Trade Like An Inca

Written and contributed by John Wilson, Successful Options Trader of the Month – May 2016

Does this photo look familiar?  If you haven’t been to Machu Picchu, please put it on your bucket list.  If you do go, try to do the four-day hike instead of taking the train.  You’ll not only see more along the way, but you’ll also get to smell like the lamas that are walking around the ruins by day 4.   Trust me, it adds to the experience.  If you’ve been there, I’m sure you get it.  It’s a magical place.

So, how does Machu Picchu relate to trading options?  For a culture that didn’t use the wheel or write anything down, it sounds like a stretch here.  What they did have was a solid communication system that was required to keep the Inca Empire intact as it stretched about 3,400 miles from southern Colombia down to northern Chile/Argentina.  The communication system essentially consisted of messenger runners called “Chasquis”.  According to Wikipedia, the chasquis relay system could cover up to 240 kms a day; we aren’t too sure how much an individual runner would do, but I’m sure that didn’t get a t-shirt or use any energy gels as we do when running just a 5K.  On another note, if you ever do the 4-day hike, you’ll notice that most of the porters just wear sandals while carrying a ridiculous amount of weight on their backs.

What’s the takeaway here?  It’s not that we should trade wearing sandals, which may work.  Who knows?  It’s we need a good communication system even when we trade.  What do I mean?  I’m referring to a feedback loop.  Personally, I love trading.  There are so many positives here.  I’m sure if you are reading this, you feel the same way.  However, there are also some negatives.  One of them is camaraderie.  It can be a lonely profession.  I’m sure we, traders, can feel like those chaquis runners high in the Andes all alone carrying the all important “quipu” (see below), which looks like a bunch of knotted strings which only a chosen few could interpret.  How do we fix this?

Find a trading buddy.  I have found this to be very helpful.  You not only can get another perspective, but you also may develop some new friendships.   When you do team up with someone or with a group of other traders, it’s important to be as candid as possible.  As they say, truth will set you free.  It also helps the P&L over time.  I have found that feedback speeds up the trading learning curve.  I certainly appreciate the group of traders I have met over the past couple of years.  Thanks guys and gals!

One more thing.  To help the other traders, just be sure your skype connection (or whatever communication site you use) is working properly.  When it’s not, it really feels like the aftermath of drinking some “local” water down in the Andes of Peru.  Not good.

Buena suerte!

Written and contributed by John Wilson, Successful Options Trader of the Month – May 2016