Bad Things do Happen

Have you ever felt that the market was out to get you? You had a winning position. The stock was acting just as you had predicted. Then suddenly the position turned to crap when the stock price experienced a large gap at the opening. The good profit disappeared and you were the proud owner of a losing trade.

Did you take that personally? I suspect you already know better than to blame the market. We are involved in a big probability game.

Tyler offers a simple explanation of why you should not blame the market (Tyler’s Trading).

The financial market is no respecter of persons. Each trader rises or falls based on merit and merit alone…

After getting hosed a few times or treated unfairly by Mr. Market I too am tempted to bellow, “Hey! Do you know who I am?” But, alas, such an exclamation falls on deaf ears. No, the market doesn’t know, nor does it care who I am. It doesn’t care about the size of my bank account, my voluminous library of trading books, the time and effort I’ve put forth or years of experience. My shins will get kicked in just as swiftly as the next guy. The market doesn’t care about my family name, my background, my connections, or my social status. It simply provides a playing field which rewards or punishes based on skill.

I’m just one of millions of nameless, faceless traders.

It’s our job to manage risk. Sometimes we are going to be unprepared for the unlikely event. However, as a risk manager, if we take care of our trader persona and monitor position size carefully, then out trader persona will be spared the agony of blowing up a trading account.


2 Responses to Bad Things do Happen

  1. Dan 06/09/2011 at 11:32 AM #

    I was wondering if you might be able to answer a question for me. I was curious if you might be able to provide me with a resource that would help me become a professional trader.

    I currently live about an hour from New York City and would like to start a career in trading and I would be willing to move to Chicago to trade options. I currently hold a B.S. in Finance but when I look for information on how to achieve this career I’m unable to find helpful information.

    • Mark D Wolfinger 06/09/2011 at 1:13 PM #

      Such information is difficult to find. The competition is fierce. Few positions are available. That’s the good news.

      The firms who hire have their pick of graduating classes = B.S. through PhD. Degrees in physics and mathematics are far more important than finance in today’s world.

      However, there are ‘proprietary trading firms’ (use Google). Be careful. Some charge a big chunk of cash to give you a trial. Others insist that you use your own money to trade. They are looking for stars. If you are able to hook up with one of these firms, be certain that you don’t have too much to lose. The best ones teach you at their expense. But they are difficult. They want to make lots of money. I don’t know how much patience they have with a new trader.

      If you have time and cash (for trading), you may be able to succeed on your own. Read books (The Rookie’s Guide to Options), attend FREE seminars at the CBOE or Options Industry Council.

      If you make good progress, you may want to hire a mentor. That’s expensive, so chose wisely (interview clients). There is no rush to do this. Learn first. No need to pay for costly beginner lessons.

      You have to want this badly. It is a difficult path.