The Part-Time Trader (8 page)

Every dollar from your paycheck that you can put away toward savings or into your brokerage account for additional trading power, you should consider as a winning trade. It is profits that bring you closer to realizing the opportunity of leaving and becoming a full-time trader. So make sure that your job is incorporated into your trading as part of the strategy itself and not two separate items. In doing so, you will keep the necessary perspective of your job, balanced with family pressures, all the while becoming a better and more profitable trader.

C
ontinuing the theme of the last chapter, I'd like to share with you my next motivational movie, probably as inspirational as
Rocky,
Rudy
, and
Chariots of Fire
combined, and that is
Office Space
.

My favorite scene from the movie occurs when Peter Gibbons, who has completely lost all interest and motivation in his current job, tells the “Workplace Efficiency” job consultants exactly how he feels. In a moment of unabated honesty, Gibbons proceeds to share with the consultants how he uses the side door when coming in late, “spaces out” for the first hour after sitting down at his desk, and repeats those same methods during his extended lunch break.

What really hits at the core of my inner being is when he speaks to the “Bobs” about his inability to be motivated on the job, citing the fact that he works for eight different bosses, and how if he improves the efficiency of the workplace or saves the company a large sum of money, he doesn't see a single dime of what was saved as a result.

And to bring it home he concludes, “So that means that when I make a mistake, I have eight different people coming by to tell me about it. That's my only real motivation is not to be hassled, that and the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired.”

For me it couldn't have been any different.

That last statement says it all. When I was still tirelessly working and pushing papers during my first year on the job, I had come up with close to $7 million in negotiated cost savings for my company. Knowing that I had saved the company that much, how do you think that was reflected when consideration for my yearly salary raise came around? Try 3.1 percent on a $30,000 salary. That means I was bumped all the way up to $30,930 per year or $35.76 before taxes for each biweekly paycheck.

No doubt, I felt like my contributions were truly appreciated!

I would have been thrilled with a cut of 0.14 percent of that negotiated savings. That way I could have had a 33 percent raise on a $30,0000 salary, bringing me up to $40,000 on the year, and perhaps I might have been motivated to repeat the same feat next year as well. I wouldn't think that is asking for much—0.14 percent—but, according to the boss man, it most certainly was.

To further my connection with
Office Space
, I pretty much had eight bosses as well. Let me list them:

• Group lead.
  This is the “Larry” who is assigned to micromanage and lean over the shoulder of his employees on a daily basis. This individual has the dreadful job of handling all the management responsibilities that no one else wants to handle.
  
• Head contracts manager.
  He's the “Gary” who is supposed to be responsible for me, but ultimately just assigns his group lead to bother with me, unless I screw up—then I become his problem, too.
  
• Program contracts manager.
  The contracts manager on the program I was supporting. Sometimes I supported three or four projects, so you can increase this boss by an equal number, as well as all the ones listed below.
  
• IPT manager.
  This is an acronym for a fancy job title that stands for integrated project team manager. Essentially, if you are building a wheel, there will be an IPT manager assigned to the spokes, another assigned to the tire, and another assigned to overseeing the air nozzle that attaches itself to the tire. A little bit of overkill, I might add.
  
• Project manager.
  This field is rife with “Debbies” who just want to flex their muscles and the overall production of that wheel, so that if a significant management role ever comes open, they might be the first person under consideration to fill that position. So in the process of attaining that goal, they will make your own life a living nightmare. Try to stay out of the crosshairs of this person if you can.
  
• Project engineer.
  Very similar to the project manager, but instead this person provides the technical support and all things related to the functionality of the product being developed.
  
• Deputy program manager.
  This management level you have to watch out for, too. They are your Debbies that cannot seem to get over the management hump and to the top, and typically it is because there is a serious character flaw there.
  

  Just a rule of thumb: if their job title has “deputy” in it, think of the traditional Barney Fife from
  The Andy Griffith Show
  who thinks they are more powerful and more important than they really are. They are a pit bull that has to constantly be brought down back to earth by the main person in charge, which takes us to the ultimate boss man.
  

• Program manager.
  Most of the time you are not going to have to deal with this individual, depending on where you are on the totem pole in the organization. He has bigger fish to fry, so the main objective with him is to fly below the radar.
  

  When I did something wrong that caught his attention, usually it meant that the previous seven people mentioned were already complaining to him about something that I did and were determined to cover their own butts in an attempt to not make themselves look bad. What was even better was if he noticed something wrong without any of the aforementioned seven noticing first.Then the rain really came down.
  

Since your job and not your trading is still your first priority, your goal, just as it was in my case, is to make sure that the people we have already discussed are always happy with the work that you are doing. That means that you have to draw the line with how you approach your job and how you deal with those in management. Trying to be the corporate yuppy who still wants to rise through the ranks and get noticed by every Larry, Gary, ­Debbie, and Edward will be a major undoing of your career. However, not giving a rip about your job and solely focusing on trading will likewise ­sabotage your job.

