Investing lessons from the Trading Floor

I spent years as an options trader at esteemed institutions like Merrill Lynch and Goldman Sachs, making decisions in fractions of a second—with millions on the line and limited information.

My main takeaway - the market doesn’t reward emotion; it responds only to disciplined preparation and a clear, probabilistic approach to decision-making.

That mindset now shapes how I invest across asset classes—including real estate.

This newsletter is where I share that approach with you. Whether you’re new to investing or looking to sharpen your edge, my goal is simple: help you make better decisions and build lasting wealth—especially through real estate.

This Week’s Tip: The Investor’s Playbook – Lessons From The Trading Floor

Here are five principles I used as a trader that other investors could benefit from:

1. Think in Scenarios, Not Predictions

The best investors don’t say, “X will happen.”
They say, “Here are three outcomes—what’s my plan for each?”

In real estate, that means running base, upside, and downside projections for every deal. Assign realistic probabilities to each scenario and think in terms of Expected Value.

2. Always Define Your Downside

Traders survive by asking, “What’s the worst-case scenario?”

In real estate, that means stress-testing your assumptions:
What if rents drop 10%?
What if vacancy spikes?
What if interest rates rise again?

If your investment can survive the worst case, you’re investing from a position of strength. Look for asymmetric payoffs where your downside is limited but your upside is huge.

3. Build a Risk Mitigation Plan

In trading, hedging reduces risk without killing opportunity. In real estate, that can mean:

• Fixed-rate debt

• Interest rate caps

• Healthy reserves

• Rent loss insurance

• Diversification by market or tenant type

Your job isn’t to predict risk - it’s to prepare for it.

4. Know Your Exit Before You Enter

Traders never enter a position without a stop-loss or exit plan.
In real estate, too many investors jump in without knowing how - or when - they’ll get out.

Will you refinance in 3 years? Sell in 5? Hold indefinitely?
Your exit strategy shapes your risk profile, capital structure, and timeline.

5. Align Funding Strategy with Risk Profile

Leverage magnifies both returns and mistakes.

Make sure your capital stack (equity, debt, preferred equity, etc.) matches the risk you’re underwriting.

Using short-term debt for a long-term hold is a mismatch that kills deals. Understand the impact of:

• Yield maintenance

• Defeasance

• Lockout periods

Understand the technical mechanics of the underwriting - they can destroy your returns if ignored.

Closing Thought:

Whether you’re trading options or investing in multifamily, the same rules apply:

Discipline, risk management, and probability-based thinking are the foundation of durable wealth.

In this newsletter, I’ll continue showing you how to apply those principles to private investments—so you can grow capital with clarity, not just confidence.

⚠️ One Last Thing:

Don’t just invest in a deal because a friend tells you it’s good.

That opportunity might’ve passed - and you might be inheriting risks by investing too late. Always understand the context of pricing before you invest. For example - a lot of investors have done well with Class C properties tied to Section 8 housing. But in many cities, the spread between Class A and Class C cap rates is now the tightest it’s ever been just as the current administration is considering major cuts to Section 8 funding. If those cuts pass, it could trigger significant delinquencies and steep price declines. I'm not saying this outcome is certain, or even likely - but the probability is higher than it's been in years. So to reflect that risk, cap rates should be higher.

Learning to spot and analyze deals independently is what separates seasoned investors from lucky ones. Ask your sponsors detailed technical questions to ensure they have done their preparation and are equipped to handle all risks.

We’re building DeCyph.ai - a platform to help investors screen, stress-test, and analyze deals faster and more objectively.

• We source deals directly from sponsors

• You evaluate them for free

• We take no compensation from sponsors

• We don’t make recommendations—we give you independent analysis to help you decide for yourself

If you want to take control of your investment decisions, log in and try it out.

🔗 DeCyph.ai

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Would love to hear from you at [email protected] -  

“What would make you more likely to use DeCyph.ai regularly?”
(Select up to 3):

1. New deals every week to analyze with personalized alerts

2. Access to sponsors (via Zoom, meetups, etc.)

3. Quarterly mark-to-market on my CRE portfolio with red flag alerts

4. Educational content and webinars on how to analyze deals

5. Sponsor track record along with past and current deal scorecard

6. Independent deal score and a deal comparison tool

7. Investor forum or group to discuss different deals