Team Trading vs Solo Trading: Which Is Best?

team trading vs solo trading

There are two schools of thought in the trading industry. One side advocates for traders who trade individually. This is the category where most day traders are. On the other hand, there are those who advocate for trading as part of a team. This is the category that we firmly believe in.

In this article, we will look at the pros and cons of trading solo vs trading as part of a team.

What is solo trading?

Let’s first start by what we mean by solo trading. This is the process where you trade individually and become and independent trader. You create your personal trading account, come up with a strategy, and execute traders yourself. This is the class where most forex and Robinhood traders are.

This is because they typically create a day trading account, deposit their own money, start with a strategy that is already in their mind, research, and then execute their trades.

How trading alone works

Many people have succeeded in trading individually. In fact, many Americans now have rooms dedicated to day trading in their homes. Others do it well through their mobile applications.

The process of doing this is relatively simple.

First, the trader gets interested in making money in the stock or forex market. Furthermore, most media publications are all writing stories about how much money traders are making in the stock market.

Second, the trader opens an account with a leading broker. Some of the most popular brokers in the US are Robinhood, Schwab, Fidelity, and Interactive Brokers. Some of these companies let them practice in a demo account.

Finally, the person deposits money and starts to day trade. Some spend more time coming up with a strategy before they start trading with their real cash.

Pros and cons of solo trading

There are several benefits and cons of trading as an independent trader. Let us first look at the benefits.

  • Schedule – As a solo trader, you have the freedom to trade at your own schedule. This means that you can plan to trade at night or during the day.
  • Idea generation – You can come up with a strategy for idea generation. For example, many solo traders have the strategies they use to find ideas and execute them.
  • Complete control – As a solo trader, you have total control of all decisions that you make. For example, you can decide on the number of trades to open every day. You also decide on the assets that you will trade in a given day.

Still, trading alone has some cons.

For example, it is often said that two are better than one. As such, at times, it can lead to an emotional toll especially when you are not doing well.

Also, since you can only do too much as an individual, it means that you can miss some opportunities when trading alone because you will lose opportunities that occur at night or when you are asleep.

What is team trading?

Team trading, on the other hand, is the situation where traders make decisions as part of a team or organization. This method is most common among traders who run their trading floors. At Real Trading, we have decades of experience of guiding people trade their floors.

At the same time, the strategy is popular in hedge funds and investment banks. In these organizations, traders work as part of a team to come up with strategies and execute trades. In most cases, teams are usually grouped in their respective categories. For example, macro traders are placed in their categories while algorithmic traders in their own categories.

Team traders believe in the idea that talent wins games but teamwork and intelligence wins championships (Michael Jordan quote). They also believe that two are better than one.

In some cases, team traders start their day assessing the previous day’s trades and then coming up with strategies for the day (it’s a tip that we always give..keep a trading journal).

For example, they look at the economic and earnings calendar and then identify trade opportunities. In this, they could look at the performance of a stock like AMC and predict whether it will rise or fall.

Pros of trading as a team

At Real Trading, we have seen the power of team trading first-hand. This is simply because many of our partners trade as part of a team. As such, we have seen some of the benefits of team trading. They include:

  • Idea generation – At times, teams are better at idea generation. For example, when you are trading a stock like GameStop, the other teammate can show you opportunities in a stock like Blackberry. Having a team will help improve your thought process about the different assets.
  • Leveraging strengths – Another benefit is that it helps you leverage on the strengths of the other persons. For example, if you are good at swing trading, you can learn from a trader who is good at scalping.
  • Time – As a solo trader, you can only trade at a specific time. On the other hand, being part of a team can help you trade more times a day.
  • Difficult times – Finally, being part of a team can help you handle difficult times well. For example, if you make a big loss, being part of a team can help you move on faster.
  • Bigger profits – When you are running a trading floor with Us, you have higher chances of making more money than when you are doing it independently. This is because the company provides you with the liquidity and the proprietary tools you need to trade. 

There are two main disadvantages of being part of a team.

First, at times, you could be a part of a team that is not collaborative. Instead of building you, this will typically derail your trading journey. Second, being part of a team can make you lose confidence in your trading. Therefore, it is important for you to form a good team that builds on each other’s skills and expertise.

»The Case for Starting a Profitable Trading Office«

Your role as a manager

As a trading floor owner, you become a manager. A manager with responsibilities and a team of people working below you. As you grow professionally, the benefits you derive from the management skills you learn will be very valuable.

Related » The Perfect Hire For Your Trading Team

For example, you will learn how to solve conflicts, how to socialize with people, and how to run a company (with all the mistakes this can involve).

It is difficult to learn these skills when you are an independent trader in your home office.

Summary: Is it better to trade as a team or alone?

“Should I Open a Trading Office or Become an Independent Trader?” Team trading vs trading alone are two concepts that you might need to contend with as a trader.

On the one hand, there are people who strongly believe in trading as part of a team. There are others who believe in playing solo. In this article, we have looked at the benefits and cons of trading in either format.

As you may have guessed, our advice is to build (or at most look for) a team with which to trade in the various assets. But a lot also depends on your attitude and how comfortable you feel.

In this, You can find usefull our Strategies to Save Costs When Starting a Trading Floor.

External Useful Resources

  • Should You Find A Trading Team? Or Are You More Profitable Trading Alone? – Babypips
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