Short Term Trading Weekend Lounge: 19 - 21 August, page-162

Thought I would add to yesterday's post about trading fulltime because a few of the comments in the discussion piqued my interest, namely:

1. The issue of taking holidays as a fulltime trader
2. The question of whether we are obsessive

I think when it comes to reflecting on issues like these, it pays to look around us at analgous situations to put the proper context on our own situations, because examined in isolation we have no real reference frame within which to make the appropriate evaluation. In scientific terms that would be like conducting an experiment without any type of control or standard sample to compare the test sample to (i.e. if we test a sample and get a result, how do we know what the result means unless we have some kind of standard to compare to to determine if its a good result or bad result).

Take the issue of holidays:

Should we shut down our positions and put everything into cash when we go away, or put stoplosses in place, or watch our positions while we are on holidays, which means we are not totally shutting off? Well the answer I think is it depends on the individual and how they want to do it, and the reason I say that is what I see if I look at other work and business contexts:

Work context: When employed people take holidays, many shut off completely and aren't contactable, however many will take emergency calls or follow their emails and some will choose to remain involved in ongoing work situations by remote.

Small business or self-employed context: These types generally don't get paid if they take a holiday, so tend in my experience/observation to be more inclined or prepared to take calls or stay in touch and manage business issues while away because not doing so could impact business when they get back from holidays. If they have a business with employees often unless they have a manager who can be really trusted and demonstrates they can look after the business while the owner is away, will probably be regularly in touch to see that business is on track, because the buck stops with them.

Fulltime trading is effectively self-employment, so it is imo understandable in the above context as a small business owner that even while on holidays there is some level of staying in touch with the market and ongoing trades, because while you can afford a holiday, your livelihood is still dependent on the markets.

The question of obsession:

At what point can we be considered to be obsessive? There is a fine line between obsession, passion, and doing what it takes to get the job done or be the best at what you do.

In the regular social context are we obsessive because we contantly check our iphones to see what stock prices are doing? Probably a few years ago I would have said yes, but when I look around today, I see so many people hooked constantly to their phones, whether walking along the street, or at dinner with friends, or at home with the family watching TV - a large number of people these days I would say (with my somewhat older school social values) are obsessively tuned to their phones. So in this new modern social context, how do you distinguish a trader tuned into the stock market from a teen tuned into instagram? The answer is this is actually the new social norm and while in the older social context I would say it is all obsessive, society today is judging it is normal behaviour. Better to watch my phone and make money I say, rather than flicking through boring photos of what someone else ate for lunch!

In comparison to other fields of endeavour, how far does a trader go before they should wonder whether they are obsessive rather than just passionate or working hard to be successful?

When reflecting on this question I think of two types of people - the olympic athlete and career minded people (although we could easily be compared to gamblers as well I suppose). For me the dividing line between passion and obsession is what degree of impact is there in the pursuit of some endeavour on other aspects of your life (your health, family and friend relationships, wealth, etc). Obession is when someone pushes passion (or working hard) so far that there is serious adverse impact on some, most or all other impacts of their life (loss of job, marriage, health, wealth, etc).

Are traders the only group of people susceptible to pushing it too far? Of course not. In my view, while many will look at olympic athletes with respect at what they've achieved, we rarely if ever question or examine what they have sacrificed to get there. We often do hear that they have sacrificed a lot to get to the highest level, but we don't know just how much. For some, they have sacrificed going out with their friends to train, some have sacrificed an income while they pursue their olympic dream, but they have done so without damaging those friendships and/or somehow with an eye to future employment opportunities, etc. There will be others though for whom their olympic pursuit has been a problem and they have lost spouses or families and have not given any consideration to career prospects, so they start life after their olympic career completely from scratch. They have all been passionate about their dreams, but the 1st group have managed their passion by maintaining some balance, whereas the second group has not given any consideration to balance, and they have pursued their dream no matter what the cost.

The same can be said about career focussed people. There are many out there who are passionate about what they do for a living, and maintain a reasonable work-life balance, but there is a sub-group who push it further - career and path to the top no matter what the cost (no spouse, no family, few real friends, etc) - they may or may not get to the top, but when they do they often finally pause and realise their life is empty. Many of us will look up to these "high achievers" with respect, but quite frankly, the way I look at them is they are excellent at one thing, and have been very poor at most other aspects of their lives, whereas most of us are just reasonably good at a greater number of things.

So my view is we can see obsessive behaviour all arond us if we take the time to look. Are we traders obsessive if we spend 80 hours a week at our desk and still look at our iphones when we are away from our desk? An 80 hour work week is not unusual for "high achievers" who will also be tuned into their iphone when they are out for drinks or dinner. So that alone is not the defining criteria imo. The answer is, how much are we not managing to balance the other important aspects of our lives to pursue our trading objectives (whether to be the best, or just enough to get by). The answer to that is completely up to the individual to determine what they want out of life, and how well they can manage to balance it. That balancing act takes conscious effort, it doesn't happen by itself, just as maintaining a marriage takes conscious effort there are very few if any 30-50 year old marriages that lasted without work.

Cheers, Sharks.

PS: If you think you might be obsessive, but can't really decide, the best way to find out for sure is ask your wife/partner/family/close friend what they think - if their answer is different than yours you might just write it off because they don't agree with you, but the reality is the truth will probably be sowewhere between your view and theirs, and the best thing to do will be simply to talk about it - how hard can that be!!!

PPS: I don't pretend to have all the answers, I just happen to think about this stuff a lot and happy to share my views.