Introduction

Imagine having the opportunity to hear the specifics about how a ‘Market Wizard’ approaches psychological fitness.

I have invited trader Tom Basso to the hub so that we can benefit from his mindset and methods.

Tom, now retired from managing money, was the president and founder of Trendstat Capital Management, which reached its peak with $600 million under management.

Tom Basso was featured in Jack Schwagers' second Market Wizard book, The New Market Wizards, written in 1992. In the book, Jack refers to Tom as ‘Mr. Serenity’, a title that perfectly captures Tom's calm approach to the market.

Tom started his career as an engineer and applied the same methodical approach to trading, enabling him to stay calm, centred and balanced regardless of the performance of the financial markets. Welcome, Mr. Serenity.

Questionnaire

• You started trading with around $2,000, and it took you quite a while to build up. What’s your advice to traders who feel they should be an instant hero in the markets?
• You look at each trade as a single data point among thousands of data points to avoid being emotionally invested in that specific data point. Tell me more about this because I feel that concept can help traders.
• You're very involved with risk control. Everything that you produce talks about managing risk. How do you stay so even-keeled?
• Markets that trend sideways are where a lot of losses are incurred. How do you handle making losses emotionally?
• You carefully defined your parameters when trading. How important is it to you to be specific?
• Would you say the fact that you've automated a lot of your systems the reason behind you saying you've never skipped a trading signal?
• The level of consistency in your trading is incredibly admirable. How do you stick with the grind of trading?
• Do you think that you've come across things that still shock you in the market or is everything still as organised and so ‘seen before’?
• If you had your time over again, what would you do differently?

Reading time: 36 minutes

Trading level: Intermediate

PSYCHOLOGICAL FITNESS • RISK MANAGEMENT • DIVERSIFICATION