As Performance Director at Mandara Capital, a commodity trading firm in London, James King implemented scientific methods to stack the probability in the favour of success, by using techniques learned from his education in Applied Sports Science and Performance Psychology.
Now James is setting out on a new venture, Project Thor, which aims to support talented retail traders with extra capital and other beneficial resources.
In this interview with Aaron Fifield from Chat With Traders Episode 133, King discusses using sports science to stack probability in favour of trading success.
The human tendency is to jump to solutions, before we really analyse the problem.
On his beginnings in sports science...
I got a sports science degree from the University of Edinburgh, and thats where I got passionate about psychology specifically, and re-identified that as a differentiator between what makes those who are elite. I started working as a performance expert for Mens Health Magazine, trying to digest the complicated recipes science gives you and make them easily digestible for people to apply. Thats where I started working one-to-one with athletes, Olympians, footballers, and then with traders and investors.
On his transition into finance...
At Mandara I was a Performance Director, I wasn't aware of anyone with the same title in the trading/investment space. It's a term used primarily in sports teams, someone who's responsible for talent identification development and then actual results that are produced by the athletes they manage. This was something new (to the investment space), and I think it characterises Mandara as a company, and also the owner, as a really open-minded, challenging-the-status-quo type attitude which I think is key to then engineer the sort of results we did. Yes its a unique role but since then a few other companies have done the same thing.
On identifying talent...
The first thing you need to think about as an individual is to pick the right goals in the first place. So by that I mean, just like a cricket bat, tennis racket or golf club have sweet spots, so do individuals. Your sweet spot lies at this intersection of where your strengths are, (personality and character strengths and also cognitive strengths) and different types of strengths will give you an advantage over others in certain styles of trading.
The second important area is interests. It's important to identify what you're really interested in and what you sincerely find meaningful. I don't mean hobbies necessarily, I'm talking day-to-day, what pattern of working do you enjoy undertaking etc. And once you're clear on that, what you really enjoy focusing your energy and attention to.
The third thing is values, making crystal clear, in the context of your career, what is important to you, if you succeed in this goal that you're about to pursue, what's it giving you, whats the gap you're trying to fill. Is it for money? For status? Work life balance? And at Mandara, a lot of the guys who came in, their values were along the lines of learning.
On testing resilience...
One of the tests we had simulated what someone trading within a prime product space such as oil might have to go through in a physical settlement period where there is a lot of volatility. So where everything is happening; you're speaking to brokers, watching whats happening electronically, you have a direct trades team communicating with you, have the guy to your right and left communicating with you etc. So it's a bit of madness and we'd have them sit in this sim and perform. It was as specific as we could make it. But in order to bring about the resilience, the first thing you can do is turn up the intensity, the second thing we can do is start putting on pressure, giving the individual negative feedback, so we had actors playing the arsehole across the desk giving him some grief or weak communications to see how they dealt with solving those small problems.
We would increase the emotional component by turning on white noise, which spikes your sympathetic stress response and simulates when you are under stress. We would also have the individual hooked up to stress response monitors, so we had bio feedback, not just seeing how they looked like they were coping, but also bio-metrically in their body. It was impossible not to do a bad job on this test because it was so brutal, but what we would look at is, this person has made an error, how many subsequent errors do they make? So looking at a succession of negative errors. i.e. do they make a mistake and recover and bounce back quite quick, or do they make one mistake and it all goes to shit?
The reason we were testing those specific things was because they were the types of scenarios that the individual would have to go through at Mandara. It wasn't because we were a bunch of arseholes, it was because our expectations were so high.
On using bio-technology to monitor traders...
There was a core development curriculum, but beyond that there were individuals that engaged in this science more than others. Just like you get a at a football club; some athletes are going to love certain tools that a sports psychologist might bring. Some individuals used these tools to work on emotional control at times. Not many did engage in that, but it was there. There were a couple and the couple that did were two of our strongest performers. A few of the guys were looking at their blood sugar throughout the day as they traded, measuring their energy, and it wasn't something that was forced, but rather a product of the mindset of the individuals that we screened in, who were curious for any edge they could get.
On building individual resilience...
This is where I guess I'm going to be controversial. The thing I would suggest is that resilience is something that is in everyone already, its there. If it is something you struggle with consistently, then there is probably a more deeper root-cause problem you might want to look at. And it all comes back to that first point, make sure you're chasing the right goals in the first place. Make sure you're using your strengths, make sure you're doing something you genuinely find meaningful. And make sure you're clear about what you're getting from doing that.
Again, when you're in that sweet spot, you're instantly at your best, operating at a higher level or resilience you have in you. That's where I would always start. If you're not motivated to pursue your goal then you will find any excuse to be un-resilient. The second part to that, is that resilience is built by stepping out your comfort zone. General resilient tools like meditation works for some people, but doesn't work for others. I think its about experimenting with stuff like that, you'd be silly to not to try these things out. Apps like Headspace are great. Almost every trader I've met has that app.
On developing traders expertise...
There was one over-arching tool that was useful. We call it the 'catter' approach. It was a series of steps we go through with these guys and basically keep them thinking about the next steps and improving. And it kind of summaries the culture at Mandara, a lot of our traders found that really useful. The markets don't stay the same, so a strategy that might have worked a few years ago might be completely redundant now. So it's not a, "I'm making money, I can relax and go home", and nor was the nature of the individuals there.
But a tool we found really useful was this sort of pattern thinking we train the guys with, and some obviously took it further than others, but a few of the individuals probably attribute a lot of their growth and success to this approach. And the first step involves making sure on the over-arching goal and direction. "Does it make the boat go faster?" That statement should drive every decision and every once of activity you under take as a performer. So in trading, am I maximizing profit or mitigating risk? These are the two things you really should be focusing on. In the context of your own personal life, does it maximize pleasure, minimize pain.