While the big three sports in America are football, basketball, and baseball, I’ve always found myself watching a lot of European sports at odd hours of the night. At the top of that list is motorcycle racing, specifically MotoGP®, which is the top echelon of grand prix motorcycle racing around the world. As an engineer by training, the combination of man and machine has always fascinated me — is it the rider or the bike that makes the difference?

Similarly, we see daily, examples of stock market traders making tens of thousands of dollars every month trading SPX and Tesla. Was it the bull market, the platform they’re using, a certain options strategy, or just dumb luck? Is it easier for them to make money because they started out with $20,000 versus the guy trying to trade on a $2,000 account? It doesn’t take too long before someone comes along on Reddit and says, “You can’t beat the market… just put your money in a total market index fund and call it a day!” In many senses this person is correct, but the reason is more nuanced than many people appreciate.

It reminds me of the difference between top pro-amateur riders and those in MotoGP.

Years ago, an excellent article was written in a now defunct motorcycle magazine called Sport Rider; unfortunately, a link to the article doesn’t exist. For this story, one of the test riders (a seasoned former professional) wanted to see how fast he could ride around a track compared to a MotoGP rider on the same bike. Various telemetry was used on the bike to capture forward speed, engine RPMs, shift timing, gear position, etc.

Unlike a car, pretty much all bikes are manual transmission, so one must shift gears to adjust speed. And like most racing sports, the idea is to get around the track as fast as you can by staying in the optimum power band, delivering the most speed on straightaways and optimum torque coming out of corners to get back up to speed as quickly as possible.

Everyone expected the MotoGP rider to clearly clock the best time, and he did. But the best lap times weren’t off by minutes it was more like seconds. Those seconds add up for every lap in the race until the gap is insurmountable by the rider in second place.

What was most fascinating about this experiment was looking at how many times the MotoGP rider shifted gears up or down as they braked just before entering a corner. This is what made all the difference.

The MotoGP rider had anywhere from 8–10 more shifts throughout the course. If you’re a beginner rider on a MotoGP bike, you could literally be in first gear and ride around the entire track at 60 mph (96 km/h).

MotoGP riders are really stuntmen.

A MotoGP rider wants to squeeze every ounce of speed right up to the very last second before aggressively applying the brakes to slow down. This means shifting to one more higher gear for just a second for that extra speed, then requiring one extra downshift as they began to brake for the turn. Holding that extra speed also meant braking a lot harder and/or braking later so that a minimum amount of time was spent at lower speeds. On a road track with several left and right turns, these extra up and down shifts add up, but also shave time off the clock.

Getting an extra shift for a split-second to then have to rapidly shift down gears with your foot so you’re in the right gear coming out of the turn is risky. A bad shift is how you can lock up the rear wheel, skid out, or lose traction coming out of the turn and get thrown from your bike. MotoGP riders are really stuntmen. To get to that level of skill almost all of them have crashed, broke collar bones, arms, ribs, and more.

So, a top former professional rider who could beat most 99% of the people on the planet, was only seconds off from a MotoGP rider because that MotoGP rider was willing to expend the extra energy shifting a few more times to keep that bike at the fastest speed without losing traction. That MotoGP rider is the 1% of motorcycle racers.

Trading in the stock market to make millions is like being in that 1% of all motorcycle racers — it’s being a MotoGP rider.

It’s extremely hard to breakout and be up +50% when the entire S&P is down -30%.

A long-term investor putting their money in VTI is that amateur rider just getting around the track in first gear. They’ll finish the race and can even brag that they were able to just get the bike moving without it stalling, but they won’t break any track records. Even the slowest rider who gets to throw their leg over a $1,000,000 USD MotoGP bike has something to brag about. They’re special machines.

Today, pro-amateur retail traders have access to a multitude of high-end trading platforms that allow numerous setups for options trading, even the ability to program hotkeys on your keyboard for split-second scalp trades. They’re not using Bloomberg terminals (the $1MM MotoGP machine), but they have access to other tools.

But for most amateur retail investors who want to generate additional income by moving into trading, most strategies are limited to basic buying and selling swing trades, single leg calls, maybe some covered calls once you have a hundred shares and some cash secured puts.

The problem is regardless of being an amateur or pro-amateur trader, your portfolio is going to largely move with the market. It’s extremely hard to breakout and be up +50% when the entire S&P is down -30%. The only way to do that is to be in and out of the market AND consistently right using a whole host of strategies that are optimized for sideways and down markets.

It’s not just doing 1–2 option spreads or short sales, it’s doing a lot of them, over and over — making 10x no matter which way the market moves. This is the skill of a 1% trader, a MotoGP trader. Most retail investors simply won’t have the time, money, and/or skill to do this consistently.

Unfortunately, if you follow any financial channels on YouTube or Instagram, you’re bound to be barraged with ad after ad of some guy (or gal) that can make you a MotoGP trader without having to do all the extra “shifting.” Some are honest and try to teach you the advanced stuff, but the vast majority are selling you dreams of millions when they’re already trading with a very large account.

It does turn out that it’s much easier to make $200 from $20,000 (just a 1% return) versus making $200 from $2,000 (a 10% return).

The other critical piece is that top traders, like MotoGP riders, have thousands of hours in the seat to get to their level of expertise. Most traders blow up their account repeatedly before making it big and gaining enough experience to keep what they have — protect your basis.

Likewise, being a top MotoGP rider is somewhat a game of attrition. The top riders are able to bounce back from injuries throughout their entire career and stay healthy long enough to still ride a bike near 200 mph. Too many injuries, too early on, sidelines many a “would be” top rider.

The next time you see a motorcycle rider in a brightly colored suit backing it into a corner at Sepang, or Jerez, or Mugello, just know it took a lot of pain and practice for that rider to get there.

You can make a lot of money investing and trading in the stock market without having to be at a MotoGP level. Depending on your age and financial situation, trying to get those extra shifts just may not be worth it.

And for the record, it’s probably 70% rider and 30% bike.

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A recovering perfectionist, polymath in training with too many interests. Writing on career, entrepreneurship, investing, family life, random life observations.