The key is to find that balance between the two. If you are still obsessed with climbing up the corporate ladder, you might as well stop reading here and give the book to the guy in the cubicle next to you who seems miserable in his job and in search of some hope of a better way of life.

But if you are serious about this, then you have to realize you are not going to climb the corporate ladder if you are going to remain serious about trading while in your job. Those who try to actively climb the corporate ladder are not trying to balance two professions at the same time like you are. By trying to keep up with the Edwards you are going to open yourself up to some embarrassing moments as a result of trying to burn a candle at both ends of the tunnel. If you want to act like some sort of Superman on the job, that is fine, but your focus and your obsession has to be your full-time job and nothing else. If you want to be serious about your job and rise to the top, you better lower your aspirations for ever making the transition into a full-time trader.

Listen, I am not against your having aspirations of climbing to the top of the corporate ladder. But you bought this book because you want to eventually transition into becoming a full-time trader or at least manage the load between the desk job and the current part-time trader status you are currently labeled with.

However, to become a trader who can do both successfully, you have to have the time and resources. The roadblock standing in the way of your successfully trading part-time is that pesky Monday-through-Friday eight-plus-hour job you currently have to take account for, and that is what I am here to help you with.

The balance isn't easy, of course, and as you delve into the rest of the chapters in this book, the picture will be cleared up, a sense of direction will be given—how you are able to do both and, most important, how you can be successful at both.

How many times have I seen this happen among traders eager to leave the strains of the corporate world? First and foremost, please, please adhere to what I'm about to write in this section. Many times since launching SharePlanner, when someone has joined our services, they have what is popularly labeled “beginner's luck.” A person will come to SharePlanner and begin taking some of the trades that I provide and even some of his own. Most of the time, the risk plans and ways to successfully trade the stock are completely ignored, yet because of this brief and common phenomenon, the trader still seems to do very well, often outpacing my own gains for a brief period of time.

While this is taking place, it is absolutely amazing to watch it unfold. This trader just starting off truly believes in his mind that he has found the holy grail of trading. I remember an e-mail in which a certain individual proclaimed that he was never going to lose at a trade again!

That was after he had put together five successful trades and doubled down on two of them, instead of letting the stop losses do their job, placing upwards of 50 percent of his capital on individual trades and even holding through earnings on one of the positions. Through this, he netted a cool 15 percent on his average trade.

His mind was in the clouds, though, as he truly thought he had already arrived as a trader and knew everything he needed to know. However, all he was really able to do was enter a stock symbol and put an order in to buy a stock and another one in to sell it a few days later. The gains that he made off of those five trades were simply the results of what happened in between his two actions of buying a stock through no merit of his own.

Being successful right out of the gate is not something to frown upon. It is what it does to the person and their psychological makeup that is the problem. In fact, when I hear there is a first-time trader in our chat room, I actually get excited because if he follows my trades, I just may be the benefactor of some of his beginner's luck.

All kidding aside, though, this individual typically starts seeing dollar signs. He starts doing the math in his mind about how much money he will be trading with if he can duplicate his efforts each and every time and over the long-term what it might look like for his portfolio, lifestyle, and eventual early retirement from the workforce.

Instead of keeping level-headed during his early success, the young “victorious” trader actually takes the proactive approach and makes his very own trading spreadsheet and subsequent “path-to-riches” game plan. In this plan, it shows how after a couple of years of trading and a consistent 10 percent return on each trade, they will be able to retire from the workforce and live happily ever after. The best part is that most of these spreadsheets do not account for losing trades, and instead it is averaged into their winning trading by simply deducting a small dollar amount from his winnings.

I know it sounds crazy reading about it here, but it is actually quite funny what the mind will think up and believe when there are dollars involved, as unbridled hope and optimism can be hard to manage and maintain. I remember when I started getting more familiar and making the transition into part-time trading, the same thing happened to me. I had that great feeling toward my trading early on that led me to believe I was invincible, that the gains would pour in almost every day or at least a few times a week. I created a spreadsheet that had me retiring with well over $5 million in my trading account in just five years.

A typical spreadsheet would look something like
Figure 4.1
.

Figure 4.1
The Beginning of False Hopes

So after two months, the user is up 28 percent. Now my first question is always “Where are the losing trades?,” and I am left even more baffled by the response, “They are averaged into the spreadsheet.” Essentially, the trader (if you can really call them that at this point) is telling me that the losers are more of an afterthought and averaged in with the gains of 10 percent per trade.

By the end of two years they believe that their account will actually look like the one in
Figure 4.2
on the premise of the scenario I just laid out.

Figure 4.2
Unrealisitic Trading Goals