“I want to grow up and be a trader,” said no kid ever!
There might be exceptions to that comment if the kid is growing up in Stamford or Darien, Ct. and whose dad or uncle is a hedge fund manager.
The fact is I don’t know when the sons and daughters of power money make any decisions or even if they make their own decisions. I could be wrong about that, I grew up in a blue-collar industrial town in central Connecticut and all I traded were baseball cards. (Apparently I should have kept them, not traded them, as I discovered later.)
Decades have past from when I was a kid and I discovered that money was useful, much like oxygen.
It wasn’t until 1982, after seven years of purveying life insurance, annuities and mutual funds, that I stepped into the world of retail stock brokerage. If you know who Bud Fox is, you know my world at the time.
In 1991, at the start of a recession and for reasons that made sense then, I declared myself free from the bullpen, the squawk box, and the pressure from above, below, and the sides of my cubicle (read: corporate, self, and clients).
Now I can assure you that a licensed stockbroker is not by definition a trader. Back in the day, young stockbrokers were first and foremost, salespeople. It took years of experience to qualify as an asset manager with discretion in the account. These days brokers are asset gatherers.
The very first day upon returning from my brokerage’s New York broker school, for lack of a better term, I was given a cubicle, a list to cold call, and a stock with a story to push. Opening accounts was the name of the game. Trading? No, you didn’t trade. You just brought money in and it had to be transformed into a security, like a stock with a story behind it, if you expected to be paid. That buy transaction generated something called commissions – the life blood of the broker and the brokerage and indeed Wall Street.
In spite of all that quick, and I mean quick, education about balance sheets, economics, currencies, a plethora of securities of all descriptions, securities law, trading regulations, salesmanship, commodities, even how to dress as a broker, etc., I did not know how to trade per se. I knew about investing, not trading. Certainly not the way I and countless others trade the markets around the world now
While I played at trading and cursed the results, there was a broker in my office who did anything but get upset while he traded. In fact, I noticed that he was having a relatively good time during trading hours. He knew something that I did not.
Sensing my frustration, he approached me about showing me the “rules” of trading. I put my ego aside, grudgingly, and listened.
His opening comment to me about trading was this, “You first must decide if you want to make money or if you want to be right.” My troubles, he said, stemmed from my insistence that I was ‘right’ and the market was ‘wrong’.
I choose the ‘make money’ route. Though I did not refer to him as a coach at the time, that is exactly what he was doing– coaching.
You’ll note at the very top of this page, on the right side, it reads, “Trading the stock market is a daily learning experience.” Who coaches a stock market trading coach? The market gives lessons every day to beginners and experienced alike.
The market is my coach.
I learn something every day about trader behavior, psychology, tactics, strategy, techniques, traps and tips from the market itself. The charts tell me what’s going on, volume and range tells me the intensity and the close tells me confirmation (or not) of trend.
The fact is that the market, whatever that means to you now, is even more vast than you can imagine in its complexity and levels of participation. Your job, as a novice, or even if you’ve been ‘playing the market’ for a few years, is to master the basics letting time and experience mold you into a trader that fits your style, your temperament, and your skill limitations.
We can’t all be pit traders of old any more, and frankly I don’t think I would have liked that mob scene. I evolved into that nameless, faceless trader with pixels flickering in my eyes. Those beautiful red and green pixels rewarding or punishing good or bad decisions instantly.
My coach is ruthless in its unforgiving nature and uncaring as to my success or failure. Nothing personal in this, after all, it never promised me a thing, just an alternative career choice. Like all career moves, one has to put forth the time, the energy, the commitment to not only learn, but master at least one slice of the trading environment.
There are other coaches regarding trading the market besides the market itself. And if you think experience in the market is not important, wait and see what ignorance in the market cost.
Have a plan, trade the plan.