#138 - Why I've Never Run A Live Trading Room

Episode of: The "Daily Call" From Option Alpha

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Feb 7, 20184m
#138 - Why I've Never Run A Live Trading Room
Feb 7 '184m
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Hey everyone, Kirk here again from Option Alpha and welcome back to the daily call. Today, I just want to describe why I’ve never run a live trading room and why honestly I have no intentions ever in my life to run a live trading room. Now, live trading rooms are insanely popular. I see them all over the place and I probably literally get maybe five or six request every single week to run a live trading room of some kind. Basically, what is a live trading room if you’ve never heard of it or if you don’t know exactly how it works, but it would work basically like a live chat board. In most cases, I think that’s mostly how they work, the ones that I’ve seen. But basically, people are in there live and they’re trading and they’re either showing their trades or they’re commenting on their trades in chat back and forth to each other and it’s just this big rolodex and board of talking back and forth and effectively sharing ideas. And why I like the idea on the outside of a trading room and what goes with a trading room, I think the actual implementation and execution of a trading room is often done really, really bad and often probably leads to bad mechanics and bad systemology of how you should be trading options in the first place.

The ones that I’ve seen before… And I jump in and try to see what other people are doing and try to learn from other people as well. But what I generally see in trading rooms which is why I’ll never run one live myself is a lot of just chatter and banter. Most of what I’ve ever seen is not really actually execution, it’s not really actually the strategy mechanics behind it. It’s a lot of noise. It’s a lot of white noise and generally, a lot to follow and I think it’s really hard for people getting in to assume that that’s the regular standard protocol for how you should be trading, is lots of noise, lots of activity, banter back and forth and not really execution. I think what it also creates is it also creates this need to fill a gap. That’s I think what the biggest problem with a trading room, is that you get somebody on there and they’re supposed to be trading live. They end up looking for things that maybe aren’t there. They end up getting into trades that maybe aren’t there in the first place to fill the gap, to fill the white space of this hour block or two hour block that they have to run this live trading room. And so, again, it just breaks a lot of mechanical rules. You end up seeing people forcing trades all the time, breaking their own rules, doing things just because somebody made a comment that really isn’t realistic to where maybe that position is setup or how that indicator is used. I find that it just creates a lot of white noise and ultimately, a lot of losing trades and very frustrated traders.

The good news is that if you’ve ever run into that and if you’ve ever thought about running into that, the good news is that you don’t actually need to be as part of a live trading room. I have a life. I have girls that I love to stay at home with and my wife is at home with me and so, I don’t want to be associated to a computer and tethered to a computer, required to be at this room or be trading or watching the screen all day. That’s the reason that we’ve built Option Alpha, so that people can learn how to trade the markets without having to stare at the markets. I think when you realize that, then you realize that you don't need a live trading room to be successful, that you can get in, wake up the morning, maybe execute a couple of trades a couple of days a week, it doesn't have to be all the time, but then let those trades manage themselves, use contingency orders, etcetera, use back-testing and trade optimization tools like we have at Option Alpha to help streamline that process. But ultimately, you don't need to be tethered to the computer. You can run your life. You can do whatever you want. You can still work your day job and do this. That’s why I think running a live trading room maybe is going to falsely lead people into believing that they need to be glued to the screens all day which is another big reason why I don’t do it.

Hopefully it helps out and hopefully it answers a lot of questions that you might have about why we do or don’t do one here at Option Alpha and I assume we’ll never do one here in the future. But as always, if you guys need anything or have any questions, let me know. Until next time, happy trading!

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