I was given the worst possible advice by our best options trader a few days ago. Suffice to say, he is brilliant in his own way, soft-spoken with a keen attention to detail in his exquisite scalping strategies in which he makes over 1000 trades per day.
This talented scalper, let's call him Kareem Abdul-Jabbar, after the basketball star; Kareem said to me that to be a great trader one had to fail and lose a lot of money. That is, to feel that pain of the loss of capital, to understand that agony in which one couldn't sleep at night because one was drowning in negative capital.
I didn't need to feel that agony. For the last half decade, I witnessed the decline of my family's fortune, as their multi-million dollar investments turned into dust. I stood witness, while my parents dutifully shielded me from that loss of capital. The future looked bleak, but my family never lost their perserverance. It's something that I never discussed, this economic tragedy that had befallen the members of my family, who for decades had enjoyed the American Dream.
It made me realise that women are often shielded from fiduciary matters. We are absent when business is discussed. As children, we learn that is it vulgar to discuss money with others; and we are sent on our way, to primp and preen, and be admired for our beauty and diligence, but are never consulted when important decisions are made regarding our financial future.
Middle class families send their daughters to become accountants and lawyers, in the hopes that they will never suffer the fate of an unknown financial future. I studied music and art, and in the United States, that is a privilege as I have come to learn. I look at all my artist friends, and most of them ahead of their time, the Picassos, Klimts and Van Goghs of their time, except no one knew who they were yet. Yes, we were all struggling.
So my brilliant co-worker, the star options trader continues to tell me that my non financial background could be a great asset; after all, my mind wasn't filled with superfluous information, and my particular style of visual thinking lead to an eerie accuracy in creating charts that always met their targets. But perhaps, underneath it all, I always had a love affair with the world's economy.
For me, failure wasn't an option.
Friday, January 28, 2011
Monday, January 17, 2011
Neocapitalism: An insular education
It's been said that Wall Street steals all the most brilliant people away to work in finance. When I ask people who work in all sectors of finance, they all seem to have the same story: Graduated from an Ivy League; majored in economics or accounting; interned at some bank as students, always knew they were going to work in finance etc. They studied numbers all their lives. They had parents who pressurised them into the field. They were following a path that was already paved from them. They never knew anything else.
I sometimes wonder if insider trading is really about people who socialise at country clubs, playing golf, and saying, hey, let's do this next week, just between you and me. Just don't leave a trail of emails, facebook messages, or twitters. You'll be fine, right?
I once read that the best traders are star athletes. Most investment and capital groups are attracted to star athletes, not due to their Michelangelo and model-like appearance, but because as star athletes, they are disciplined. They get up at the crack of dawn, they practice their technique daily, they don't indulge in excess, they learn to persevere etc. It's akin to the myth of the hero: this perfect athlete/ trader. They are Greek gods, admired by men and ladies alike, wanted by all Proprietary Trading Groups and bring in the most revenue.
The truth is, this probably is untrue- at least for most Proprietary Trading Companies out there. At our company, 3 of our best intraday traders were not athletes. They didn't even play sports at all. One was a warm, caring individual who came from a foreign exchange background, and studied business administration when he really wanted to be a writer. The other two, foreign immigrants who liked to play a lot of video games in their spare time, and the other still, a French national who read a lot of literature, and had an intuitive way of analysing the market. They knew how to scalp based on their understanding of routes, tape reading and learning how to outsmart the automatons at the "big banks" at intraday play. They were never A-students, and none of them attended Ivy Leagues nor were star athletes; but what they had in common was that trading was never meant to be their primary profession. Trading was their Plan B, and somehow, they found they were extremely good at it.
Did Wall Street take away our best scientists, artists, musicians, writers, engineers, editors, lawyers, doctors and make them into financial analysts, traders and investment bankers?
Perhaps. In the United States, we live under neocapitalism. One could no longer have the freedom to do what they wanted in life unless they were somehow involved with the financial market.
Wall Street was our new religion. But part of the joy was discovering that path itself. This is what always separated the bulls from the bears. One had to always take a stand.
I sometimes wonder if insider trading is really about people who socialise at country clubs, playing golf, and saying, hey, let's do this next week, just between you and me. Just don't leave a trail of emails, facebook messages, or twitters. You'll be fine, right?
