(continued from Stopping Out, if you haven’t read any of this series, start here)

That’s it. It just ends. There’s no redemption arc where I am asked about my most challenging moment in a Market Wizards interview and I have the cliche answer dialed up and ready to go: “it’s when I blew up on FNMA but I came back from it a stronger trader. Now I am MBC’s #1 trader after I made $40 million last year.” I took the cowardly way out.

I moved on from MBC to be an independent trader and for the next 10 years, my results were… pretty good. Let me show you something.

Consistency and solid risk-adjusted returns and closing near the high watermark–year over year over year1*2014 graph starts April 1st, a few weeks after I left MBC so no, you don’t see the FNMA trade creating a big dip there. I’ve achieved financial independence and I can do whatever I want. Where can I go at this point with trading that moves the needle for me? It’s just a job and I’m over putting myself through the emotional ringer in some empty quest for glory. I’m detached from all that crap now, it can’t upset me anymore.

Then 2023 happened.

It can still upset me. Just when I thought I was finally over the turbulent emotional years of my 20’s… just when I finally felt like a grizzled 30-something trading veteran, someone who has seen it all… just when I thought maybe it was just a job and it wouldn’t make so depressed anymore… Nope. My results tanked hard and so did my mental state. I still can’t handle extended periods of losing. It makes me feel like my entire world as I know it is collapsing on me. I stop trading for long durations and I don’t replace it with anything productive. Entire days and weeks get wasted as I watch TV and eat junk food and abandon all chores and errands because I temporarily cannot function as an adult. Then the shame and disgust kicks in–you are such a useless piece of shit. Can’t make money anymore. Can’t do anything right. That’s how bad trading makes me feel. For the record, the trade that bottomed me out2which I will never write about because it’s not that interesting was just shy of the figure of my FNMA loss. $195,483–I still have never lost more than that amount.

When I first started writing this in June, it was sort of an outlet to all the angst I had been building up from this terrible, awful, no-good trading year. Even worse I just hated trading more than ever and I wanted to do something else… but after some contemplation, I felt stuck. There wasn’t anything I felt super passionate about. And I had become so accustomed to printing money every year that I couldn’t accept that it was now just gone. So I’d force myself to trade, eat another spoonful of shit, and find myself in the gutter again. I must have repeated this cycle at least a dozen times.

While super depressed and wasting time at home doing nothing, I stumbled upon this “web comic” and I binge-read it over 72 hours.3The guy who wrote that has a far more interesting story than I do so PLEASE READ IT!!! I started thinking about why I even started trading and why I moved to New York at all. I felt compelled to start writing again for the sake of retracing some steps. I entertained the idea that my at-the-time unborn daughter would one day read this and know her father’s story. So I wrote from the beginning. People seemed to like it so the further I went, the more effort I put into it.

I didn’t just want it to be my story. I also wanted it to be the story of MBC Securities, as well as everyone there who I traded with. Almost all the traders I met at MBC ended up doing something other than day trading for their primary source of income. I wanted to paint an accurate picture of the prop business–most people just don’t make it as professional traders, even if they’re smart and they get the right training. Why? Because it’s really hard.

There were also a handful of traders who I met along the way that did quite well for themselves. Remember that picture from Consistently Profitable Trader?

That leap from marginal trader to CPT is the big one. You can have a nice life just staying there for many years, provided you don’t blow it all up in one big mistake. But I added that one last panel even though I didn’t go over it4I kinda wish I picked a different term because Master Trader sounds a lot like Masterbator…, kinda like a secret character in a video game where you had to beat the last boss and do all the sidequests just to unlock it. A CPT grinds money to make a living. A Master Trader plays for the high score for the sake of the high score.

Me–I’m still close to the same trader I was 10 years ago. This isn’t to say my PnL didn’t spike when market conditions, particularly 2020-2021, became incredibly favorable. But from a skill or mental standpoint, I didn’t change that much. I didn’t unlock the secret character but it’s possible I met some people who did.

Let’s find out what happened to some of the other characters in the story.

