Drive the perfect race

[28/08/2025]

Three quotes/concepts that were revelations, in hindsight.

(1) A bank market maker once described trading as an endless quest to drive the perfect race. Formula 1 fan or otherwise, it’s difficult not to relate to this as a risk taker. The analogy is apt - essentially a complex sequence of (mental) movements, timed to perfection, supported by technology and with a heavy layer of participant/peer behavioural psychology and game theory, in order to win what is essentially a competition on repeat. All while battling every human bias in the book.
The reason this explanation sat with me is not because of the sporting comparison, but the second derivative. The psychological traits required to participate and the psychological impact of pursuing a perfectionist endeavour that is knowingly as good as impossible. The asymmetry of outcome satisfaction becomes apparent and can be dangerous. How does a driver (trader) feel when winning vs losing, when the win-type is imperfect. Is the payoff of short-term self-flagellation net-beneficial when it dilutes victory satisfaction, with the life-long aim of sharpening the skill to eventually ‘drive the perfect race’? Are the losses meant to hurt and the wins meant to buzz in equal measure? What is the enlightenment-akin happiness payoff expected, if/when achieved? Is satisfaction possible without it?
"Shokunin" (職人) is a Japanese term that signifies a craftsman or artisan, but its meaning goes beyond a simple job title. The term signifies the life-long pursuit of perfection; a person who has dedicated their life to mastering their craft; possessing a high level of technical skill and knowledge gained through years of rigorous training and apprenticeship.

(2) The comfort-zone is defined by a number of parameters when professionally trading within an institution. Non-exhaustive: product suite, peer performance norms, end-goal management/career aspirations, relative exposure to industry high performers, salary/bonus split, time of year, team/individual VaR budgets and expectations, intra-firm politics, lifestyle expenses, tenure in role. I’d defy anyone preaching that they are constantly pushing the envelope, but I recall a conversation that changed the way I thought about trading during an interview. The interviewer, who had traded on both sides of the buy/sell-side fence, and whom I looked up to, told me that 15 years into his career, he actually started trading to win. What he meant by this was that he had forced himself to transition from majority-market-making, where you’re often trading intraday from a position of strength and attempting to enhance and leverage an expected ‘book value’, bound by many of the parameters above, to a mindset of trading to maximise absolute returns. With that came additional drawdown risks and a profound shift from a defensive to an expansionary mindset, accepting the seat-insecurity that accompanied such a shift and the career uncertainty that followed, but targeting and harnessing the uncapped progression and gains that can accompany a successful transition. The reason this concept stuck with me was the notion that the learning doesn’t finish, which dovetails nicely with Shokunin.

(3) Finally, a trifecta of thoughts for all participating in the field. An ex colleague, when training me, often repeated the mantra “discipline wins the day”. Whilst not mutually exclusive from quote (1) above, I believe that in a world of endless styles and horizons, this is the pillar of trading that is fundamental for long run success. I’m very often guilty of ‘sloppy’ phases of play. In its rudimentary form, this can mean hesitating with a stop-loss, sizing-up too quickly or getting greedy with an idea. Distilled: not planning, or not sticking to the plan. The quote “the person who does best is the one with the panic button furthest from his keyboard” (Chase Coleman, Tiger Global) can, if followed, elicit moments of brilliance (limiting market involvement/position liquidation amidst times of stress and dislocation), but in the same way as a vol-selling or mean-reversion strategy, it works until it doesn’t; sometimes with disastrously unlimited consequences. I don’t share this for fear-mongering purposes, but as a simplification model. In a binary world, the ill-disciplined aforementioned approach makes for a stressful and emotional existence, requiring faith and calm above all else. The polar opposite is a highly disciplined and downside-protected approach, whereby losses are an expected part of the game, trades are planned and plans are adhered to. I’ll leave you with one final quote - incidentally from the same mentor and former colleague: “there are old pilots and bold pilots, but no old, bold pilots”. Do with that what you will!