When you deserve to be screamed at as a trader

BellaMike Bellafiore's (Bella's) Blogs9 Comments

A partner looks up at his scoreboard, which tracks the performance of traders, and sees one trader particularly in the Red. And it’s getting worse. He clicks on the trader’s ID and sees an open long position 1 point out of the money. The market is broken bad below SPY 125 on the Open. What’s worse is the firm has had conversations with this trader in the past about his failure to exit losers. The trader was even let go for this very reason and then talked his way back into a return. And now this.

The partner has his Floor Manager flatten the trader and retrieve his phone number. The call is placed.

“So what is going on?” asks the partner.
“I am just trying to clear my head from that last trade,” replies the remote trader.

Now I will save the exact conversation for the two parties. But at no time during the rest of the conversation was the remote trader allowed to talk. There are certain times when even an attempt at reason is such a waste a time it must be clear there will be no explaining. Let’s just say that the 3 minute conversation was not PG rated. The volume of talk from the partner started and stayed at screaming. The partner made it clear if this ever happened again the trader would be terminated. The trader was placed on the demo and the partner slammed the phone down in disgust.

Being long a market stock when the market is broken is how you blow up your trading account. I have faded stocks professionally. In fact for a period of time this was my trading strategy. The above was not fading. It was bad trading. Letting a stock run past your predetermined stop precedes your search for new employment. This is not something you work on. This is something you do not do. This is self-destructive. This is almost like you saying you do not want to trade. If you cannot hit stocks that trade against your stock you need to stop trading immediately.

Some may read this post and wonder about the screaming. Getting in a trader’s grill is an action taken for the best interests of the trader. Creating further discomfort for the trader makes it more likely he will not do the above again. Who wants to receive a lashing like that again? And no one wants to disappoint their mentor.

What next? Trade on the demo. Do specific visualizations exercises. Experiment with creating a mental stop loss for if the stock trades against you before a trade, then place the trade, then automatically place a stop. Take yourself out of the stop equation. Have a long, self-critical conversation with yourself and try and understand why this is an issue for your trading. Get rid of the idea of getting long a market stock when the market is broken. Do not return to trading with real money until you have eliminated this issue.

One Good Trade

9 Comments on “When you deserve to be screamed at as a trader”

  1. Today was a day to take profits quickly and cut losses even quicker. While the market is in turmoil and swing traders are bleeding, cash is king for day traders

  2. can u give me the number of this trader, i need to smoke some of what he/she is smoking…..where did he/she ever see a place to get LONG today. that’s some good $tuff he’s smokin’ – i need some of that.

  3. If the trader is making money then he can always go wherever he wants to go. I do not think creating a hostile work environment is a good tactic. It actually is fairly stupid even from a behavioral policy. If you have to raise your voice to be heard then it is likely that will become the only way you will be heard. A better approach is to have rules and risk management procedures in place beforehand.  If there is no definitive risk management in place then it isn’t clear how the trader would know he is in the wrong..

  4. Dude, did you even read the post? The trader has been warned and let go for pulling the same crap. If you read this blog enough you would clearly know to use stops. TRADING 101. Some people only listen when yelled at. Ever been through boot camp? The DI never talks to you. It’s not because he hates you, it’s because he wants your utmost attention. It works!
    This guy should be thanking his lucky stars he didn’t become a free agent. Kudos to the boys for giving him yet another chance.

  5. This is the same type of behavioral response that many people use with their children, pets, etc. I’ve seen it and it isn’t effective.What do you think happens cognitively when you yell? It becomes more difficult to clearly understand what you are saying. Why do you think people yell? They yell to feel better. That’s all. It just makes them feel better but there is a cost which is that one isn’t working toward the primary motivation: getting the behavioral response desired.

    Honestly, i wouldn’t work for someone who yelled at me. My point also is that no one gives anyone anything. If this trader isn’t producing value then he wouldn’t have a job. So, either he’s producing value and they should be glad to have him or he’s not and they should let him go. No reason for yelling.

  6. Market Predictor,

    Research and professional performance coaches would disagree with your conclusions.  There is a great deal of research that demonstrates critical feedback is essential for the success/failure of a trader.  For almost all the volume/loudness of this feedback is not a negative.  Some performance coaches will go so far to say that if a student has trouble getting yelled at when they receive feedback then this alone is reason they can never be a good trader.  
    None of the yelling can be done without caring for your traders.  And if the student does not clearly understand that the yelling was meant to help and that I care then my teaching technique should be criticized.  The student and the professional trading coach (the trader works with an outside trading coach who works with some of the biggest traders and pro athletes in the world) who works with this trader privately all concluded the yelling was for the best interest of the trader. Market Predicator- thanks for making this an interesting discussion.  We always enjoy your contributions.  

  7. “Some performance coaches will go so far to say that if a student has
    trouble getting yelled at when they receive feedback then this alone is
    reason they can never be a good trader”

    That argument sounds extremely weak. I’d argue that the best traders in the world, like any professional, may choose not to tolerate getting yelled at.

    Again, I’ll repeat the basic problem with any type of behavior that is not directed toward the primary motivation is that it waste energy, distracts, etc. I’ll grant it might get someone attention when used rarely.. its like cursing. Nobody pays any attention to someone who curses all the time. If someone doesn’t curse and curses then sure it will get someone attention. If you are going to claim the yelling wasn’t for your own psychological benefit then that’s fine with me. But keep in mind I’ve seen this behavioral response used in many situations to elicit some sort of action and I’ve seen it not work where simple direct methods do work. The job is to get the behavioral response desired. Anything else may be counter productive.

    In this case without more information, it sounds like a process control issue. If the trader has a daily stop or risk limit then it needs to be automated at the software level. If the trader can’t stay within that loss limit and is making profits then his methods may not be suitable/applicable to that level of risk. If he can sometimes stay within that risk level then one needs to look at volatility/etc and find a plan to shut down when market is too risky.

    Thanks for appreciating my input.

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