Okay I've been slacking on my blog just a bit. The traveling, trading and training really can take up that precious spare time! Since I haven't done a blog entry since February, I'm going to jump start this with an article I wrote which deals with "balancing the demands of everyday life as a trader." Let's jump right in:
A Week in the Life of a Trader
What do a lawsuit, disgruntled employee who walks off the job, computer crash, YM trade gone bad due to a platform lockup, and a poopy diaper all have in common? No, this isn't a riddle with a door prize. These are all events that happened to me during the week I was making notes for this article. As a new father, work at home trader with hired assistants, and head of a business that runs a few trading related websites--there is always, always, always a challenge. My days mimic ocean waves rolling on a beach, a constant ebb and flow, shifting between moments when I'm merely busy to moments when I feel I'm beating off the headwinds of an approaching hurricane. Why not just blow my brains out and get it over with? It's all about learning how to manage your life and not let your life manage you--especially the trading life. To do this, I utilize the 4 F's: Focus, Fuel, Facts and Fun.
The week began auspiciously enough. Monday, April 23, 2007 was a quiet day with quiet markets. I did a few grain trades. I bought some gold. The peace and solitude ended abruptly with a phone call from my darling wife. She is pregnant with our second child and recently starting getting nauseous at the smell of my 18 month old son James "poopy diapers." Normally we have a nanny on hand but this week she had the nerve to take a vacation. "Hi, hon," she says on the phone. "James pooped." Sigh. "Ok, I'll be right down."
I check my orders. Stops and targets are in place and everything looks fine. It doesn't escape me that I'm in a trade that could mean tens of thousands of dollars in profits or losses . . . and I'm about to go run downstairs and wipe an ass. I could ask one of my employees to do it, but I'm fairly certain they would point out that their job description did not include this. Resigned, I run down and change the diaper. If you are a parent, you will understand when I say it's actually a fun bonding time with your kid. They laugh at you while you struggle to hold up their legs and clean up their mess, rub on butt paste, and put on a fresh pamper. If you aren't a parent, you'll think that's the stupidest thing you've ever heard. Just wait.
On Tuesday the trading day is humming along. I wait for setups, and take them when they occur. I get stopped out on my first YM play and I move my stop to breakeven on a ZG play. As these trades unfold, I monitor my orders accordingly. Then, just as I short a 30 minute breakdown on soybeans, I get a call that we are getting threatened with a trade mark violation lawsuit on a new Fibonacci related website we had just launched. I talk to their lawyer. He focuses on using intimidation tactics instead of participating in an adult conversation. I am watching my soybean trade and miss half the stuff he is saying. I yawn, which seems to offend him as this is a "serious business." That is one thing that is good about spending your life as a trader--there really isn't much that can happen to you that stresses you out because you have already experienced every range of extreme emotion that a human being can tolerate. The attorney wraps up the conversation by saying, "You have to take the site down right now."
"We're not taking down the site."
Yells. Threats. When he stops, I say, "Relax, we're going to change the name. We just need a day or so to implement the changes. When do we have to have the new name up and running?'
"This must be done immediately. We will fight to protect our interests. We--"
"Yeah, yeah I got it. How about by tomorrow?"
"Immediately. We must protect our--"
"Well, it's going to be tomorrow because we have to find a new name and obviously make sure it's not already trade marked. We aren't being malicious. This isn't IBM versus Microsoft. It was an error. We're fixing it. If you want to proceed with the lawsuit and waste your client's money, that's fine." Click.
FOCUS
Although I don't get sued every week, there is always something going on around me. The above two examples, poopy diapers and lawsuits, show the importance of focus. Part of being a trader is being able to have a game plan and keep that game plan on the forefront of my mind throughout the trading day, no matter what is going on around me. If I planned to buy gold on a pullback to the 8 period exponential moving average with a 10 point stop, then nothing should distract me from that. The computer next to me can ignite and burst into flames, but if gold prices hit my buy zone, then I'm buying, and I won't even try to put out the fire until my stop is in place. Once my orders are in place, however, then my job is done and I can turn my attention to the fire. Once in a trade--a well thought out and pre-planned trade--I don't need to stare at every tick. My orders are like my employees and they are now doing the work for me. Nothing that happens around me is going to change that.
In my experience, a trader without a specific plan can get hammered during interruptions. They become unfocused, prone to impulse trades. They start blaming losses on things that are outside their control. "I lost money on the trade because my wife took me to lunch." Dig a little deeper and you'll fine that he left the office without a stop or a target in place. Whose fault is that? Not the wife's. Stay focused.
On Wednesday, as I'm in an ES trade, one of my employees (who is also my sister in law) grabs her purse, storms out the door and drives off. I ask another employee (who also happens to be my sister in law) what happened. Apparently she's "extremely upset" at me because I'm keeping her out of the loop on new and upcoming projects. This is true. I gave her a few big projects and she fumbled the ball. I feel its time to give her a break from major responsibility until she can gain more confidence in our procedures, and gradually become more self-sufficient in handling major responsibility on her own. I mean, at this point, she is twenty-four and getting paid $80,000 a year to essentially answer the phone and check emails. I want to say, "Girl, enjoy the down time while you have it!" I find it semi-rewarding to work with people in a "tough-love" situation and push them to think bigger and shove them through their comfort zones. In my experience, this is what you need to do, constantly do, to lead a more rich and rewarding life--do the thing that scares you the most. In this case, however, tough love equals no love. After the markets close she calls me from her husband's office and tells me she is putting in her two weeks notice because, essentially, "management sucks." That would be me, since I'm management. "That's fine," I say. "Come in tomorrow and we'll work out the details." Although I think she is making a hasty decision and a mistake, I also admire her for putting a stake in the ground and saying, "I'm not going to stand for this." I don't pretend to understand the individual torments of the human soul. Reality is merely a reflection of what we are thinking about all day long. In her mind, she hit her stop loss. I call the paper and place an ad for a new employee--sisters in law need not apply.
