Should I bench this trader?

BellaGeneral Comments14 Comments

A few weeks ago a developing trader on our desk sent me his trading review for the day.  He had traded at least 15 stocks and was negative in nearly all of them.  I responded:

There is no reason for you to trade more than 8 stocks.
Set that as a rule.
You have to see the big picture and starting concentrating on where the real money can come from.
Just trading 15 stocks and hoping something works is not a good process
You have to learn what is more likely to work.

That trader responded:


So today that same trader sent me his daily trading review.  Again almost 15 stocks.  Again almost negative in all of them.  Here was our exchange.


What do u want me to say here? I told u last week not more than a certain number of stocks. WTH is this? For the rest of earnings season u can trade four stocks a day at max. This will not be lifted until u are positive for two weeks. Tomorrow u r on the demo for violating your stocks per day rule.


bella, i honestly do not think this is too many stocks, JPM and C are the same concept play, SWN, MPC and COG are the same natural gas short, BAX, MAT, GCI in play earnings stocks with good relative volume, and the other trades were all just feelers to see if they would work, QCOM, INFY CSC, NCR, these were plays that showed potential and were worth a feeler, i think it is a little harsh to put me on the demo on the first real day of earnings, i will gladly trade 4 stocks until i am positive for two weeks, i understand that, but to put me on the demo on the first real day of earnings seems a unfair, i was doing the right things today and i stand by the majority of my trades, i lost money today because i got chewed up in BAX, C and slipped in MAT on the open, not because i put feelers on in a handful of other stocks


you told me recently you would keep it to 8 stocks

u didnt today

your results last week and to end the month are irresponsible and cause for a time out

you cannot lose money that consistently being an intraday trader without making changes that lead to making some money and stopping the losses
you had no idea on the open today that we had been very week the past few sessions and wasnt even ready to consider that into your trading on the open until i brought it up
this is a lack of preparation both mentally and work wise
why are you trading feelers when you arent making money in stocks you are watching more closely?
the way you go from losing to positive is to watch a smaller number of stocks more closely and find the very best entries for those stocks
like the MAT into the close that you mentioned
i am harming your progress if i dont bench you tomorrow
you have to follow rules to progress
you have to cut bad streaks
you have to make changes when you are going badly so that under no circumstances are you not positive the next few trading sessions.
Should I bench this trader?


no relevant positions

14 Comments on “Should I bench this trader?”

  1. the ONLY reason he should be benched is that he is not recognizing what you are saying. he should have owned up to breaking the 4 stock rule, then asked to trade tomorrow. otherwise I dont think demo is needed for breaking the rule once if he truly understood he was wrong and why. otherwise Im not a big fan of demoing at all. 

  2. I agree with ttrade, the demo may be a bit harsh, but this trader is going nowhere fast.  I am not a trader, but I am a TA and I watch this stuff all day.  The strategy/explanation isn’t sound (I also don’t know the offline dialogue), sounds like he is throwing darts at a board.  I don’t understand the BAX play at all.  If you read anything other than volume you would have known this was an awful play.  The “feelers” are garbage also, but he is young and he can learn.  Just doesn’t seem like he wants to.

  3. Regardless of whether or not his trades that day were correct, he still traded nearly 15 stocks after you told him to set 8 as a rule.

    He then said, “Understood” and proceeded to violate that rule.

    I say he gets 1 day benching for violating the rule and then an additional 3 days benching for questioning you.

    If trading was more like a “traditional” job and one of your employees violated a rule you had both agreed upon, he would likely be getting fired, so he’s getting off easy! 

  4.  that trader should bench himself for lack of discipline. He should learn how to deal with his own discipline,, but I guess some people just like to be told what to do.

