How Monroe Trout Finds the Edge in Trading

Monroe Trout

People acquainted in the business of trading know who Monroe Trout is. A highly successful hedge fund manager, Trout has made a name for himself as an expert when it comes to recognizing patterns in statistics and quantitative analysis. These abilities contributed to his success in trading options, stocks, index funds, commodities, and managing his own hedge fund. He found himself gaining impressive profits for himself and the people he worked with.

Early Beginnings

Monroe Trout was born in 1962 and was largely raised in Connecticut. As a little boy, Trout had shown interest and potential in finance. He got a summer job encoding price data into an Apple computer at age 17 – an experience that sparked his interest in the stock market. He eventually got into Harvard and majored in economics, became captain of the varsity baseball team in 1983, and graduated magna cum laude in 1984.

After obtaining his degree, Trout moved to New York City and quickly landed a job working at Wall Street. This was the start of his career. He started working in the commodity pits and quickly became well known among his peers for turning profit for 69 out of 79 weeks.

By 1986, Trout Trading was born. He then moved with his family to Bermuda to run his very own firm, which he did so skillfully. When the 1990s arrived, Trout was already worth $900 million.

Star of the Trading World

Trout earned a legendary status in the world of trading where he is dubbed the “Cal Ripken of the Trading World,” due to his patience and consistency. He found himself getting featured in the book New Market Wizards, a nonfiction written by Jack D. Schwager. After the book’s publication in 1992, Trout became a household name in the world of trading including those outside Wall Street.

Trout has acknowledged in the past that there are a number of ways he has an advantage, and this includes his rational approach and good research skills. But if we are to name to his biggest advantage, perhaps it’s his good timing – he knows when to enter and when to exit.

He has this thing called the “magnet effect,” an idea that revolves around the fact that the market navigates toward round numbers. Most traders would see a huge handle incoming and think they should sell in advance of expected resistance, but Trout says this isn’t always the right move. Momentum is essential for him, so he only buys something when he spots it’s nearing a round number.

To become a successful trader, Trout says finding an edge is essential. You must find a successful system, develop it tremendously, and come up with an approach before you trade.

Trout’s Philosophy

Trout is a huge fan of philosopher Ayn Rand. He believes that those granted survival are the people who claim it, and that success will only come to you if you don’t rely on the advice of others and think on your own.

Perhaps this is the secret as to why Trout found the success that he has right now. By arming yourself with knowledge and experience, your own instincts will become most reliable.

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