{"id":2102,"date":"2009-09-30T17:32:54","date_gmt":"2009-09-30T22:32:54","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=2102"},"modified":"2013-06-20T13:55:22","modified_gmt":"2013-06-20T17:55:22","slug":"good-on-paper-gop-be-respectful","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/good-on-paper-gop-be-respectful","title":{"rendered":"Good on Paper (GOP): Be Respectful"},"content":{"rendered":"

I just handed in my manuscript for One Good Trade\u00a0<\/em>to Wiley. I am relieved to have this behind me. During my editing process I discarded some humorous anecdotes that just did not quite fit with my book. I thought you might enjoy this one interview I had with a prospective prop trader candidate.<\/p>\n

GOP: Be Respectful<\/strong><\/p>\n

This next interview occurred on a Friday. By the end of the week if I can keep my eyes open past 9pm this is a huge victory. And it’s 7pm and I am at the office. I am hungry. I really just want to go home, lie on my couch, order a pizza, and watch the Yankees. But we are a little behind with our interviews and there is an excellent candidate to be interviewed. This candidate had traded at a big bank. His resume claims he made five million for his bank last year. He was a former college athlete. Let’s call him GOP (Good On Paper).<\/p>\n

Sometimes when I am tired I start the recruiting process backwards. I let the candidate lead with questions. GOP started with, “How much does the average trader make when he starts?” Already he\u2019s compounding my Friday evening angst. He then asked, “Do you hold overnights?” I explained that we don’t and that when we first traded we did.<\/p>\n

For background, <\/strong>I first started during the tech boom. We traded AMAT, KLAC, CSCO, INTC, MSFT, DELL, NVLS. Stocks that printed strongly into the Close (stocks that finished at their intraday highs) tended to gap up the next morning. So we would take them out overnight. During the Internet boom we did this as well. After the Internet bubble burst we stopped this practice, as the patterns dissipated and the risk\/reward fell out of favor. Maybe these patterns will emerge again. But today the strongest stocks into the Close can open negative, and the weakest stocks can gap up on the Open. Those old school patterns are gone the way of Urban Fetch, a NYC delivery service infamous for delivering indulgent snacks like Krispy Kreme and Ben and Jerry\u2019s ice cream before bed. Further there is so much overnight risk presently that it is not worth it for us. This might work at other places, just not for us, and not during this market, as you never know when a bailout will fall from the sky.<\/p>\n

GOP listened and responded, “Well, that is a mistake. I would not trade anywhere that did not allow overnights.” I remarked then I guess we weren’t a good fit for him and apologized for wasting his time. I could taste the Patsy\u2019s pizza as I finished this sentence. And just when you would have thought the interview had ended, the fun started.<\/p>\n

“I made five million dollars for my firm last year,\u201d\u00a0GOP said. \u201cI made it taking out positions. How much did you make last year?\u201d<\/p>\n

“Less than that,\u201d I remarked.<\/p>\n

“Then doesn’t that show that it would be stupid not to allow me to take overnights?” he responded arrogantly.<\/p>\n

“Not necessarily,\u201d I replied calmly. \u201cWe trade a certain style. There are certainly many different ways to make money. \u00a0We are looking for those who are a good fit for us. We would not during this market be able to quantify our risk with your overnights.”<\/p>\n

“How much did you make last year?” he asked again with disrespect. And the back and forth continued without progress.<\/p>\n

“Less than you apparently.”<\/p>\n

“Well, I am not interested in this firm unless I can take out overnights.”<\/p>\n

“Understood. I guess we’re not a good fit for you.”<\/p>\n

“So you are not going to let me take out overnights?”<\/p>\n

“No,” I said.<\/p>\n

“Well, that is so stupid.”<\/p>\n

“Look, I am tired, it’s been a long week, SMB is not a good fit for you.”<\/p>\n

“So you are asking me to leave?” GOP asked annoyed.<\/p>\n

“I cannot help you. We are not a good fit for you,” I replied patiently.<\/p>\n

“That is rude. You are kicking me out of your office?” he asked raising his voice.<\/p>\n

“I cannot help you. We are not a good fit for you,” I replied soothingly and even more patiently.<\/p>\n

“Thanks for wasting my time,” GOP barked.<\/p>\n

“I am sorry. Best of luck with your search.”<\/p>\n

“This is so stupid.”<\/p>\n

“Enjoy your weekend.”<\/p>\n

Sometimes people like GOP are just having a bad day. Sometimes good traders are not used to civility. They are like pampered athletes who if producing can get away with just about anything. We are not really interested in people with such an attitude. \u00a0Eventually they end up bringing down morale, which is expensive. I would assume this is why Dallas Cowboys owner <\/strong>Jerry Jones released Terrell Owens. But also I do not want to spend the entire day around those who I do not respect.<\/p>\n

Arguing with a partner is not the best way to secure an invitation with a firm. Managing our risk is very important. If we cannot quantify our risk then we cannot allow our traders to make certain trades. Two more things: 1) The trader above made less than seven percent of what he made for the firm because of losses in other departments. 2) The bank where GOP traded is no longer in business.<\/p>\n","protected":false},"excerpt":{"rendered":"

I just handed in my manuscript for One Good Trade\u00a0to Wiley. I am relieved to have this behind me. During my editing process I discarded some humorous anecdotes that just did not quite fit with my book. I thought you might enjoy this one interview I had with a prospective prop trader candidate. GOP: Be Respectful This next interview occurred … Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[18,363,364],"class_list":["post-2102","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","tag-smb-capital","tag-the-way-of-the-prop-trader","tag-wiley","no-post-thumbnail"],"yoast_head":"\nGood on Paper (GOP): Be Respectful | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/good-on-paper-gop-be-respectful\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Good on Paper (GOP): Be Respectful | SMB Training\" \/>\n<meta property=\"og:description\" content=\"I just handed in my manuscript for One Good Trade\u00a0to Wiley. I am relieved to have this behind me. During my editing process I discarded some humorous anecdotes that just did not quite fit with my book. I thought you might enjoy this one interview I had with a prospective prop trader candidate. GOP: Be Respectful This next interview occurred ... 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