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Building Your Trading Edge from the Bottom Up with Michael Barrett
Episode Summary
In this revealing episode of The Sound Trader podcast, host Graham reconnects with Michael Barrett, a former professional prop trader who transitioned from active trading to designing and managing their trainee programs. Originally interviewed in 2014 during his first year as a prop trader, Michael continued his career for over a decade trading treasuries and index futures, eventually mentoring hundreds of aspiring traders. This long-term perspective provides unprecedented insights into what actually separates successful traders from those who fail.
Unlike typical trading advice focused on strategies and technical analysis, Michael’s perspective comes from observing the complete lifecycle of trader development – from trainees with finite savings racing against time to become profitable, to established traders managing the complex interplay between trading performance and life responsibilities as they mature.
Throughout the episode, Michael challenges conventional wisdom about trader development, explains why building edge starts long before strategy selection, and reveals the harsh realities of competing in increasingly algorithmic markets. For anyone considering a prop trading career or seeking to understand what sustainable trading success actually requires, this episode offers a rare insider’s view from someone who has lived both sides of the equation.
Key Highlights
Chapters
Introduction & Background (00:00 – 03:00) Graham reintroduces Michael Barrett, last featured in 2014, who made the transition from successful trader to program designer and mentor at Star Beta.
The Journey from Trader to Mentor (03:00 – 07:30) Michael explains his decade-long trading career and transition to managing experienced traders while designing trainee programs.
Profile of Successful vs Unsuccessful Trainees (07:30 – 12:00) Analysis of what characteristics, if any, predict success in prop trading training programs.
The Importance of Screen Time & Curiosity (12:00 – 15:30) Why genuine curiosity about market dynamics matters more than raw talent or experience.
Managing Stress and Taking Strategic Breaks (15:30 – 18:30) How successful traders manage the psychological demands of constant vigilance and competition.
Designing Effective Training Programs (18:30 – 25:00) The framework behind Star Beta’s trainee program and getting people trading live quickly.
Building Mechanical Trading Edges (25:00 – 30:00) How prop firms create measurable advantages through fees, connectivity, and technology.
The Cyclical Nature of Trading Strategies (30:00 – 35:00) Why edges come and go, and how experienced traders adapt to changing market conditions.
Trading Floor vs Remote: The Community Factor (35:00 – 40:00) The underestimated impact of trading environment on decision-making and performance.
Current State of Prop Training Programs (40:00 – 45:00) Why Star Beta paused their program and the challenges of scaling training online.
Starting Over: Building Edge from the Bottom Up (45:00 – 50:00) Michael’s advice on competitive analysis and avoiding direct competition with better-funded players.
Discretionary Trading vs Algorithmic Competition (50:00 – 55:00) How manual traders can position themselves to profit from algorithmic strategies’ vulnerable moments.
Why Backtesting is Useless & Managing Wrong Trades (55:00 – 60:00) Michael’s controversial stance on backtesting and the art of managing positions when wrong.
Consulting and Future Directions (60:00 – End) Michael’s current work in performance consulting and potential future developments.
Quotes from the Episode
“Building edge doesn’t start with strategy. Building edge comes with the things that happen before you click the mouse to put in an order.”
“There’s very little in common of who is going to be a successful trainee, who’s going to become established as a successful trader. There’s not really a set of characteristics that is high probability.”
“The guys who are single, hungry in their 20s, they’re the ones that set the benchmark of what’s required. And so that can be, you know, doing long hours, sleeping under the desk for days and weeks at a time.”
“You don’t realize the degree to which the atmosphere of the room is an input to your decision making until it’s not there.”
“Backtesting is useless. And I stand by it. Particularly if you are a manual discretionary trader, there’s very little that repeats itself in your decision making that is worth manually backtesting.”
“Trading is about recognizing when someone else is f**ked and going in that direction and pushing them till they spew. That is a big skill of trading.”
“The days when you will feel you do your best trading are often days when you’ve lost money, but you’ve turned a disaster into half a disaster.”
“You can absolutely be predatory and you better believe that everyone else is in there being predatory. Anyone who is of a competitive mindset is attempting to be predatory.”
“Do a competitive analysis. Who are your competitors in the market and what are they likely to be paying as far as their commissions, their costs, and what are their edges that they have that are unique to them?”
“How do we recreate the trading floor in a digital environment? Something that we’ve asked ourselves for quite a while and there’s not a perfect solution to it as of yet.”
