From Trading Screens to Private Markets: How Public-Market Experience Can (and Can’t) Help You in Start-up Investing

A perspective for traders and public-market investors exploring private opportunities.

Note: This article is for general information and educational purposes only. It does not constitute investment, legal or tax advice.

Many of the investors who approach Capital Circle are already active in public markets:

• trading equities and derivatives,

• using technical or quantitative frameworks,

• managing risk day-to-day across listed portfolios.

Increasingly, they are curious about private markets – angel investments, growth-stage rounds and other unlisted opportunities.

On the surface, it feels natural to say:

“I know markets, I follow companies, I should be good at this too.”

Some of that experience is indeed valuable. But private markets operate under a different physics. Bringing a trading mindset into start-up investing without adjustment can create blind spots.

This insight looks at:

• what transfers well from trading to private investing,

• what does not, and

• how experienced traders can build a thoughtful approach to private deals.

1. What Trading Experience Gets Right

1.1 Respect for risk

Good traders develop an instinctive respect for:

• downside risk,

• position sizing,

• how quickly things can move against them.

They understand that being directionally right is not enough; timing, liquidity and risk control matter.

This mindset is helpful in private markets where:

• company failure is a real and common outcome,

• capital can be locked for many years,

• concentration risk is significant.

1.2 Comfort with volatility and uncertainty

Public-market traders are used to:

• news-driven moves,

• changing narratives,

• price action that does not always track fundamentals in the short term.

This can help them stay calm when:

• start-ups hit rough quarters,

• rounds take longer than expected,

• sentiment in a sector swings.

1.3 Discipline in processes

Successful trading often requires:

• clear frameworks,

• rules (even if discretionary),

• post-trade reviews.

These habits are valuable when:

• defining an angel investing strategy,

• deciding which deals to pass on,

• analysing what has worked or failed over time.

2. Where Trading Experience Does Not Translate Directly

2.1 Liquidity assumptions

In trading, even in small or illiquid names, there is usually:

• a screen,

• a price,

• an order book (however thin).

In private markets:

• there is no live market,

• exits are event-based (acquisition, IPO, secondary),

• time-to-liquidity can be 7–10+ years,

• there may simply be no buyer when you want to sell.

Treating a private position as if you could “lighten it” like a stock position is a fundamental mistake.

2.2 Time horizons

Trading experience is often built around:

• intraday,

• swing (days to weeks), or

• positional (months).

Even long-only public portfolios are usually:

• reviewed frequently,

• rebalanced often,

• liquidatable in a matter of days or weeks.

Private investments:

• evolve over years, not weeks;

• have information refresh cycles tied to board packs and updates, not tick data;

• require patience even when things are going well.

A trading instinct to “adjust quickly” needs to be balanced with accepting illiquidity by design.

2.3 Reliance on market-implied signals

In public markets, traders can lean heavily on:

• price action,

• volume,

• volatility,

• options flow,

• relative performance.

These market-implied signals do not exist in the same way in private companies.

Instead, you must rely on:

• direct company information,

• conversations with founders and customers,

• fundamental indicators of progress.

For some traders, this feels like a loss of a familiar toolkit; it is, in reality, a shift to a different form of analysis.

3. Reframing Edge: From Micro-Timing to Macro-Selection

Trading often focuses on:

“Can I time this move better than the market?”

In private investing, the more relevant question becomes:

“Can I select, support and hold a set of companies that, as a group, can create attractive outcomes over 7–10 years?”

Key mindset shifts:

• From entry price over days → to entry terms over years.

• From pattern recognition on charts → to pattern recognition in teams, markets and behaviour.

• From short-term mispricing → to long-term value creation and capture.

The “edge” is less about micro-timing and more about:

• quality of selection,

• quality of access,

• quality of ongoing judgement.

4. Building a Framework as a Trader Entering Private Markets

4.1 Define your allocation clearly

Decide:

• what proportion of your overall capital you are comfortable placing into illiquid, high-risk private positions;

• whether this is a fixed pool or opportunistic;

• how many individual positions you aim to build over time.

Without this, there is a risk of over-allocating during a period of enthusiasm, and then being constrained when better opportunities appear.

4.2 Set rules for minimum information

In trading, you might act on limited information because you can exit quickly.

In private markets, once capital is deployed, exits are hard.

Define a minimum standard for:

• information you require before investing (deck, data room, founder calls, customer references);

• time you spend understanding the business, not just the pitch;

• red flags that automatically disqualify a deal for you.

4.3 Decide your role: passive cheque or active supporter

Some investors prefer:

• purely financial exposure;

• minimal involvement beyond monitoring.

Others want to:

• open doors,

• contribute expertise,

• sit closer to the company.

Be honest about:

• how much time and energy you realistically have,

• in which sectors you can genuinely add value.

Clarity on this helps you select fewer, better-aligned opportunities.

5. Common Pitfalls Traders Face in Private Deals

5.1 Overconfidence from public-market success

Good trading results do not automatically mean:

• good judgement on founders,

• understanding of early-stage execution,

• experience with the messiness of private governance.

Overconfidence can lead to:

• underestimating execution risk,

• overpaying for momentum stories,

• ignoring basic hygiene in documents and rights.

5.2 Chasing narratives instead of doing work

Traders are used to:

• narratives changing quickly,

• momentum being a valid strategy.

In private markets, simply buying into:

• “hot themes”,

• crowded sectors,

• or fashionable spaces

without deep work can result in expensive, illiquid exposure with limited real edge.

5.3 Neglecting portfolio construction

Traders can quickly adapt their portfolio:

• cutting losers,

• increasing winners,

• shifting sector exposure dynamically.

In private markets, where this flexibility is limited, neglecting portfolio construction – concentration, stage mix, sector mix – can be costly.

6. How Capital Circle Thinks About Traders Entering Private Markets

At Capital Circle, we see traders and public-market investors as a natural but not automatic fit for private markets.

Where the fit is strong:

• there is respect for risk and process;

• there is curiosity about how private value is created;

• there is willingness to adapt frameworks.

Where it becomes problematic:

• private markets are treated like “longer-term trading ideas”;

• illiquidity and failure rates are underestimated;

• decisions are made based solely on theme, not company.

Our role, as a consulting and matchmaking platform, is to:

• bring clarity to what a private deal is and is not;

• structure information so traders can map opportunities into their own frameworks;

• encourage realistic expectations about risk, time and liquidity.

We do not:

• provide trading advice;

• run a fund or pooled vehicle;

• guarantee performance or outcomes in any deal.

Closing Thought

For traders and public-market investors, private markets can be:

• a powerful complement to listed exposure,

• a way to back companies earlier in their journey,

• and a source of both learning and potential return.

But they require a different toolkit and a different temperament.

If you bring:

• your discipline about risk,

• your respect for process,

• and a willingness to learn,

while leaving behind assumptions about liquidity and timing, your public-market experience can be a genuine asset in navigating private deals.

If you are an active trader or public-market investor considering a structured approach to start-up and private investing, you can reach out to Capital Circle via the Contact page and briefly outline your current strategy and interests.