appreciates good ideas. Go to Tao of trading, it’s T A au of trading.com/lifeblood and check out all the great resources and see if this is a good fit for you. Thanks gets Aaron. Thank you, George. Been a pleasure. Till next time remember, do your part by doing your best

Transcribed by https://otter.ai

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