Trading has a way of reminding us politely at first, then aggressively that experience is not a force field. Even highly seasoned professionals get humbled. If trading were easy, everyone would be retired by now, preferably somewhere warm, arguing about which year they almost nailed the top.
I came across the following comment from a highly experienced oil trader that landed in my inbox this morning. It is worth sharing and here is a section:
“No champagne emojis. No victory laps. To be fair, this was a damn hard year for oil traders. I have spoken to many energy professionals across the industry, and it was tough for everyone even the teams sitting in skyscrapers with ten analysts and physical traders. Plenty of peers did not just struggle, they bled.
This was a solid bounce-back year for us after what can only be described as a hostile environment for systematic energy strategies. Choppy ranges, false breakouts against underlying fundamentals, signals that worked for about two days before reversing. This is the kind of market that exists purely to humble quants and annoy traders.
We responded by lowering volatility and expanding diversification through additional signals. That restraint is exactly why this program has only one down year in its entire history. One. That is not luck, it is the byproduct of respecting portfolio construction and risk profiles, not fighting them.
Quiet years like this tend to get dismissed. They should not. These are the years when the plumbing gets fixed, risk models get tuned, and the strategy survives long enough to matter when the environment shifts. If you want excitement, there are plenty of products out there that deliver it right up until they do not.”
Well, going back to my thoughts, markets move in cycles and strategies go through unfriendly phases. Discipline is often tested when results are least exciting. The uncomfortable periods are usually the price paid for longevity.