- 1998: Volume 7, No. 3 The Phases of a Trading Career

For each phase of a successful trading career, there is a beginning, middle, and end. While some traders are good at starting a project, others are good at sustaining a project, and still others are good at completing a project. The problem for traders is that, if they are to make successful transitions to a new phase, they will have to have the skills needed to complete beginnings, middles and ends.

No End in Sight

This fact was underscored recently when a trader named Harry called for help. Harry was very upset at the prospect of going into the next phase of his life. This long-term, successful trader and money-manager felt old. Life was no longer exciting for him. Harry knew that changes would have to be made in his life, and he was keenly aware of the promises he had made to his wife and family about his departure from trading. In fact, he was at the point of selling his business to his partner and phasing out of the business completely. So, why was Harry in a panic?

Harry was frightened thinking about his friends who had retired from trading. According to Harry, they were either bored with life or dead. Of the retired traders who still had a pulse, all wanted to get back into the game to feel alive again. Harry was also aware of the fact that he had never learned to enjoy life beyond his trading. He had difficulty relating to his wife, Edie, who hoped that when Harry gave up trading, their fighting would stop. Her reasoning was based on the fact that Harry excused his lack of loving involvement by saying that he was under too much pressure from trading. Harry would placate Edie with the promise, "One day, when I give up trading, everything will be all right." But Harry did not know how to stop and smell the roses along the way. He had been highly skilled throughout his career as a trader, and then, as a money manager, but Harry had no concept of how to end things.

Successful endings are critical to a trading career because they set the stage for the successful beginning of the next phase of life, whatever that might be. If a trader is afraid to end something and holds on too long, serious losses can result, not just from a single trade but from a transition that must be made. Fear is usually the issue as it was in Harry's case. The solution is a new set of associations framing ending and closure as a source of opportunity and forward movement rather than a source of pain and loss.

Beginning Phase

Of all of the traders I have worked with, Charles is one of the most skilled at completing the beginnings, middles, and ends of things. While he was still in college, he had started up a small business with a family friend, which he leveraged into a flourishing operation. Several years later, when Charles decided that he wanted to be a floor trader, he realized that he would need a mentor. Charles found a mentor by spending time observing floor traders while considering, "Who do I want to be like?" When Charles identified the trader he wanted to model, he found someone to introduce them. This introduction launched a life-long friendship as well as the start of Charles' career on the floor. The young trader read all of the books his mentor read and, as quickly as he could, he molded his every action on his mentor's pattern. For the next 15 years, Charles was very successful, in his trading, in his marriage, his relationships with his children, and with the other people in his life. Charles was definitely a good starter.

On the other hand, there was Todd, a trader who wanted everything now. From his need for instant gratification, Todd wanted to experience the feelings of success before he had actually achieved success. While he was skilled at creating these good feelings in his own mind, Todd forgot to put into his imaginings the details and steps needed to reach his goals. When Todd came to the floor of the exchange, he had no plan for learning his new profession, which required study and preparation. Instead, he felt he could learn by trial and error. The result was that Todd experienced so much error that it wiped him out of the business.

Unlike Todd, successful beginners have a different set of associations, which make them willing and eager to do the things necessary to make this phase successful. They see beginnings as exciting and challenging. In addition, they see beginnings as the foundation for their project-not as an inconvenience or as the end in itself.

Mid-phase

After 15 years, Charles, our successful starter, realized that he had to get off of the floor. At 40, Charles' back and feet were aching and he felt that he was wearing out. So, Charles did what many floor traders do, he became an upstairs trader. Instead of resisting the change and clinging to the past, Charles saw the ending of his career as a floor trader as a step toward a new challenge which he eagerly anticipated.

Charles was also aware that the transition from floor trader to upstairs trader is often called "the kiss of death." To avoid sabotaging himself during this transition, Charles decided to approach this change as though he was starting a new career. Using his pattern of seeking the right teachers, he attended conferences, seminars and read books on trading. Once again, Charles succeeded in completing the transition. Within a year, he had developed himself into a good discretionary trader off the floor.

Along the way, Charles had also learned about successful middles. He understood that there would be a second phase in his trading, after the exciting beginning period. During this phase, he would have to give up the excitement of trading on the floor, and develop his craft off of the floor. During this mid-phase, Charles would accept the fact that his system and trading methods worked and that he would need to be content to reap their rewards. Now, he was in a new period where he just had to follow his plan. Many traders find this phase boring, so they sabotage their efforts, wanting to go back and rediscover the early excitement. When he looked at his life, Charles saw the rewards that becoming a successful trader brought to him and his family. He was exceptionally good at aligning his excitement with following his rules and the rewards he would get from being a good trader. Charles was a good, mid-phase man.

The mid-phase of a trading business requires these qualities of character, which are needed for a successful trader. When trading gets boring, a trader must persevere. When inevitable losses occur, a trader must stick to his commitment. When the temptation is great to break your rules, a trader must have the integrity to hold fast to his trading rules and to his word to himself and others. If a trader takes the easy or quick way, there will be a dear price to pay. He must respect the foundation in market study and research that helped him to get where he is. At the same time, he must be flexible in order to deal with the inevitable changes that will be encountered. He must be willing to continue to refine his system to make it the best it can be. And finally, he must be disciplined enough to keep his business afloat every day, which means that he has to attend to his physical and emotional well-being and do the things that are hard, but necessary for success.

Like Todd, the "instant gratification" guy, Elliott wanted success immediately. Fortunately, he was also willing to pay the price and do the things that it took to launch his trading career and become very successful-until the period of routine set in. Then, Elliott found ways to create excitement by sabotaging his results. He would do this by changing his system, adding new rules and generally experimenting with what was tried and true. Inevitably, Elliott's trading career was lost.

Interestingly enough, Elliott not only acted out this pattern in his trading, but also in his personal life. He loved romance and seduction. Elliott wanted each romantic encounter to be another "Titanic" affair. However, when he finally did extend his honeymoon into a real honeymoon and married the love of his life, the routines of everyday life and dealing with the emotional issues that couples face daily, led him to separation and, finally, divorce. Isn't it interesting how new romances no longer produce the same impact for Elliott because he sees them through the eyes of a wounded lover?

End Phase-to a New Beginning

Charles, our successful starter and mid-phase trader, had a good life with his family because he knew how to balance his life. Charles had come to a point where he wanted more special moments with his children and grandchildren. To accomplish this, he would have to phase out some of his career as a trader. In typical Charles fashion, he decided to become a long-term investor. While he was still a day-trader, he looked into long-term investing and began investing in tandem with his day trading. As a result, making the transition to full-time investor did not involve learning new skills, but giving up one of his careers. Now, you can find Charles with his son and his grandson on the golf course, or with his wife in exotic places where they are enjoying themselves.

Conclusion

The beginning, middle and end of each phase of a trader's career are important to the long-term success of his overall career. A trader must be able to carry his ambition to trade past the first few hurdles of learning his business, doing his research and building his system if he wants to have a trading career at all. A trader can not rest once his business is established simply because he likes the challenge and excitement of starting up his business. He must sustain that trading business through its development and day-to-day activity even though it may become routine and boring. And finally, it is important to a trader's life to know when to end his trading career. For a trader to make these transitions requires a tremendous commitment to his goals, a willingness to model those traders who are successful in each phase of the business, and the flexibility to make the adaptations required for that next step forward.