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Trade Spotting

Trees whipping by at 140 mph, the car takes air 4 feet off the ground, lands sideways, then your spotter calmly says right turn. Rally racing is a dangerous business and something that makes it unique is that the driver isn’t alone in the car. It was recognized long ago that this type of constantly changing course was too much for a single person to handle. All rally racers have a spotter that keeps them on the road by alerting them to conditions and decisions that will need to be made before the driver even sees them.

Think about this in trading. We often see day trading as a lone wolf activity. It’s just you and the charts, you answer to no one. Maybe it’s time to challenge this concept and start looking at it as a group effort. Trading may not be life or death, but it’s dangerous to be out there on the chart all alone. A couple of wrong moves and you could lose all your life’s work in a matter of hours. One bad day could take your dreams away and leave you struggling to recover financially and emotionally.

Perhaps day traders should consider having a “spotter”. Someone right there with you, looking and verifying that you know which way the course is going, the hazards that lie ahead. We could also call this a Risk Manager, but we are envisioning more of a trade co-pilot who is actively engaged in the decision process with you. A Risk Manager is more passive and not engaged in the trade from start to finish. A Risk Manager is more like the passive guardrails on the course. What type of advantage could this be for your trading? Imagine a rally race where you are the only one with a spotter. Sure, it may be a little extra weight, but think about how much more confident you could be to press the gas, tap the brake, pull the brake, or spool up the turbo when someone is letting you know what lies ahead.

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