  5. I think you should put the collars on. If he can’t keep his discipline then you do it for him. Tell him point blank that keeping his discipline has to happen or he wont make it in this business. I would put the collars and let him trade. Trading the demo involves no emotion and is of little help. If a choppy market is causing this trader to lose his discipline that will not trigger without his emotions playing out. If its choppy market conditions triggering his lack of discipline even in 4 stocks it will surface with over trading in them. Have him re-evaluate each position taken each day looking at time of day, how the SPY was trading at the time trades were taken etc. Make sure he is seeing the whole picture and not filtering out information that is relevant because it didnt support his bias. Young traders(experience not age) sometimes do not understand why what they did was wrong. Pattern recognition is great but each pattern has different probability during diff tapes and time of day. Re-inforce that as speculators we only risk our money when the odds set up in our favor. 50/50 trades need to be passed on even though they work 1/2 the time.

  6. Bench for sure. I’d consider firing him for such a poor attitude. He needs to understand that you are his boss, the partner/owner of the firm and he needs to know his place. Having gone through a surgery residency, I know I would have gotten my ass kicked for that type of attitude.

  7. Matt,

    I am thinking about adding some new rules for new traders.  Like me increase share size and intraday max loss and BP, perhaps we should increase stocks you can trade?  So you cannot trade three stocks intraday unless you can make money with two and you cannot trade 8 intraday unless you can make money with four.  


  8. Given his misguided “fairness” appeal and his willingness to disregard the rules and his pnl, perhaps he has a future in the Obama administration.

  9. I like that idea, but it’s definitely a fine line in terms of limiting stocks because you also want younger traders to stock-hunt (within reason) when their initial stocks for the morning aren’t any good.

    For the guys I train, I give them absolute freedom at the beginning to make their own mistakes. Then, if I can notice destructive patterns in their trading that they’re not picking up on, I tell them to institute a rule to eliminate that behavior. If that still doesn’t work, I make them follow the rule by limiting their freedom to make those destructive trades.

    For instance, some of my guys only want to trade AAPL & PCLN and the other high-fliers. The problem comes when they don’t make any money in these stocks and continue to trade them. So I tell them to cut it out and look for other stocks, and if that doesn’t work I implement a price limiter that prevents them from trading stocks over $500. 

    I haven’t had any guys so far who I’ve thought traded way too many stocks, but I do tell guys to keep only 1-2 positions on at any given time so they can focus on them. I agree that anything that can instill rules-based thinking into younger traders is a good idea.   

  10. The issue that strikes me about this trader, and he’s not alone, is his ability to listen.  In my opinion, and it’s just an opinion, that’s the deep seeded issue.  With this information, what is the most effective way for this trader to develop his listening skills?  Building and improving our character should be a high priority, not just in trading but life in general.  Michael Martin states it beautifully in his book The Inner Voice of Trading:

    “As a trader, improving your ability to listen improves your trading dramatically – listening to why someone is speaking the words, and the manner in which they are speaking, not just the literal meaning.  When you listen this way, you open your mind to the true meaning of what is being conveyed.  This includes listening to your own inner voice.”

    This is an area we all can improve on, not just the trader mentioned above.  This situation should be viewed as a blessing because he has the opportunity to grow psychologically!  But that’s his choice. Him justifing why he traded 15 stocks after being told not too (which btw is in the best interest of the trader) is not gonna help.  So what will?  It depends on him and how receptive he is to the situation.  Bella, that’s the beauty of you being a mentor or whoever is his mentor.  You’ve been in these situations before so you know best and the developing trader should listen and trust your guidance.

  11. Quick thought. Are you a mentor or boss to this trader? Some people here are reply with a bosses answer and others a mentors. Two totally different hats in my opinion. One is only focused on the trader and the other although some focus is on the trader ,firm considerations  jump to stage without concern for the trader. Bosses have time frames and rules and responsibilities that are different from a mentor. 

  12.  Bella obviously wears multiple hats for his company(just read One Good Trade, or you may have already.), only one of which is that of mentor. To me, when the mentoring is falling on deaf ears, or should I say, when the mentoring is only being perceived by the trader as a loose suggestion with no limits, then that’s crossing the line, especially when the results aren’t there. There are such employees that think outside the box and are high flyers that you give loose reigns to, but when more experienced traders aren’t being tapped for valuable ideas(such as focusing on fewer stocks…for a good reason!), then the boss hat gets put on. Hey, you have to watch the bottom line too.

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