Clockwork: We were going to be a great duo, like Shawn Kemp and Gary Payton, or Jose Canseco and Mark McGwire. It’s a shame I had to blow it all up and ruin it before we both really came into our own. I taught Clockwork everything at the beginning. He’d follow all my trades and annoy me when he’d exit so quickly before I did. Then over the course of ten years, he surpassed me and became an eight figure trader. He’s one of the best scalpers I have ever met but he also expanded his game into swing trading and options. I wrote a little bit about him here but that doesn’t cover the monster years he had in 2020 and 2021.

He’s a good example of a pro trader drifting higher on the Pain axis on the Pain/Time Matrix with more experience and confidence under his belt.

I remember as a trainee, he was so happy to make $100 in a single day. Then he’d shut down all his risk because he didn’t want to give back his hard-earned profits. He hated taking pain. Compare that to the current version of him: the last time I met up with him, he was telling me about a position where he drew down $700,000 on a sharp move, far beyond his daily stop, and he was threatening to quit if he got liquiduated. I’m proud of him.

Eagle: If you told 2013-Pete that Clockwork would make 8 figures annually one day, he’d have been a bit surprised5not because he didn’t have the skill but because he was such a safe trader focused on consistent PNL. Eagle–different story–I always knew he had the talent to be a great trader. It was obvious just from observing him for a week–he’s a great executor and he didn’t stop trying to learn new things. He went through his own massive blow up trade on a stock called KBIO in 2015. He faced the exact same dilemma that I had: stuck in a huge drawdown. He decided to stay at MBC and make back the deficit. He recovered within a month and went on to crush the markets for the next 9 years, multiple times finishing the year as the top trader at MBC. In some ways I see him as a foil to my story–the guy who took the other path in the road and succeeded.

A couple years after I left, MBC developed a new team structure for their office planning. Trainees and unproven traders would be selected into teams that were run by the best traders on the desk. Who were the first two traders to get their own teams? Eagle and Clockwork.

Tommy: Tommy and I continued to trade the Coin Fund until the middle of 2014. We actually loaned our money most of that time to make 1% a day but interest rates eventually fell to very ordinary levels by the spring and bitcoin’s volatility had died out. We agreed to put the fund on hiatus. Rivers dispensed our performance bonuses and used the rest of his money for his startup’s expenses. I thought Tommy would make it as a trader. He netted $50,000 in a year from the inception of the Joint Venture–most failed traders are never able to get to that point. But for whatever reason, it just never worked for him and he left trading altogether in 2016. We’re still good friends and we’re both long-term bitcoin investors.

Even though I’m not a huge fan of NYC6despite still living here because my wife wants to, one of the most underrated aspects of living here is the ability to connect with other like-minded individuals and stumble upon unexpected opportunities. If I didn’t move here, I wouldn’t have met Tommy or his cousin Rivers and would have missed out on trading the Coin Fund.

Other MBC traders: My only in-person mentee, Teddy, didn’t make it as a trader. He lasted about 6 months before taking a job outside of trading. Mesut still trades at MBC–he’s the only guy from the Y5 days who doesn’t rely on momentum strategies but instead seeks out special situations and other weird stuff. My pal Coulsen left in 2014 and joined a wealth management firm. Anton left MBC to join Tuco’s hedge fund but then left after a year and became an execution trader at a large institutional hedge fund. Jimmy left in 2015 while in a large drawdown. After a couple years in the real world of working, he then came back in 2017. He was given a clean slate (previous deficit wiped to 0, mostly stemming from his tight relationship with Avery) provided he work hard and do the usual MBC trade reports and presentations that he once hated to do. His second act lasted about a year. I always thought Jimmy had a knack for understanding chart patterns and micro price action but he lacked the focus and drive needed to succeed. Hanzo left trading completely due to the stress of constantly fading the market. He now teaches finance and accounting at a local community college, which he feels is his true calling. This from the guy who was once the #1 trader at the #1 equities trading firm in New York. He actually invited me to talk to his students a couple months ago after reading one of my posts.

