Why do we trade? A majority start mostly to make money. In its best form to provide financial stability for their family. In its worst to mask some personal insecurities. Or maybe neither and trading is just something you are doing because life offered this path and you started walking.
“Trading is a zero some game,” say many. And if this is the case then a trader adds little to no societal gain. First, trading is not a zero sum game, but I will let Roy Davis, Director of SMB Training, write about that in the future. Also, why as traders do we let the public so mindlessly define our game as just a pursuit of money? Is that really what it is all about for the best traders? That has not been my experience.
SMB offered a free seminar a few months ago on Reading the Tape. I asked our audience to volunteer their ultimate goal as a trader. One ambitious, bright attendee answered loudly with a smirking smile,”TO MAKE MONEY!” I gave him a dismissive look.
The first year I made serious money as a trader taught me my life lesson about the consequences of excess money. My partner, Steve Spencer, and I had decided to take a weekend trip to play golf in Hilton Head. Taxes were due the following week. I stepped off the plane from my First Class seat and fielded a call from my hometown accountant. He had a number. It was how much I would owe the government based on my trading performance. I would share this number but it was so obscene and it’s a holiday weekend I would rather not depress myself. I remember writing that outsized check feeling not in any way rich and certainly not nearly as financially secure as I had thought.
And that was the good problem. Lots of money, protecting lots of money is just another part-time job for you. It just adds more work to your life. After your monthly expenses are covered the extra money does not yield more happiness. It just brings more meetings with accountants, financial advisors, lots more checking of your bank accounts and investments.
I just finished a great book (a must read for all those running a business or hope to some day) Delivering Happiness: A Path to Profits, Passion, and Purpose by the CEO of Zappos, Tony Hsieh. Zappos has transformed how we think about the importance of corporate culture and customer service. Zappos became a billion dollar company because it focused on all things customer service, by delivering a WOW experience to their customers. Now their goal is to spread happiness.
Tony describes happiness:
Happiness is really just about four things: perceived control, perceived progress, connectedness (number and depth of your relationships), and vision/meaning (being part of something bigger than yourself).
Let’s try a fun exercise, using the criteria above and outline what would make us happy as traders. We have control over our pay since we receive a split of our profits. Check.
Are you progressing as a trader everyday? One of the things that brings peace to my day as a trader is filling out my trader journal. I have never understood why this is so calming to me. Now I know. This is my trading path to make progress everyday. As I keep a detailed trading journal, I am improving. To be happy as traders we must strive to get better everyday.
Do you feel a sense of connectedness as a trader? Are you a part of a trading team? Sixty pairs of eyes are better than one. Developing friendships with your fellow traders makes every trade more interesting. Nothing is more fun than drinks after work and replaying a chop in XYZ with your trading confidants. Asking a friend what they’re trading intraday is infinitely more interesting than just a warm body to your left. The other day after an AM meeting I felt our traders had relied too heavily on our partners for trading ideas. After that AM meeting I had everyone march right back into our training room. I explained that we, the partners, did not have all the answers, and their success would depend heavily on them working together with their trading-mates to make themselves better. I was also offering them a way to be happier.
And finally are you involved in something bigger than yourself? Dr. Steenbarger has written that the true reward for becoming a great trader is that you also become an elite performer. In an interview I recently did for Your Trading Edge Magazine I shared how becoming an elite performer spilled over into other life moments making you a better friend, brother, finance, son, teammate, and trader. If you are an independent trader maybe you can start a virtual trading community that shares more trading ideas thereby giving you a purpose bigger than your P&L. Maybe if you sit on a prop desk you can work together to grow more trader’s profits so a larger hedge fund will seed your desk an even bigger book to trade. Maybe you can be a part of a desk trying to be the best on the Street for your product. This is fun. These are goals. And apparently all of this brings happiness.
What would make you happy as a trader? What is the point of doing anything if in the end it does not bring us happiness?