(For those of you not aware, this is the magnificent Durdle Door on Dorset’s Jurassic Coastline. The reason for the photo will become apparent later on in this piece.)
Hello Traders….well that was an interesting start to August. Hopefully now everyone is flat and sunning themselves away from markets. Or crying into their beer.
As you know every so often I ask you to indulge me in my writings/posts. This is trading related, but is mostly just a rambling piece that will only end up reminding and inspiring myself. So either bear with me, or stop reading now.
I recently read an article on Medium.com that came from George White’s Twitter Feed which is a good feed to follow (he’s even sometimes complimentary to me!)
Anyway the Medium post was written by a guy called Sean McLaughlin – and it would appear that Sean is having a tough time of it. That’s nothing new, all traders have had, and will continue to have, challenging periods (if they tell you they don’t, or never have, then don’t listen to them.)
Seans piece was entitled The Career Risk Traders Are Unaware Of. Its an honest, well thought-out, and well written piece that addresses one of the unspoken issues – namely that of Opportunity Cost. Is it a valuable use of your time to trade for a living? What happens if it doesn’t work out?
One of the sessions on Stage 4 of the VTP starts out with quoting Teddy Roosevelt: “With Victory Comes Great Sacrifice” and we pose the question: what would you sacrifice to become a successful world-class trader?
If you don’t know what you would sacrifice then maybe this weekend provides you with an opportunity to consider that question. Let me assure you: there is a price to be paid.
I don’t know if there’s a definitive right answer, as everyone’s situation is different, but I know there are plenty of wrong answers to the question.
I don’t know Sean, and I don’t know the details of his situation, but he alludes to some poor life and financial decisions which may have contributed to his present circumstances. I believe that we create our own peaks and valleys in our lives. He also talks about under-capitalisation and he’s spot-on there, most private traders are under-capitalised for their goals and expectations. I see and hear it time and again. I have lost count of the times I’ve seen private traders do one of the following:
Wannabe traders trying to live an Instagram-lifestyle on start-up wages.
Private traders spending 500-2000 a month of operating expenses (offices, computers, fancy platforms – let me assure you, to private traders having a Bloomberg terminal is just a vanity project)
Private traders having a period of success, and then ramping up their position size ten-fold to chase the moolah (this never ends well)
Wannabe traders trying to replicate their comfortable monthly corporate wages off a 5k account. Can you do this? Yes, anything is possible. However, what’s the probability of you achieving this month-in-month-out? Low, exceptionally low. Do yourself a favour – give yourself a fighting chance to succeed.
I’m sure you could add plenty of other examples of your own. Overall this is a business, keep your expenses and mistakes small, and work on ways to increase your profit margins.
In my old military job you were “only one bad sortie away from “the chop”, or being an IDRO.” When I worked in the City you were only one quarter away from demotion/sack. In Trading you’re only one trade away from being out of the game. If you think about it, that’s a lot of pressure to have on your shoulders, so its no wonder that some people really struggle with it.
So what can you do to help yourself if you are under-capitalised and struggling?
Put money into a pension, or long term savings plan, that you cant touch. Ever. Think of it like building a Strategic Reserve. Even Jesse Livermore did this and it helped him after his blow-ups.
Living life like George Best may look fun – but it rarely ends well. You don’t need a helicopter or a speedboat. Well no-more than one at any rate.
Get a wife and a life – honestly do yourself a favour, sort this out. Get a life outside of trading. (Note to self: follow your own advice.)
Don’t give up the day job until you have to. If you’re hoping that leaving your hated job to become a trader will work then I assure you it wont. If you hate your job then deal with that first. Then trade, if you still want to, which you may not want to once you’ve sorted out your shitty job.
Leverage your skills elsewhere. One of the reasons I coach is that I have in the past educated and coached fighter pilots, CEO’s, Sales-People, Volunteers, Sports stars etc. It turns out that I enjoy it, it gives me some socialisation, and makes me a better trader/person generally. (I don’t care how introverted you tell me you are – being at home all day on your own is not healthy!)
If you have a business that creates income then find a way to make it continue paying you whilst you learn how to trade. (I know that maybe harder than it sounds.) You want to be in a position that when you sit down to trade you are there trading for opportunity, rather than trading to generate money….to pay your bills. That never ends well.
Keep your life cheap and cheerful. I still do. I have learnt that my time is precious and better spent with people who’s company I enjoy rather than flying to the other side of the world to take a selfie. (I cant abide airports these days.) I realised that autonomy was more important to me than a flash car.
I was sorry to read of Seans situation, and I genuinely wish him well and hope that he creates a better life for himself. That he can turn his valley into a peak. Anyone who has traded live for a career has my respect – it’s not easy.
I’m sure Sean has it all covered and is working his arse off to get back on track and get some forward momentum. If I could help then I will – I’m like that.
It will probably provide no help to him or other like him, but I have recently been introduced to the writings of Roman Emperor Marcus Aurelius – via the Prime drama Black Sails (if you haven’t watched it then do yourself a favour and watch it – brilliant drama.)
One of the episodes ends with the reading of a chapter from the Emperors Handbook and it struck me as a fantastic piece of writing. I loved it from the moment I heard it. My enjoyment of it has only increased since my exposure to it, and now I have it written up in my Winners Bible and also in a frame on my Trading Desk. Here is the dialogue…
The Emperor writes: How should you be?
Be like a rocky promontory against which the restless surf continuously pounds; it stands fast while the churning sea is lulled to sleep at its feet.
I hear you say, “How unlucky that this should happen to me!”
Not at all.
Say instead, “How lucky I am that I am not broken by what has happened and am not afraid of what is to happen. The same blow might have struck any one, but not many would have absorbed it without capitulation and complaint.”
The Emperors Handbook – Marcus Aurelius
Well it may not bring solace to many – but it certainly resonates with me. The more I read it, the more I enjoy it. I think its a fantastic piece and I will refer to it for the rest of my days. It helps shape my attitude on challenging days.
Apologies for the rambling. Nevertheless whatever your trading situation is I wish you every success. Make sure you have a good network around you, and leverage their strengths if you’re having a challenging time. Take some time off (if you can) and go away and refresh and re-charge your batteries this August . I have a feeling that from September onwards markets are going to be a bit tasty!
For those of you who do not know what a Rocky Promontory is; its a point of highland that juts out into the sea; a headland. And to finish it off here’s me in front of Durdles Door – you can walk from Weymouth station to Lulworth Cove (a beautiful spot next door to Durdle Door) its about a 16 mile hike up and down the coastline but on a glorious day is a sight to behold. If you’re in the UK go and see it. If you’re elsewhere go and find your own Rocky Promontory.