Tom Dante: Making calls is not the same as trading

The best trade caller I’ve ever known - This is the story of someone who could read the market well but could not translate it into profitability.

Once upon a time, (around 15 years ago), I worked alongside a young man with an incredible talent for predicting market moves.

Every morning, I would sit down at my desk and every morning he would outline his expectations for the day. “GBP will move up to this level and then it will put in a top for the day and close on its lows”, he would vehemently insist whilst simultaneously shovelling Coco Pops into his mouth and jabbing his finger at his screens. Every day he anticipated a move or a reaction from a level and almost every day I would watch the market do what he said and marvel at how accurate this young lad was at reading it. One morning, he told me he expected a solid move up in Crude Oil for the entire day.

It was, he declared gesticulating wildly and spraying milk everywhere, time to get long in size and hold. Although I didn’t have the same read, I kept my eyes on it and lo and behold, watched it move up for the entire day.

Around 4pm, as I was wrapping up and thinking about the long drive home, I congratulated him on the call and said something like: “What a day you must have had”. With a dejected look on his face, he turned to me and said: “I’ve done my arse”.

I looked back at him puzzled.

“How?”, I asked. “The market has done exactly what you said it would!” “Well, I knew it would go up…but I was waiting for a pullback…and it just wouldn’t pull back, so I missed half the move.” he said.

“Oh, I see.” I replied. “Well, you can’t catch them all”. He nodded.

“But then I got frustrated and thought it looked overdone on the day, so I went short.” he added slowly.

I nodded, listening with bated breath. “I got stopped out on it” he continued.

“And it really frustrated me that I’d gone short when I knew my bias was long. So, then I flipped to long as originally intended and I doubled my size to recoup the loss…which was when Oil started to pull back…” As he related the events of the day, I could see the pain on his face.

“…and now long at that extra size I knew I’d be in trouble if I was wrong, so I had to cut it and took another big loss…only to see it go straight up again.”

“Risk have just stopped me out for the day.” he ended miserably.

I didn’t know what to say.

Somehow offering a weak platitude about sticking to one’s plan seemed like it might only antagonise.

So, I just nodded sympathetically. Now I wish I could tell you this was an isolated experience but sadly it wasn’t.

Nearly every day this lad, with his incredible read, anticipated the market well.

And nearly every day this lad, subsequently sabotaged his read, mainly I suspect, due to poor discipline. The final straw came, one evening, when risk told him to stop trading for the day and he decided to carry on regardless.

A reckless, last-ditch attempt to try and dig himself out a hole.

He left soon after. That lad was one of the nicest people I have ever met.

I never saw him again.

But I like to imagine he solved his discipline issues, and he is out there somewhere, crushing these markets and living the dream. Which leads me to conclude with the moral of this story.

Making calls is not the same as trading.

They are not even in the same ballpark.

This lad was the best caller I’ve ever seen and the worst trader. I’d rather be average at calling and excel in execution.

Execution is everything.

Without it, your calls mean shit. Oh, and while you’re reading:

If you have a clear read on a given day, make a plan and try and stick to the fucking thing.

Cheers.