Hitting Singles Vs. Hitting Home Runs: The Trading Strategy Of The Norstar Group

In the dynamic world of trading, the pursuit of ‘alpha’ – the capability to outperform the market and secure superior returns – is a journey of strategic choices. Jason Nordlund, the Founder of The Norstar Group, unveils two primary approaches in trading: the steady pursuit of consistent, smaller gains, known as “hitting singles,” versus the quest for large, high-risk profits, or “hitting home runs.” This exploration illuminates a counter-intuitive secret key to sustainable alpha in trading.

Hitting Singles: The Consistent Alpha Approach

Steady Alpha Growth: Hitting singles focuses on achieving consistent, smaller profits above market averages, contributing to a steady alpha growth over time.

Risk Management: With lower risk per trade, this approach aligns with maintaining alpha in volatile or unpredictable market conditions.

Compounding Alpha: Small, regular gains can compound, significantly boosting alpha in the long term.

Psychological Benefits: This less stressful approach allows traders to maintain a level-headed strategy, essential for consistent alpha generation.

Hitting Home Runs: The High-Alpha Strategy

Large Alpha Gains: Targeting home runs can yield substantial profits, significantly above market performance, in a short time.

Capitalizing on Market Opportunities: This approach can be highly rewarding during strong market uptrends or when specific sectors exhibit high growth potential.

Skill and Timing for Alpha: It requires a nuanced understanding of market dynamics and excellent timing, critical for achieving high alpha.

The Drawbacks of Each Strategy

Singles Approach: The growth in alpha is slower, and traders may leave “some meat on the bones.”

Home run Approach: The higher risk can manifest large gains, with significant swings in portfolio performance. Or it can lead to near certain demise over the long-haul.

Which Strategy is Likely to Get You the Furthest in the Long Run?

Everyone imagines being a “home-run hitter.” But not unlike real home-run hitters, strikeouts tend to come steady and strong. Sure, you could connect in a big way early on when “swinging for the fences,” but more often than not, swinging for the fences ends in certain demise over the long haul.

In his book, Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders, author Curtis Faith explores the journey of several newbie traders who were taught to just hit singles. And in the end, they achieved extraordinary results!

So, leave the home-run swing to the Yankees. When trading, go for consistent singles and significantly increase your chances of success.

Jason Nordlund Advocates for ‘Hitting Singles’ in Trading for Long-Term Success

While the allure of being a “home-run hitter” is tempting, Jason Nordlund asserts that the path to sustained trading success is through consistent, well-calculated moves – hitting singles. This approach significantly heightens the likelihood of long-term triumph in the trading sphere.

About The Norstar Group

The Norstar Group Is A Group Of People & Companies With One Purpose:
To Connect Investors With Opportunity