Trading Preparation is Paramount to Your Success – Stock Warrants HQ

Trading Preparation is Paramount to Your Success

A few people have been asking about my trading career, where I learned to trade, what I’ve traded, etc. Here is an article I wrote for another website that details my first day on the job, and gives a little insight into a Wall Street trading desk. Throughout my trading career I’ve tried to take “lessons” away from my trading experiences. You’ll see below that I learned a very important lesson that first day on Wall Street.

At the end of 1997 (good lord I’m ancient) I began my first job as a professional trader. I had taken a job as an assistant trader with a large Nasdaq market maker and my wife and I headed to Wall Street (literally, 14 Wall Street at the time) to seek our fortune.

My firm had provided housing for one month to give us time to find a place in the city. So in late November of ’97 we arrived in Jersey City during the middle of what seemed to be a hurricane to find our palatial apartment building surrounded by about 2 acres of vacant lots. It was an inauspicious occasion.

Day One

But hey, I wasn’t there to enjoy New Jersey (or as my Exit 9 roommate from college simply calls it, “Ass”). I was there to be a TRADER. So off I went on Monday morning to take my place among the traders of Wall Street.

Remember, this was before EVERYONE hated Wall Street. It was before the internet bubble, you know, back before Facebook, the microwave, and when Pluto was still a planet (click the link, forget trading for a minute). When a group of traders went out for happy hour it was a little like Entourage, though I’ve never really watched that show, but from the commercials I’ve seen I think it was something like that.

I arrived on the trading floor and reported to the Assistant Head Trader. This guy is the epitome of calm in the eye of the storm. All around him all day long traders are yelling, cursing, making and losing millions of dollars. While overseeing this mayhem, and trading stocks himself, I never in my entire time on the desk heard him raise his voice or curse once (well, there was one time, but one time only, and that’s another story).

Practicing Trading, Fun for All

Back to me. So I reported to the Zen master who tells me I need to become familiar with the trading platform as quickly as possible, sounds logical. It’s 8am and none of the traders roll in until 9am so he takes me to a terminal and places the system in “training mode”. In training mode I can buy and sell millions of shares of any stock I want, and while it looks completely real, it’s all pretend. Can you guess what happens next?

The traders started arriving for work and Zen master says I should sit with him during the 9:30am market open to see how the market makers take money from retail investors. Well, he didn’t exactly say it that way, probably more along the lines of “I should sit with him to watch the market open.” So I sit beside the Zen master and I’m completely excited. I’ve made it. I had no idea whatsoever whats going on, as everyone is speaking a foreign language, but who cares, I’m going to be a TRADER.

The market opens and I start to hear a commotion in the back of the room. There is much wailing and gnashing of teeth (my shout out to the Biblical crowd) in the back of the room, and I break out of my “I’m a trader” reverie and wonder what’s up. That’s when it begins to dawn on me. One of the traders is definitely losing money and I may be the cause.

OOPS!

The commotion is coming from the back of the room, and even though I’m not the one losing money, I start to get a queasy feeling. Now I hear a volcanic eruption of cursing, and it’s coming from the trader whose terminal I was using in training mode.

I turn to Zen master and tell him that “maybe” I left the terminal I was using in training mode. Oops. A very slight smile crosses the guys face as he tells me to just go tell the trader.

I slink to the back of the room and tell the trader why none of the orders he is putting into the system are working. I’ll never forget his response. “You let someone in your house and they s#%& all over your backyard!!” I don’t remember anything else from that first day, but I came away with a free lesson (and traders know that very few lessons in the market are free).

The lesson I learned that day was to always have my trading system up and ready before the markets open. This means your computer, phone, iPad, etc. better be ready to rock and roll before 9:30am. As a professional trader I check my systems every morning well before the market opens.

I also have several backups in place, including multiple computers, the ability to trade on my cell phone, the ability to call a trading desk to have them place an order, and the ability to activate my cell phone as a hot spot should my internet connection go down. I also have a contingency plan in place to move locations if that becomes necessary.

Do you have a backup plan?