I’ve found that a lot of traders have a love of poker. If you do you won’t have missed a great movie called Rounders starring Ed Norton, Matt Damon and John Malkovich. If you aren’t into poker the rest of this post is still worth reading.
There is a bit of bad language in here (courtesy of Hollywood) so if you are squeamish go somewhere else.
There are some great quotes in that movie and some that are absolutely spot on when it comes to trading. I’m going to pick out a few of my favourites that relate to trading that I’ve used and others can use to learn from.
“If you can’t spot the sucker in your first half hour at the table, then you are the sucker.”
This is why I don’t trade the open. I let the market settle in and some of the initial volatility leave the market during the first 15-20 minutes. I don’t have enough information or an edge during this period and I know I’m the sucker at that point. So I simply don’t trade.
“Guys around here’ll tell ya… you play for a living. It’s like any other job. You don’t gamble. You grind it out. Your goal is to win one big bet an hour, that’s it. Get your money in when you have the best of it, and protect it when you don’t. Don’t give anything away. That’s how I’ve paid my way through half of law school. A true grinder.”
I have a really similar attitude with my trading. I’ve written before about how I had a total loss blow out in another endeavour other than trading and how I’m never willing to repeat that again (here). Trading is a business. It’s a job. You do it to make money and it’s not meant to be that exciting. If you want excitement pick something else but when you’re trading you are there to make money. Period.
Trading isn’t gambling. It’s just like the quote - grinding it out. Making one good decision after another. Your goal is to make consistently good decisions over and over again.
Just like above you only enter a trade when you think that your edge is present and that you have a satisfactory reward to risk. Otherwise sit on your hands and do nothing.
Protecting your capital is your number one concern. If you lose it you’re out of the business for a long time, if not permanently.
“See, I learned how to win a little at a time. But finally, I’ve learned this… If you’re too careful, your whole life can become a fuckin’ grind.”
Despite what I said above about how I think of things like being a poker grinder for a living this quote always reminds me of Ed Seykota who says that you have to bet enough for it to be meaningful. You see this is why studying risk / money management and psychology is such an important aspect of this game. You have to find the balance that is right for you to reach your financial goals and stay sane.
“Joey Knish is a New York legend. He’s been a rounder, earning his living at cards…since he was 19 years old.”
The traders that impress me the most and the ones that I want to emulate are the ones who have been around the block so many times, who have been there done that and got the T-shirt. It’s all about consistency. All about a long-term track record. You’re nothing until you have 3 years record and even then your still just a bug compared to the real players. My goal is to be in this game and sporting a 20+ year track record. To do that I’ve gotta be a rounder - grinding it out.
Leatherass himself - Joey Knish (Image thanks)
“You don’t hear much about guys who take their shot and miss, but I’ll tell you what happens to ‘em. They end up humping crappy jobs on graveyard shifts, trying to figure out how they came up short. See, I had this picture in my head. Me sitting at the big table, Doyle to my left, Amarillo Slim to my right, playing in the World Series of Poker. And I let that vision blind me at the table against KGB. Now, the closest I get to Vegas is west New York, driving this lousy route handed down from Knish… to rounders who forget the cardinal fuckin’ rule… Always leave yourself outs.”
This quote is bang on as well.
You don’t hear much about the traders who take their shot and miss except the horrifying statistic that most starting out in this career fail. BUT I do know what happened to me when I got a big head and thought I was the man in my last business. I got bust down so hard that I had to hump a crappy job. Mine was a coffee shop. Not grinding out trading or playing poker but grinding out expresso grains to one unappreciative customer after another.
You know what you only need to be busted out once, if you’re not a complete idiot, to learn that lesson - the hard way, yes - but learn it well.
So as a trader I now always categorically never forget the cardinal rule - I leave myself outs. I make sure I can always come back to play. It doesn’t matter how good you are if you can’t afford to sit at the table.
“Don’t got the stones? You ignorant punk. I play for money. I owe rent. Child support. I play for money, not the fuckin’ world series on ESPN.”
This is the epitome of the pro poker rounder. Take care of your business. Take care of your family. Make yourself armour plated and be able to always chose this as a way to make your living. As far as I’m concerned it’s exactly the same as a trader. You are a lucky to have this as a way of earning. Appreciate it and protect it.
“In Confessions of a Winning Poker Player, Jack King said, “Few players recall big pots they have won, strange as it seems, “but every player can remember with remarkable accuracy… the outstanding tough beats of his career.” Seems true to me. ‘Cause walking in here, I can hardly remember how I built my bankroll, but I can’t stop thinking of how I lost it.”
If you’ve traded for a while tell me this isn’t true. Learn never to have to have this issue. Keep your losses small. Be grateful when you have the big winners. Play our game right and don’t ever ever have a trading day that can end you.
“You’re in town for five fuckin’ minutes, you already got a sign on your back. Oh, what, that fuckin’ Knish rat me out? You gotta stop listening to that guy, man. He sees all the angles, but he doesn’t have the balls to play one. Hey, that guy hasn’t had to work in years, Worm. You don’t think that’s work, what he does? Grinding it out on his fuckin’ leather ass? No, thank you. I thought so, too, all right? Now I know what real work is.”
Trading is real work. You have to grind it out. If you swing wildly for the fences, sometimes you connect, but statistically you strike out. Having the balls to hold back, to have discipline, to trade well and to really do it off of skill not dumb luck is the way to go.
I read on the blogosphere and Twitter so many guys with signs on their backs. Guys who run their mouths off to people with experience and tenure. Like I said above if you’re just starting out and you don’t have 3-5 years under your belt have a little class and respect your seniors.
All I can say to everyone is that I’m going to grind it out on my leatherass. I’ll see you in 20 years time and let’s compare track records.