Tim Racette trades the eMini, the SMP, the Euro futures and stocks, and also calls himself a lifestyle entrepreneur – that sounds like theideal mix of business and pleasure. The Lazy Trader spoke to Tim to see what it is he does that makes his life such a well-balanced one.
Key Takeaways
Embrace new technology when it comes to trading
Every trader needs an ‘unfair edge’ in order to do well
Do not set specific goals as this will force you to make bad decisions
Find out about his biggest trading mistake
Look beyond trading to learn good habits
How did Tim start off?
Tim Racette got into trading because he comes from Chicago and was so close to, and had access to, one of the most famous trading floors in the world. This gave him his start and he was able to be introduced to influential people down on the floor. It all started in his late teens, so it was an early introduction to trading, like trading courses for beginnersin the flesh.
Now things are different. Tim Racette is based mainly out of Arizona, and although he used to travel back and forth from there to Chicago, now, thanks to being able to trade on the screen, he doesn’t have to – he can trade from anywhere. It wasn’t difficult for Tim Racette to move from pit trading to screen trading; it was more about observing. Therefore, the transition from pit trading to screen trading wasn’t hard. He has known people, though, who have worked on the floor for 20 or 30 years, and had spent that time reading individuals across the pit, and they found screen trading to be very difficult to move to.
What are his trading strategies?
Tim Racette primarily trades in two ways. Firstly, he swing trades equities and trades the underlying trade stock. The swing trades could be anywhere from a couple of days to a couple of months. The second part of his trading is day trading the futures markets. He looks at trading the eMini SMP, the euro, crude gold and the NASDAQ.
Traders need an ‘unfair edge’ to survive long term. Tim Racette’s unfair edge was having access to the trading floor. He had a friend whose father worked there and having all the right networking opportunities. This will help you when you get started in forex trading.
Also, he was extremely young, and therefore had an inherently positive mindset – he could do anything – and having the time and energy to purely focus on the markets with no other responsibilities. You need to be able to differentiate yourself in some way to make yourself stand out.
Demo trading should be your first stop
You need to start small and practice where the risk is, this ensures it is almost completely taken out of the scenario. A demo or sim account that allows you to strip away the emotional side of trading is ideal.
Demo tradingisn’t going to be exactly the same as trading live, but it allows you to break things down and take away a lot of the risk so that when you are ready to go live, it will pay off. There is a mindshift that has to happen.
Liquidity is important in his trading strategy
For Tim Racette, the eMinis have the most activity and volume. There are a lot of different players from short term traders to hedge funds to protect a stock investment. There is a lot of liquidity, a lot of opportunity to get in and out, and therefore it makes for a really good high opportunity environment.
What was his biggest mistake?
Tim Racette’s biggest mistake as a trader was probably the way that he used to set goals. They were time-based goals, things that he wanted to accomplish by the end of the year. That meant he was focusing on an account value, and that would mean he would make bad decisions.
If he was behind where he had intended to be, that meant he would sometimes trade whether there was a good trade there or not. He changed the way he looked at things, switching his goal setting to simply being the best he could be. This took off the pressure and allowed him to make better trades and better decisions.
Would Tim recommend any books to read?
For those just starting out, Tim Racette recommends a book called Atomic Habits by James Clear. Clear talks about the challenges with some goals, and how to create good habits and triggers that will lead you towards the productive result.
So a good tip is to focus on your net worth as a whole going up, include trading as a piece of that. It keeps you heading in the right direction, even if there are dips every now and then. It will help you to make the decisions that will take you in the right direction.
What does today and the future hold?
Tim Racette has mostly traded the same way since year two of his trading. Since then, things have pretty much stayed the same, but now he trades more in good markets and less in bad markets, so sometimes he has more day trades and sometimes more swing trades. As any good trader, he lets the market come to him rather than force a trade.
You’re from Chicago a place which has traditionally been the nerve centre of pitt trading yesteryear, playing host to CBOT or the Chicago Board of Trade Futures Trading Pits…is this how you got into trading?
You did well do get into electronic trading given the demise of the pitt environment – did you find it difficult to adjust to? Did you find lots of your colleagues found the transition difficult too?
For the benefit of the audience, describe your trading style?
In a previous interview with Etiene Crete, you talked about every successful trader needing an unfair edge to succeed long term. What would you say yours was?
Now, you focus on the eMini – your website name, https://eminimind.com says it all… why the eMini?
Would you recommend multiple strategies as a trader, or is 1-2 enough for you and your followers?
On reflection, what’s been your biggest mistake as a trader? And how did you recover from that?
What would your top 5 tips be for those starting out?
What has been your most recent lesson?
Where can listeners who want to find out more go to find you?
A prolific writer in her own right, Lisamarie brings to the team her unique ability to vividly turn dry and often complex subjects into life, making financial education a more fun and accessible experience for all
A prolific writer in her own right, Lisamarie brings to the team her unique ability to vividly turn dry and often complex subjects into life, making financial education a more fun and accessible experience for all
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