The BBC reality TV series “Million Dollar Traders” has just shown here in Australia. If you have missed it, it is a 3 part series. The premise of the series is 8 every day people (vets, engineers, students, shop owners etc) are given some training and 1 million dollars to manage under the watchful eye of a professional trader and the investor. They are given Bloomy terminals in a London office. As the series progresses the intention is to eliminate the weaker traders until the best survive.

The series itself is yet another reality show out of the BBC sausage factory; in hedge fund terms a million dollars is small fry; and the trading methods used are nothing to write home about, but I must admit I enjoyed it immensely as all the psychology issues involved in trading came out.

Like many hedge funds the trading approach involved each trader being allocated a risk limit based on their past performance. As their performance improved they are allocated more money. As a trading group each morning they would start the day at 6AM and review all the major markets and talk about different strategies for how to trade the market (mainly based on support/resistance and major themes in the news). The objective of each trader in the group is to build a portfolio of long and short positions (mainly in stocks).   The objective of the hedge fund manager is to have a stable of traders all trading different styles and different positions in order to minimize his risks.

The series itself was shot at a really interesting time in the market when the credit crunch was unfolding, so trading was not easy and most of the street were loosing money. The best thing about the series is we have all the classic archetypes in trading, including the usual bad trading archetypes:

• The risk hungry trader who over trades his risk limit and still has an itchy trigger finger
• The most intelligent person in the room with all the best ideas for trades but just could not pull the trigger on a trade
• The know it all trader who expected the market to operate to his rules and lost on just about every trade
• The trader who had one big loss and never really recovered and just dug himself in deeper
• The “ethical” trader who could not cope with what is required to be a true capitalist

The good trading archetypes:

• The cool as a cucumber trader who methodically worked their portfolio
• The trader who looks at price action and just sees the push and pull of greed and fear
• The trader who looks at the market as a whole and sees it as a big chess game and wonders what the next move will be for the central banks and the big funds

Most of the series focuses on the five negative archetypes as there is just so much angst and emotion in this group, which makes for good television. You barely hear a peep from the other traders who are the positive archetypes. They just keep their heads down and work their portfolio. Watching these people winge and moan at times was painful, but sooooooo instructive, because you learn so much about yourself by watching them.

Probably the best moment in the whole series is when the Hedge Fund Manager (HFM) ejects one of the weaker traders for failing to pull the trigger on her trading ideas, and then half the trading room walks out with her (probably using the opportunity to get out themselves and avoid the painful situation of being ejected by the HFM). In that moment the top trader just kept on trading. Sign of a real pro.

Anyway if it comes on the telly in your parts give it a look, otherwise you can watch some parts of it on You Tube.  If you have seen it yourself, drop me a line and let me know what you thought.

Episode 1 Trailer

Episode 2 Trailer

Episode 3 Trailer

This entry was posted on Saturday, June 20th, 2009 at 9:57 pm and is filed under Trading Life. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.