FUEL
A trader needs stamina to get through the trading day and balance the multiple demands and challenges on their time. The best way to get that stamina for both the body and mind is through specific types of fuel. There are two types of fuel: mental and physical. Physical fuel has to do with keeping the body fine tuned and optimized for performance. The easiest way to do this is to drink a gallon of clean water a day, replace refined sugars and flour with whole, unprocessed grains, and remember your fruits and veggies. Sodas and fast food eat away at a trader's body and result in poor sleep, nervous ticks, and a continually weakening ability to handle the day to day challenges effectively. If you find yourself screaming at the bank teller or shaking your fist at a fellow driver, it's you who are running on empty.
Mental fuel has to do with choosing the best thoughts to dwell on throughout the day. It is impossible to control all thoughts, but focusing on certain thoughts will help strengthen the mind instead of weakening it. This will sound trite to any realists out there, but this based on the theory that external circumstances are not very important, that all of the events of our life, whether they are emotional, social, or professional are just a mirror image of our thoughts. Life is exactly how we picture it to be. Everything that happens to us is brought on by our thoughts. Do I believe that a person gets into a car wreck because of what they were thinking? No, that's why it's called an accident. But I do believe a person can calm their mind and attract the things they want around them by thinking calming thoughts throughout the day. Repeating things like, "Every day, in every way, I'm getting better and better" has a better effect on the mind than repeating, "I'm a stupid idiot and I hate my life and the market is out to get me." So if you want to change your life, balance your life, then you must start by changing your thoughts, balancing your thoughts. Besides, being rational is such a boring way to live.
On Thursday I'm in a YM trade, contemplating yet another interesting week in the life of a trader. My wife comes into the office to check on me, which is fine. She knows not to come in around any key times like market opens and closes. We've established the fact that I have zero interest in household chores like changing light bulbs. She's resigned herself to this and hires a Mr. Handyman type service to come in whenever we need tasks done around the house. However, there are still times when she will come up and ask if I can do something for her. She knows that sometimes the answer will be no. This week so far has already been trying, plus the nanny is gone. She asks if I can watch James while she goes to get a pedicure. Just as she asks this, my platform locks up.
That's part of the joy of working at home and having kids--you get to spend more time with them and I truly enjoy playing with James. However, there are times during the trading day when I just can't drop everything and do that. Having your platform lock up when a YM trade is going against you would qualify as one of those times. I tell my wife I can't watch James. She gets a little peeved at me that she can't go get a "manny and peddy." As she stalks out of the office, I call my broker to tell him to flatten me out.
By the way, my wife read a late draft of this article that I left open on my computer. After telling her mother about what I'd said, she decided to add the following: "You know you are a trader's wife when the phrase the markets are closed is as exciting as Honey, we're going to Hawaii because it means that my husband is now ready to interact with me with more than a grunt and a nod." As Borat would say, "Vaaaaary nice."
FACTS
In a situation like this, it is important for a trader to dwell on the facts. The facts in this case were that 1. I was in a highly leveraged trade, 2. The markets were open and moving and 3. My platform locked up. As a trader dealing with facts, this overrode the pedicure. It's not about emotions or who is right and who is wrong. Just the facts.
Finally, one of my employees who didn't quit this week (and who is not related to me), forwards me an email from a client who is disputing a charge of $99 on his credit card for one of our services. It reads, "Dear Sir or Madam, I did not authorize this charge. You are crooks. You will hear from my lawyer today and he will take you and your organization down." This email makes it to our bulletin board. We have a "Freak of the Week" contest for customers who send emails that reveal they are, in fact, freaks. This one is a winner and we take down the one from the prior week and replace it with this one. We call him and work it out, but neglect to tell him about the award he has just won.
FUN
Trading, life, and business can all be stressful at times, and that's why it is important to have fun. It's not worth going through the ups and downs if you can't at least smile and be thankful that you have an interesting way to make a living. One of my favorite quotes is from Felix Dennis, billionaire publisher of a variety of computer magazines among other things. He says, "If you cannot treat your quest to get rich as a game, you will never be rich." This reminds me not to take things too seriously, no matter what the quest.
By following the 4 F's a trader can stay in tune on what is going on around them without getting distracted. They can stay balanced and avoid getting the 5th F. The 5th F? Ah, the 5th F. That's the one we don't want. And if James ever says it before his 5th birthday, he will wind up with a mouthful of soap!
The market is a stern mistress whose greatest tool is in teaching human beings an appreciation for humility--a unique trait for a group of people who spend their days waiting patiently for an opportunity to kill. As a trader, I've learned to understand and accept the fact that the market is always right, no matter what else is going on around me. That is the basis for the 4-F's--a realization that the market will never make a mistake, will never be wrong, and to use that knowledge to bring balance to the swirling activity around me.
John F. Carter grew up the son of Morgan Stanley stockbroker, and was introduced into trading as a sophomore in high school, and has been trading actively for the past 19 years. He studied international finance at the University of Cambridge in England before graduating from the University of Texas at Austin. John has been a full time trader since 1996. In 1999, he launched www.tradethemarkets.com to post his trading ideas. Today he has a following of over 10,000 people. He's a Commodity Trading Advisor with Razor Trading, and McGraw Hill tapped him to write a book entitled Mastering the Trade, released in January, 2006. Carter can be reached at jcarter@tradethemarkets.com.
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