Are Trading Rooms a Good Idea?

There are several trading rooms I stop into from time to time and find them helpful and the moderators intelligent and well trained. On the other hand, I am often asked to sit in on new trading rooms and am perplexed as to the goal of the moderators. There are times I have been totally confused as the trading room leaders’ call out trades. Perhaps they trade in a different style than I, but many of the trades I have observed make absolutely no sense.

Then again, I am a confirmed scalper. I am also a confirmed in-the-trend scalper. So I find it perplexing when moderators’ call out counter trend scalp trades as these trades have a low probability of success. Usually these trades occur as results of a configuration of oscillators are indicating a trade, regardless of whether or not the trade is with the trend. To my way of thinking, trading against the trend is generally a terrible idea, regardless of what your indicators may be indicating. I am also a firm believer and using a consistent methodology in your trading technique, so when day trading room moderator initiates a trade I think it's a good idea for that individual to carefully explain the criteria for the trade and why is a high probability trade.

After all, trading is all about high probability trades and low probability trades, nothing more.

This statement is a bit of a misnomer, though, because the randomness component of the market precludes any actual percentage number being assigned to a given trade. Experience and study tells us which trades have a higher percentage of success than others.

But getting back to trading rooms, I believe they are in general a good idea. If the trading room is not technically sound, it is still possible to learn a great deal. Every time I have observed someone else trade I learned a little bit, whether it is a positive idea or a bad idea. Odd as it may sound, I think I get more out of bad trading rooms and lousy trading systems than I do very good trading systems and trading rooms. Why? Because I can spot the errors in thinking (at least in my opinion) that are being exhibited for the traders and the room. Of course, sometimes I want to scream out “how could you possibly take that trade?” But I don't. As a visitor to a trading room my job is to watch and learn.

It seems in every trading room there is an individual who is intent on imposing his view on trading on the rest of the room. He or she is generally a visitor to the room and dominates the chat with arguments with the moderator. Aside from being great entertainment, this gives me a chance to see the moderator explain his technique, or lack of technique. To some, the loudmouth visitor is annoying because he or she disagrees with the moderator. I don't see it that way because I get a great insight into what the moderator and trading room are all about.

On the other hand, I have been a moderator in several trading rooms when there is an individual who is vehemently opposed to my trading style, it can be a major distraction to the other traders and me, as trying to explain my methodology often results in missed trades and lack of attention to the trading chart. So it's a two-way street, it's great to watch someone disagree with a trading room moderator, but it's difficult to be a moderator with a difficult visitor in the room.

To answer the question that the title of this article poses, I think trading rooms are a great idea. It does not matter if you agree with the methodology of the trading room, as you can learn any time you watch someone else trade. I am a student, and always will be a student, of trading; even after 25 years of trading. I have never heard a trader explain that he or she just knows too much about trading. Even in the worst trading rooms, there are nuggets of knowledge that you can pick up and use at some point in your trading career. I would point out however, that the nuggets of knowledge you learn may not necessarily be positive, and they may be distinctly negative. But knowledge is knowledge, and you can't have too much knowledge.

I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit.

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