Aggression Vs. Patience - The Uncomfortable Balance, Trading Essays

Aggression Vs. Patience – The Uncomfortable Balance

Ray D'Argenio
Ray D’Argenio

In first typing up this article I attended on emphasizing the aggression I believe traders must apply to maximize their upside: especially for the people who aspire to become a professional trader. In doing so, I’d feel remiss if I didn’t counter that aggression – unchecked – can be determent to our trading and ultimately our bankroll. While I believe aggression is in the toolbox of a trader who’s trying to maximize his profit, he also has patience in his repertoire to match. I wanted to say this so you as the reader know I’m not advocating RECKLESS aggression. As for many things in life, trading is the great balance between action and non-action: although non-action is an action. From my experiences in trading and other games of similarity, an optimal approach – or the pursuit of it – will leave you with an uncomfortable feeling. If you want to be the best trader you can be, if you want to make the most money in trading that you can, the unsettling feeling must not deter you.  

I wanted to write about “aggression” because it seems to be minimally talked about in the retail trading community. The trading twitter community loves and retweets these passive trading euphemisms, “sit on your hands”, “you don’t have to trade everyday”, “protect your capital at all cost”. There is nothing wrong with these statements and I wholeheartedly agree. But I feel like the other side of this coin doesn’t get the shine it needs. Being patient and patient alone isn’t going to take you to the promise land. Now if you trade for a hobby or entertainment and are just interesting in protecting your downside, sure: your reasoning and “goals” for trading are going to determine your approach. I’m speaking to those who are looking to maximize their upside. I’m coming from the perspective of someone who is trying to do this for a living and who wants to make a good living. 

Aggression will often make you feel uncomfortable. Trading is a game of math. Prior to trading I’ve been in other areas where machine learning and analytics have been applied: obviously there applied to trading as well. Poker, football, and daily fantasy sports being the areas I’ve looked into “optimal” play as advised by models, software and analytics. You see it with games that computers are already stronger than humans in, chess and GO. There is one common theme that is seen throughout: an often uncomfortable or counterintuitive, aggressive strategy that humans haven’t stumbled upon themselves. 

Trade Ideas artificial intelligence Holly is fairly aggressive with the quantity of trades and her profit target; and wide with her stops. You often hear people preach the opposite: less trades, take profits along the way and tighter stops. She trades set ups I doubt many human eyes would find attractive. And She is better than the majority of traders: she’s profitable. On the recent episode of “Confessions of a Market Maker” podcast, we spoke with Senior trader at SMB Capital Ryan Hasson, who spoke to the aggressive approach and the challenging of themselves that their prop firm embraces. Mike Bellafiore, head of SMB Capital puts it well in his book “The Playbook”, “We must strike and strike without mercy when the market gives us our best setup”. 

With the introduction of solvers and AI into the poker sphere, we’ve come to understand that a un-exploitable strategy is one that’s often uncomfortably aggressive for a human player, and often not intuitive. With the introduction of analytics into pro sports, you’re seeing a lot of commonly accepted principles or strategies in each respected sport going by the wayside in favor of aggressive actions. Analytics has shown the value in basketball teams shooting more 3 pointers; in football being more aggressive on early downs throwing the ball against heavier boxes and choosing to go for it on 4th down in enemy territory at a higher clip. 

All this talk about aggression and the examples I’ve given lead me to this point; striving to be the best trader you can be while in the pursuit of maximizing your strategies and profit will often leave you uncomfortable. Being uncomfortable isn’t always a bad sign. As you size up after a run of consistency, you should feel uncomfortable. Trying a new back tested strategy for the first time, probably will be uncomfortable. Losing 5 trades in a row and then having a A+ set up appear: get over your uncomfortable feelings and pull the trigger. Implementing an aggressive approach will undoubtably bring some pain and losses, especially as you work out the kinks. If you want to challenge yourself and make the most that you can, you must resist the urge to “play it safe”. There is nothing wrong with playing it safe like I mentioned earlier in the article: it all depends on your goals. But as someone who wants to make a living doing this, you have to develop a killer instinct. The cliché metaphor to trading like a sniper; Wait, wait, wait, then finger jab. Patience with timely aggression.  

This approach to trading isn’t for everyone. I’m writing from my perspective, my approach and the correlations I see with strategies in other areas outside of trading which I believe are applicable. I’ll end this article with a quote from Jesse Livermoore;“They say you never go broke taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market”.

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