023 - Tom Basso - Trading Serenity Within the Chaos

The Calm Within the Chaos - Tom Basso on Reaching Trading Enlightenment.

Tom, famously coined "Mr. Serenity" in Jack Schwager's "New Market Wizards" book, joins us for an enlightening and entertaining discussion. On a particularly turbulent day in the market, with the VIX making one of its largest ever moves, Tom shares his calm and collected approach to trading.

The State of the Market

We kick things off by talking about the wild market conditions. The market's a mess, but Tom? He's as cool as a cucumber, following his usual routine of checking for trading errors, making new equity highs, and sharing his thoughts on Substack. His ability to stay zen while everyone else is panicking sets the stage for some great insights.

Mindset and Trading Discipline

Tom’s secret sauce? Mindset. He talks about how traders can sometimes mess up their own systems by letting emotions take the wheel. During the ‘covid crash’, many traders lost their cool, but not Tom. He stuck to his game plan, proving the power of a disciplined approach.

Position Sizing and Risk Management

Tom’s Substack article on the day's volatility is a masterclass in staying calm. He explains how keeping position sizes small can prevent emotional roller coasters. By managing risk this way, he maintains a serene trading experience, even when the market is anything but.

Diversification and Systematic Trading

Tom’s trading approach is like a finely tuned orchestra, using seven different strategies across multiple markets and timeframes. He doesn’t let any single position dominate his portfolio. Instead, he balances everything out, making sure he's ready for whatever the market throws at him. Whether it's ETFs or futures, Tom adapts his strategies to fit the market and the investor.

The Role of Technology in Trading

Tom's no stranger to tech. He uses everything from Excel for quick tests to sophisticated platforms for deep dives. He’s even involved with SIM Trader, a platform that combines simulation and automated trading. It’s all about making technology work for him, not the other way around.

Volatility Targeting and Its Importance

Tom’s take on volatility targeting is pure gold. By adjusting position sizes based on volatility, he keeps his portfolio’s risk in check. This not only boosts performance but also keeps his mind at ease, which is essential for his trademark serenity.

The Random Entry Experiment

Tom’s famous for his random entry experiment, where he used random entries with systematic exits. The result? Proof that exits and position sizing are the real heroes in trading, not just the entry signals. It’s a fun way to show that you don’t need to obsess over when to get in; it’s how you get out that matters.

Personal Insights and Trading Philosophy

Tom shares some great stories and wisdom from his trading journey. From his interactions with Jack Schwager to Van Tharp, he emphasizes the importance of self-awareness and staying balanced. His philosophy is all about being cool, calm, and collected—just like him.

Conclusion: The All-Weather Trader

Tom’s all-weather trading approach is a blend of multiple strategies and extensive diversification. He’s always ready for anything the market can throw at him. His ability to adapt and stay serene in the face of market volatility is a lesson for traders of all levels.

Tom's Books

The All-Weather Trader: Mr. Serenity's Thoughts on Trading Come Rain or Shine

Successful Traders Size Their Positions - Why and How?

Connect with Tom

Tom’s Website

Tom’s Substack

Tom on X

Tom on Linked In