Let's be honest :
- How many times did you trade just to feel like a trader ?
- if you were proposed a trader's job with an Investment Bank, would you turn it down ?
In my previous post, Groundhog day trader, I claimed that with my current trading system. I expect to make a fortune from the markets while spending just a couple of hours a day to monitor them. I'm sure you are thinking, Fellow Trader, that I'm dreaming, I'm unrealistic, it's pure BS or even I'm nuts. Frankly, I don't care -I would definitely be nuts if I gave (or even sell) you too much details about how I will make it-. My claim today is whatever your trading style is (I guess it's true even if you're scalping) you can reduce dramatically the time spent trading and monitoring the markets if you manage to get rid of one of the main sources of waste of time and money : the need to feel like a trader. Trading for the feel-like-a-trader's sake is one of the most destructive game I know.
I understood it when I was running the Orc race trading with investment banks. I used to interview a lot of young guys for trading jobs, I'd say nearly 100 of them over nearly a decade. Most of the kids, graduated from the world's best universities, had outstanding resumes and knew everything (sometimes much more than me) about Black-Scholes crap, stochastic calculus and equity derivatives -is there other markets than equities ?- but not one had the slightest idea of what a trader's job looked like, not a clue. I remember a chap who, answering to my question "what do you think the job is like on a daily basis" described me what could be the script for the pilot episode of "The Streets" series or "Wall Street strikes back" movie. It sounded like : "It's 6am, John the trader parks his Ferrari, the yellow one it's Tuesday, and gets in the trading room. In the air, the odour of the money freshly made. The ringtones of the etrali phones struggled to cover the cheers of the traders who made their first million for the day. Etc etc". That guy wanted to live the cliché of what he believes being a trader means, most of them do.
The second aspect of this need for recognition can be way more expensive. It's the recognition through other markets guys eyes and more dangerously through a trader's own eyes. Ego, once again is a mortal enemy here. Professional trading looks like a big cock contest and a trader has constantly strong incentives to show off he (or she, but the analogy doesn't work here, sorry Ladies) has a bigger one. A continuous pressure coming from sales, brokers and other traders tends to lead us to put on more positions or bigger ones only for the sake to be recognized as a trader, well to feel recognized as a trader to be precise. I won't argue on this point further : if you're trading, you know precisely what I'm talking about. Let's be honest with yourself : how many times did you trade just to feel like a trader ? Now to discuss the particular case of day traders, I guess their need to feel like a trader is even stronger. Firstly because, most of day traders dream to trade for banks or professional firms and are to some extent "failed" bank traders.Once again, let's be honest with yourself Fellow Day Trader -I know this post may be unpleasant, sorry- if you were proposed tomorrow a trader's job with a major Investment Bank, would you turn it down ? Secondly, day trading can be bloody boring (believe me on that)... and lots of day traders in order to kill boredom socialize with other ones and hence need to be "recognized" by other traders using twitter, in chatrooms or in trading forums and one of the way to be "recognized" (and to kill boredom) is to put on trades and talk about it. I have in mind a couple of examples where the feel-like-a-trader stuff impacts day traders, in addition to the classical ones of the blokes who get 50 screens, 15 computers and 10 phone lines to trade in their basement. Just one instance : a few guys around me in the UK have chosen Interactive Broker (IB) as broker -I don't know one who trades with MFGlobal but the idea is the same- just because it is used by hedge funds with hundreds of millions of AUM. First that choice of broker limits (big time) the positions they can afford -most of them can't trade more than 1 contract at the time- and this limitation profoundly affects their trading and money management systems. It doesn't make sense, the choice of broker shouldnt impact trading, it should be all the way around,. Secondly, in the UK, financial spread betting which is basically the very same thing as CFD but totally tax free is a no-brainer, that's clearly an arbitrage (if we assume that you expect to be profitable from your trading...) and one can open a position with an spread betting account as low as 100 quid (1 quid per EURUSD pip or 0.1 SPX point for instance, controlling rougly 12-13k) and control up to a few tens millions - I really doubt a day trader needs much more-. But here is the thing : spread betting firms (while they are generally just English branches of US massive Forex brokers) sound like bucket shops and it definitely sounds more "trader" to trade with IB or MFGlobal...
Now realistically, I can't claim that I've managed to get rid of this feeling, after all this website is very modestly called "The Lord of Trading" but come on Fellow Trader, let's cut the feel-like-a-trader crap the most as we can. Let's follow the ball, the real one, the only one ball : money. And if in the meantime you are bored, instead of putting on silly trades and throwing your money in silly stuffs, just do like me, write silly posts.
TLofT be with You
---------------------------------------------------------------------------------------------------------------------------
Discuss this post at the Hand of Scalpuman, our trading forums- How many times did you trade just to feel like a trader ?
- if you were proposed a trader's job with an Investment Bank, would you turn it down ?
In my previous post, Groundhog day trader, I claimed that with my current trading system. I expect to make a fortune from the markets while spending just a couple of hours a day to monitor them. I'm sure you are thinking, Fellow Trader, that I'm dreaming, I'm unrealistic, it's pure BS or even I'm nuts. Frankly, I don't care -I would definitely be nuts if I gave (or even sell) you too much details about how I will make it-. My claim today is whatever your trading style is (I guess it's true even if you're scalping) you can reduce dramatically the time spent trading and monitoring the markets if you manage to get rid of one of the main sources of waste of time and money : the need to feel like a trader. Trading for the feel-like-a-trader's sake is one of the most destructive game I know.