Resources Mentioned
Michael Barrett Performance Consulting – Michael’s performance consultancy [michaelbarrettau.com]
Star Beta – The prop trading firm where Michael spent most his career and designed training programs
Original Podcast Interview – We talked to Michael in 2014 in our first episode – Interview with a Prop Trader [pricesquawk.com/podcast-interview-with-a-prop-trader]
About Our Guest
Michael Barrett is a former professional prop trader and training program designer with over a decade of active trading experience at Star Beta, where he primarily traded treasuries and index futures between US and Australian markets. After establishing himself as a successful trader, Michael transitioned into mentoring and program development, ultimately designing and managing Star Beta’s trainee programs.
Throughout his mentoring career, Michael observed hundreds of traders progress through the complete development cycle – from initial training through establishment as profitable traders, and eventually to the challenges of maintaining performance while managing evolving life responsibilities. This unique perspective across the entire trader lifecycle has given him insights into the factors that truly determine long-term trading success versus failure.
Michael’s approach to trader development emphasizes building competitive advantages before strategy development, understanding market cycles and the temporary nature of edges, and recognizing the predatory nature of professional trading. His experience spans the transition from human-dominated to increasingly algorithmic markets, providing valuable perspective on how discretionary traders can maintain relevance.
Currently, Michael provides performance consulting to traders and other high-performance professionals, helping them navigate the complex relationship between career demands and personal life evolution. He continues to manage a group of experienced traders while exploring solutions to recreate the benefits of trading floor community in digital environments.
Connect With Us
For more episodes of The Sound Trader podcast and to learn more about market sonification tools, visit pricesquawk.com/podcast or try out the app at app.pricesquawk.com
The Sound Trader podcast explores diverse approaches to trading success, from cutting-edge audio techniques to the fundamental psychological and structural factors that determine long-term trading careers. While this episode departs from our usual focus on sensory trading tools, the insights on trader development, competitive positioning, and market psychology are universally valuable for traders using any approach. Whether you’re considering a prop trading career, currently developing your skills, or seeking to understand what sustainable trading success actually requires, The Sound Trader offers valuable perspectives from traders who have navigated every stage of the journey.
The post Building Your Trading Edge from the Bottom Up with Michael Barrett appeared first on PriceSquawk.
View all episodes
By The Sound TraderEpisode Summary
In this revealing episode of The Sound Trader podcast, host Graham reconnects with Michael Barrett, a former professional prop trader who transitioned from active trading to designing and managing their trainee programs. Originally interviewed in 2014 during his first year as a prop trader, Michael continued his career for over a decade trading treasuries and index futures, eventually mentoring hundreds of aspiring traders. This long-term perspective provides unprecedented insights into what actually separates successful traders from those who fail.
Unlike typical trading advice focused on strategies and technical analysis, Michael’s perspective comes from observing the complete lifecycle of trader development – from trainees with finite savings racing against time to become profitable, to established traders managing the complex interplay between trading performance and life responsibilities as they mature.
Throughout the episode, Michael challenges conventional wisdom about trader development, explains why building edge starts long before strategy selection, and reveals the harsh realities of competing in increasingly algorithmic markets. For anyone considering a prop trading career or seeking to understand what sustainable trading success actually requires, this episode offers a rare insider’s view from someone who has lived both sides of the equation.
Key Highlights
Chapters
Introduction & Background (00:00 – 03:00) Graham reintroduces Michael Barrett, last featured in 2014, who made the transition from successful trader to program designer and mentor at Star Beta.
The Journey from Trader to Mentor (03:00 – 07:30) Michael explains his decade-long trading career and transition to managing experienced traders while designing trainee programs.
Profile of Successful vs Unsuccessful Trainees (07:30 – 12:00) Analysis of what characteristics, if any, predict success in prop trading training programs.
The Importance of Screen Time & Curiosity (12:00 – 15:30) Why genuine curiosity about market dynamics matters more than raw talent or experience.
Managing Stress and Taking Strategic Breaks (15:30 – 18:30) How successful traders manage the psychological demands of constant vigilance and competition.
Designing Effective Training Programs (18:30 – 25:00) The framework behind Star Beta’s trainee program and getting people trading live quickly.
Building Mechanical Trading Edges (25:00 – 30:00) How prop firms create measurable advantages through fees, connectivity, and technology.
The Cyclical Nature of Trading Strategies (30:00 – 35:00) Why edges come and go, and how experienced traders adapt to changing market conditions.