I once read that the best traders are star athletes. Most investment and capital groups are attracted to star athletes, not due to their Michelangelo and model-like appearance, but because as star athletes, they are disciplined. They get up at the crack of dawn, they practice their technique daily, they don't indulge in excess, they learn to persevere etc. It's akin to the myth of the hero: this perfect athlete/ trader. They are Greek gods, admired by men and ladies alike, wanted by all Proprietary Trading Groups and bring in the most revenue.
The truth is, this probably is untrue- at least for most Proprietary Trading Companies out there. At our company, 3 of our best intraday traders were not athletes. They didn't even play sports at all. One was a warm, caring individual who came from a foreign exchange background, and studied business administration when he really wanted to be a writer. The other two, foreign immigrants who liked to play a lot of video games in their spare time, and the other still, a French national who read a lot of literature, and had an intuitive way of analysing the market. They knew how to scalp based on their understanding of routes, tape reading and learning how to outsmart the automatons at the "big banks" at intraday play. They were never A-students, and none of them attended Ivy Leagues nor were star athletes; but what they had in common was that trading was never meant to be their primary profession. Trading was their Plan B, and somehow, they found they were extremely good at it.
Did Wall Street take away our best scientists, artists, musicians, writers, engineers, editors, lawyers, doctors and make them into financial analysts, traders and investment bankers?
Perhaps. In the United States, we live under neocapitalism. One could no longer have the freedom to do what they wanted in life unless they were somehow involved with the financial market.
Wall Street was our new religion. But part of the joy was discovering that path itself. This is what always separated the bulls from the bears. One had to always take a stand.
A speculative art
Trading is a highly speculative art. It is a form of prediction that can have dire financial consequences. Often when I speak with traders, they have the mindset that the market is an enemy, which takes away their profits. Their enemy is their own. There is no enemy. The market is effusive, organic, and represents a paradigm shift; a vast ocean that pushes and pulls and gradually will drown you unless you learn to float on water, and learn to move to the rhythms of the oceans waves.
Struggling against the market is akin to trying to swim against the current. The ocean is more powerful than you are. When I first learned to surf, I fell many times, but after much practice, I realised that there was a method to the madness.
Intraday traders often have great technical skills akin to coding. They play poker when the market slows down, they place and cancel orders, learn to read the tape, and play against automated programmes from the financial instutitions that have utilised scalping technologies without a human interface.
Swing and position traders, like myself, can't be replaced by automatons, at least not yet, at this particular juncture in time in 2011. We have a thinking skill that cannot be replicated by software programmes. This ability for analysis is the same as if one were analysing a work of literature. The market possesses a plotline, a summary, a list of characters of various players, and shifts and movements that we recognise and place our bets on.
When I first started trading, I was at first, lured by the power of shifting large amounts of capital around, but as I grew more familiar with the market, I realised that it was really a kind of blueprint of humanity; in each movement, possessed truths about our society. The market was really a macrocosm of each individual action, in which a combination of fundamental analysis along with a technical understanding of its recurring motifs are necessary in the highly speculative art of being a trader.
Struggling against the market is akin to trying to swim against the current. The ocean is more powerful than you are. When I first learned to surf, I fell many times, but after much practice, I realised that there was a method to the madness.
Intraday traders often have great technical skills akin to coding. They play poker when the market slows down, they place and cancel orders, learn to read the tape, and play against automated programmes from the financial instutitions that have utilised scalping technologies without a human interface.
Swing and position traders, like myself, can't be replaced by automatons, at least not yet, at this particular juncture in time in 2011. We have a thinking skill that cannot be replicated by software programmes. This ability for analysis is the same as if one were analysing a work of literature. The market possesses a plotline, a summary, a list of characters of various players, and shifts and movements that we recognise and place our bets on.
When I first started trading, I was at first, lured by the power of shifting large amounts of capital around, but as I grew more familiar with the market, I realised that it was really a kind of blueprint of humanity; in each movement, possessed truths about our society. The market was really a macrocosm of each individual action, in which a combination of fundamental analysis along with a technical understanding of its recurring motifs are necessary in the highly speculative art of being a trader.
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