I understood it when I was running the Orc race trading with investment banks. I used to interview a lot of young guys for trading jobs, I'd say nearly 100 of them over nearly a decade. Most of the kids, graduated from the world's best universities, had outstanding resumes and knew everything (sometimes much more than me) about Black-Scholes crap, stochastic calculus and equity derivatives -is there other markets than equities ?- but not one had the slightest idea of what a trader's job looked like, not a clue. I remember a chap who, answering to my question "what do you think the job is like on a daily basis" described me what could be the script for the pilot episode of "The Streets" series or "Wall Street strikes back" movie. It sounded like : "It's 6am, John the trader parks his Ferrari, the yellow one it's Tuesday, and gets in the trading room. In the air, the odour of the money freshly made. The ringtones of the etrali phones struggled to cover the cheers of the traders who made their first million for the day. Etc etc". That guy wanted to live the cliché of what he believes being a trader means, most of them do.
I had believed for a while the main motivation of those kids was the prospect of making big money -which with hindsight is a total delusion but it's not today's topic-. I was wrong, silly me, I had just to look back at my own case to see it. When you're 25 and are used to live with less than 300 quid a month, a 2000 quid salary makes you feel you win the lottery every month. No it's not the loot, that comes a bit later (soon enough), it's the "trader" title that counts. What counts is to be recognized as a trader. Of course the banks have understood this for a while and watering their staff with pompous titles like "assistant trader" (instead of slave on a trading desk) or "global head of trading your dick" (instead of senior slave on a trading desk) saved them a lot of money.
 |
| I'm a Trader |
The first aspect of this feeling, maybe a less harmful one, is social recognition. We want to be recognized as a trader as for some reasons "trader" is believed to sound "cool" among our friends, family, acquaintances and milkmen, their brothers and other guys we meet in the street. Despite all the Wall Street protests, crisis, devil bankers, Ponzi and stuffs, I guess it's still true today among chaps, at least the ones more or less involved in financial markets. Myself, I used to be very proud to announce to the guys (the girls particulatly) I met "I'm a trader" [not mentioning that I input all day quotes in a bloody spreadsheet for a living]. My dream then was to trade metals so I could claim "I'm a metal trader" which sounds even greater. Now when I'm thinking about it, the title actually impressed no one but me. Most of the guys didn't give a damn, the rare who did were at best jealous, at worst considering me like some kind of criminal. Looking backward, I just looked like an idiot, but it's really not a big deal. To me the social aspect is not so harmful as in it doesn't cost much : at most an expensive car, watch, starred restaurants, big parties or just a few rounds of beers to impress your mates and in-laws - look at this guy, he's a trader, he makes it rain. In the worst case, you just look like an idiot like me. That's all right as long as it doesn't impact your trading.
The second aspect of this need for recognition can be way more expensive. It's the recognition through other markets guys eyes and more dangerously through a trader's own eyes. Ego, once again is a mortal enemy here. Professional trading looks like a big cock contest and a trader has constantly strong incentives to show off he (or she, but the analogy doesn't work here, sorry Ladies) has a bigger one. A continuous pressure coming from sales, brokers and other traders tends to lead us to put on more positions or bigger ones only for the sake to be recognized as a trader, well to feel recognized as a trader to be precise. I won't argue on this point further : if you're trading, you know precisely what I'm talking about. Let's be honest with yourself : how many times did you trade just to feel like a trader ? Now to discuss the particular case of day traders, I guess their need to feel like a trader is even stronger. Firstly because, most of day traders dream to trade for banks or professional firms and are to some extent "failed" bank traders.Once again, let's be honest with yourself Fellow Day Trader -I know this post may be unpleasant, sorry- if you were proposed tomorrow a trader's job with a major Investment Bank, would you turn it down ? Secondly, day trading can be bloody boring (believe me on that)... and lots of day traders in order to kill boredom socialize with other ones and hence need to be "recognized" by other traders using twitter, in chatrooms or in trading forums and one of the way to be "recognized" (and to kill boredom) is to put on trades and talk about it. I have in mind a couple of examples where the feel-like-a-trader stuff impacts day traders, in addition to the classical ones of the blokes who get 50 screens, 15 computers and 10 phone lines to trade in their basement. Just one instance : a few guys around me in the UK have chosen Interactive Broker (IB) as broker -I don't know one who trades with MFGlobal but the idea is the same- just because it is used by hedge funds with hundreds of millions of AUM. First that choice of broker limits (big time) the positions they can afford -most of them can't trade more than 1 contract at the time- and this limitation profoundly affects their trading and money management systems. It doesn't make sense, the choice of broker shouldnt impact trading, it should be all the way around,. Secondly, in the UK, financial spread betting which is basically the very same thing as CFD but totally tax free is a no-brainer, that's clearly an arbitrage (if we assume that you expect to be profitable from your trading...) and one can open a position with an spread betting account as low as 100 quid (1 quid per EURUSD pip or 0.1 SPX point for instance, controlling rougly 12-13k) and control up to a few tens millions - I really doubt a day trader needs much more-. But here is the thing : spread betting firms (while they are generally just English branches of US massive Forex brokers) sound like bucket shops and it definitely sounds more "trader" to trade with IB or MFGlobal...
Now realistically, I can't claim that I've managed to get rid of this feeling, after all this website is very modestly called "The Lord of Trading" but come on Fellow Trader, let's cut the feel-like-a-trader crap the most as we can. Let's follow the ball, the real one, the only one ball : money. And if in the meantime you are bored, instead of putting on silly trades and throwing your money in silly stuffs, just do like me, write silly posts.
TLofT be with You
---------------------------------------------------------------------------------------------------------------------------
As this post is published: SPX 1292 // SX5E 2347 // NKY 8447 // DAX : 6152 // EURUSD 1.2729 // USDJPY 77.00 // XAUUSD : 1637
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