Tuco: Tuco offered me a position at Green Ivory Capital multiple times. He even paid for my ticket to take a train to Stamford and check out his new headquarters. His fund seemed more focused on things I had no expertise in like forex, algos, and global macro, so I decided not to join. I did keep tabs on it for a few years and they seemed embattled to say the least. There are public records of multiple company lawsuits and he personally told me his head of marketing was stealing from them. Green Ivory eventually disbanded for good in 2018. I can’t even find anything about his ex-partner Rowboat7The Global Macro Guy in the 10 Traders You Encounter in Prop, it’s like he scrubbed away his digital footprint.

Here’s where his story gets incredibly sad. I found out in late 2020 that Tuco passed away from Covid-related complications. He’s survived by a wife and a young daughter. I hadn’t spoken to him in years but I always thought we’d reconnect over a beer and chat like no time had passed. That’s just the kind of guy he was. Rest in Peace, G.

Mr. West and WTG: A couple years after I left, there was a ‘great migration’ at WTG’s main Austin branch. A lot of the top traders, including former #1 trader Heath Wilson, left for a rival prop firm that promised them a higher profit split. Something really interesting happened to that rival prop firm and I hope I can write about one day, if someone is willing to talk to me about it.

WTG then went on to have great years in 2020 and 2021. They made north of $30 million alone in the TSLA S&P 500 addition, which marks the absolute apex of their once mighty edge on imbalance trading. They did so well they actually started paying trainees a small salary for the first time. But WTG has since struggled after the pandemic highs. Now all my pals tell me the imbalance strategies aren’t what they used to be. The market makers have smartened up and are giving traders horrible closing prints. They have had to also deal with their clearing firm and main capital provider abandoning their business–this may be attributable to large trading losses but I cannot confirm for sure. This left WTG scrambling for another clearing firm and here’s a twist I didn’t see coming…

That backup firm coming in to save the day? Y5 Capital. Yeah, they’re in business together and it happened like a month ago and I found out this week. I’m still shocked and trying to learn more.

Avery: He spends a lot of his time tweeting bullishly about TSLA and promoting MBC Education stuff. You get the “privilege” of knowing all of Avery’s secret levels and his secret watchlist for just $10,000. Or you can pony up $25,000 for the in-house foundation program where you can see him trade his 100 shares in person.

Victor: You know, I got a lot of messages in my early posts about Victor and MBC–some readers felt their prior beliefs about MBC were “confirmed”. Traders there don’t make money. Tier-3 bucket shop that’s merely a byproduct of social media hype. I told most of these readers to keep reading before they made up their mind. In the end, trading is game where you have to put your money where your mouth is. Victor bet big on all of us at a time where we weren’t showing anything on the bottom line. He managed to strike a deal with WTG and get us the support we needed at a critical time. At the end of the day, he can truthfully claim he trained multiple 8-figure traders from scratch. You can’t take that away from him. If you look at where MBC was ten years ago and compare it to where they are today, it’s night and day. That’s why I thought it made for a compelling story.

A few years ago, I wanted to join another prop firm for the leverage, since I was moving a lot of my retail funds towards a down payment. I asked Victor for recommendations and he invited me to dinner to catch up. Mid-way through our conversation, he couldn’t stop gushing about the growth of his best traders–namely Clockwork and Eagle. He was throwing out all these insane numbers they had made in a day, a month, a year. I almost felt like there was a hidden subtext behind why he was discussing all of this with me.

It could’ve been you Pete. You could have be the one making $40 million last year.

Admittedly, there was a very competitive part of me that felt a little jealous. Knowing that Jimmy got a second chance with a clean slate–it was definitely going through my mind… should I ask Victor if I could come back and start from scratch? Ultimately I didn’t. It didn’t feel right to ask if I didn’t know my answer would be yes at that very moment. I’m happy I had the MBC Prop Trading experience, even if it didn’t end well. It’s a part of my life’s story that I look back on fondly. But I don’t want to do it again.