Trading Floor vs Remote: The Community Factor (35:00 – 40:00) The underestimated impact of trading environment on decision-making and performance.
Current State of Prop Training Programs (40:00 – 45:00) Why Star Beta paused their program and the challenges of scaling training online.
Starting Over: Building Edge from the Bottom Up (45:00 – 50:00) Michael’s advice on competitive analysis and avoiding direct competition with better-funded players.
Discretionary Trading vs Algorithmic Competition (50:00 – 55:00) How manual traders can position themselves to profit from algorithmic strategies’ vulnerable moments.
Why Backtesting is Useless & Managing Wrong Trades (55:00 – 60:00) Michael’s controversial stance on backtesting and the art of managing positions when wrong.
Consulting and Future Directions (60:00 – End) Michael’s current work in performance consulting and potential future developments.
Quotes from the Episode
“Building edge doesn’t start with strategy. Building edge comes with the things that happen before you click the mouse to put in an order.”
“There’s very little in common of who is going to be a successful trainee, who’s going to become established as a successful trader. There’s not really a set of characteristics that is high probability.”
“The guys who are single, hungry in their 20s, they’re the ones that set the benchmark of what’s required. And so that can be, you know, doing long hours, sleeping under the desk for days and weeks at a time.”
“You don’t realize the degree to which the atmosphere of the room is an input to your decision making until it’s not there.”
“Backtesting is useless. And I stand by it. Particularly if you are a manual discretionary trader, there’s very little that repeats itself in your decision making that is worth manually backtesting.”
“Trading is about recognizing when someone else is f**ked and going in that direction and pushing them till they spew. That is a big skill of trading.”
“The days when you will feel you do your best trading are often days when you’ve lost money, but you’ve turned a disaster into half a disaster.”
“You can absolutely be predatory and you better believe that everyone else is in there being predatory. Anyone who is of a competitive mindset is attempting to be predatory.”
“Do a competitive analysis. Who are your competitors in the market and what are they likely to be paying as far as their commissions, their costs, and what are their edges that they have that are unique to them?”
“How do we recreate the trading floor in a digital environment? Something that we’ve asked ourselves for quite a while and there’s not a perfect solution to it as of yet.”
Resources Mentioned
Michael Barrett Performance Consulting – Michael’s performance consultancy [michaelbarrettau.com]
Star Beta – The prop trading firm where Michael spent most his career and designed training programs
Original Podcast Interview – We talked to Michael in 2014 in our first episode – Interview with a Prop Trader [pricesquawk.com/podcast-interview-with-a-prop-trader]
About Our Guest
Michael Barrett is a former professional prop trader and training program designer with over a decade of active trading experience at Star Beta, where he primarily traded treasuries and index futures between US and Australian markets. After establishing himself as a successful trader, Michael transitioned into mentoring and program development, ultimately designing and managing Star Beta’s trainee programs.
Throughout his mentoring career, Michael observed hundreds of traders progress through the complete development cycle – from initial training through establishment as profitable traders, and eventually to the challenges of maintaining performance while managing evolving life responsibilities. This unique perspective across the entire trader lifecycle has given him insights into the factors that truly determine long-term trading success versus failure.
Michael’s approach to trader development emphasizes building competitive advantages before strategy development, understanding market cycles and the temporary nature of edges, and recognizing the predatory nature of professional trading. His experience spans the transition from human-dominated to increasingly algorithmic markets, providing valuable perspective on how discretionary traders can maintain relevance.
Currently, Michael provides performance consulting to traders and other high-performance professionals, helping them navigate the complex relationship between career demands and personal life evolution. He continues to manage a group of experienced traders while exploring solutions to recreate the benefits of trading floor community in digital environments.
Connect With Us
For more episodes of The Sound Trader podcast and to learn more about market sonification tools, visit pricesquawk.com/podcast or try out the app at app.pricesquawk.com
The Sound Trader podcast explores diverse approaches to trading success, from cutting-edge audio techniques to the fundamental psychological and structural factors that determine long-term trading careers. While this episode departs from our usual focus on sensory trading tools, the insights on trader development, competitive positioning, and market psychology are universally valuable for traders using any approach. Whether you’re considering a prop trading career, currently developing your skills, or seeking to understand what sustainable trading success actually requires, The Sound Trader offers valuable perspectives from traders who have navigated every stage of the journey.
The post Building Your Trading Edge from the Bottom Up with Michael Barrett appeared first on PriceSquawk.