A Tale of Two Audiences

One thing has become very clear over the past few months. I have struggled with figuring out how to manage diverse media outlets and how to balance conversations with investors and traders all levels of sophistication. This has always been a struggle for me, but, in the process of writing the book, I realized why.  It is because I address two very different audiences.

Imagine the two opposite ends of the spectrum: on one end perhaps a college student who is interested in markets but may have a very small account or even only a demo account. This trader may have done a lot of reading, and perhaps a little exploratory trading, but his total market experience can be measured in months or quarters. He probably has some misconceptions about the trading process and how markets work in general, but is voraciously reading everything he can get his hands on. A real danger for this trader is that he does not know what is important, what is true, and what is worthy of his finite attention and time.

On the other end of the spectrum might be an institutional portfolio manager who makes decisions based on a number of factors without taking technical considerations into account at all. She may be interested in incorporating some tactical tools into her decision-making process, but she is constrained on several levels. For one, her training and experience (and the general quality of much of the extant technical “research”) have led her to be deeply suspicious of the discipline, and she is probably building portfolios from a perspective where precise technical timing is not considered relevant. Even more importantly, she simply cannot take a chance and place too much emphasis on technical tools. If she loses 18% on a year that the market is down 10%, it’s not ideal but it does happen. But she cannot lose that 18% and have her clients find out that she was incorporating signals from some arcane technical indicator into her portfolio. So, even though this manager may be interested and curious, her actions are constrained.

In writing the book, I took great pains to address both audiences. I speak regularly with the institutional group via my daily market updates for Waverly Advisors, in our weekly conference call, and I also hope to expand on some concepts and ideas for this group of readers in this blog. I also have deliberately crafted much of my message for the individual, self-directed trader. I have great fondness and respect for these readers, because this is how I got started. I owe much to the generosity and kindness of my mentors; I doubt I would have succeeded without them, and one of my main reasons for writing the book was to pay it forward.

So, in these blogs I will specifically tag posts with whether they are addressed primarily to institutional or individual readers. Both groups should feel free to cross the boundaries, but musings on shifting correlations or analysis of multi-dimensional volatility matrices in a portfolio context may be less interesting to the developing individual trader. Conversely, ideas about risk management and specific entry and exit techniques are probably less relevant to most institutional managers. Rather than try to walk somewhere in the middle or neglect one group, I think it makes sense to carry forward with both groups together, and for me to flag posts as carefully as possible. (And, given my diverse other interests, it would be wise to expect some general weirdness in this blog from time to time!)

Next post, some thoughts for the struggling individual, self-directed trader….


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.