Churning and Burning: Going Forward

Anyway. That’s the end of Prop Trader Series. I’m thinking about a new series called Retail Trader Series about my next 10 years as an independent trader but who knows how interesting that’ll be because there’s less scenery and far fewer characters involved. Maybe they will just be one-off posts rather than serial. I still have to do the mailbag at some point (please send questions!). I can do more conceptual or technical stuff like continuing the Tape Reading series. I might interview other traders or tell stories from their vantage point ala Players Tribune (e-mail me if interested). I might even do video. I also have to trade and be a dad, so I’ll take a short break from writing. A sincere THANK YOU! to all my readers, especially if you’ve shared my work in any way because I refuse to pay for ads or engagement. Having my writing admired by others, even on this small scale, scratched an itch I didn’t know I still had.

Again, thank you from the bottom of my heart and good luck in 2024.

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19 thoughts on “Epilogue

  1. Hello.
    Really enjoyed reading this series.
    Would be great to read about your time as a retail trader. Also any views or extra info on tape reading would be great as well, especially it’s relevance in the current US Equity markets.

  2. Great series. I binged it last night and although I never traded at a firm, the thoughts and emotions you talk about are so relatable to anyone who is honest and gives a go at trading, though nobody talks about this online (they’re all possessing 100% win rates, I suppose, lol)

    Congrats on grinding it out and having success at the end. I failed miserably after giving it a go for a couple years in the late 2000s and those times still haunt me (why did I sell 10k LVS for a loss when I had a basis under $5? Why didn’t I just go all-in on AMZN and hold for a decade? Why did I believe in some magical NMX buyout rumour and lose over and over again as it kept falling? Why this, why that?).

    Over the years since, I still half-ass back into trading here and there, flaming our each time while holding on to the regrets of the past. Quite the mental mindf*ck trading is.

    Anyway, just wanted to drop a comment to show some appreciation for your writing and honesty.

    1. Thx for the comment. Trading is really difficult, there’s no shame in failure. I met far more people who have moved on from the pursuit than those became CPT.

  3. I’m about to start at a prop firm after graduating college and this entire series has been a motivator and eye opener. Super entertaining as well… you’re a captivating writer.

    Thanks Pete

  4. Hey Pete,

    thanks for this series, I’ve really enjoyed it. As others have said your writing style is also very captivating, so I’m looking forward to more posts from you! I think the retail trader series could still be interesting, even if there’s less characters. Just seeing how you managed the transition and reading in what kind of situations you got yourself into over the years.

    Besides that I’m always looking for technical stuff like strategies (since I’m not a CPT yet), but I think from what I’ve read on reddit you mostly trade small cap shorts and that strategy is well explained in many places, even if its hard to do. Maybe a post on how you backtest your discretionary strategies? I only trade systematically since I don’t trust discretionary strategies without backtest and I don’t really get how you can backtest them, since if you can eliminate all discretion and quantify the rules, why wouldn’t one trade it systematically then.

    Anyway, enjoyed your posts and looking forward to more!

  5. Thanks for the story Pete, just read it all in the past week. I didn’t understand everything technically, but that post about your record drawdown day had me at the edge of my seat. I’m not surprised some traders get PTSD from days like this. I appreciated the raw honesty, and the illustrations were fun too!

  6. Loved the series!. Amazing how much effort you put into it. Any opinion on “Terence Brightsun” who joined MBC a few months ago and is very active on Twitter? Don’t know what to make of the guy.

      1. Can you explain a bit why they don’t need capital? Isn’t more capital what everyone wants. I understand there is margin involved but doesn’t margin cause blowups when there is a drawdown?

        1. Well I should first mention that WTG has become a bit bigger since I last left and they have energy trading and a new hedge fund that are separate entities–it’s possible there’s a lot more money in those two pods. But short answer is: the day trading firm itself generally doesn’t need a lot of capital because day traders tend to be efficient with rotating BP–they don’t tie up a lot of BP longer-term normally.

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