Why We Trade

I have met a lot of traders over the years.  Retail traders, prop traders, institutional traders, discretionary traders, all sorts, both in person and via social media.  And one thing that is consistent among them all is that they are mutants.  Not to get too Bill Murray-esque here but there is something very, very wrong with them.  I, of course, count myself in this retardedly beautiful group.

Just our choice of avocation is a huge red flag that should warn those close to us that we may have some latent personality disorders.  Even most postal workers would look at us and say “Man, those guys have issues!”

And why shouldn’t they, after all we didn’t decide to do something brave like being a fireman or police officer.  We didn’t choose a socially respected profession like that of a doctor or a lawyer.  Nor are our endeavors holy and devout like those of the non-pedophilic contingent of the priesthood.

Instead we chose to do something that is so sickly stupid that if it didn’t already exist a team of Hollywood writers couldn’t dream it up.  Something that everybody is fascinated by but nobody really understands.  Something that drives us to curse at our monitors, slam innocent computer mice onto desks, and “Bruce Lee” keyboards over our knees.  Well…..of course not you Mister Shaolin-Monk-Zen-Calm-trader-guy who is reading this and shaking his head in disgust…..but all of the rest of us have.

And the highs and lows associated with trading are epic.  I’ve always wanted to do an experiment where I gathered up a baker’s dozen or so of crack addicts and heroin junkies, brought them onto the trading floor of some large brokerage, and then let them watch for a few hours.  I am totally convinced that if at the end of the day an offer was made to pay for their detox and fund them up with million dollar trading accounts they would say “are you crazy?  I mean I have some highs and lows in my life, but those guys are nuts!  I wouldn’t do that for ten million dollars!  Now give me back my crack pipe and let me return to my relatively normal life.”

In addition, nothing about trading is natural or intuitive.  Our DNA rejects the activity, even when in our purest and most naive state of mind.  I remember my daughter wandering into my office one day during trading hours and innocently inquiring about what I was doing.  It struck me as opportunity to see how someone with a mentally “clean slate,” –free from the biases and preconceived notions that years of watching CNBC, reading 10-Q’s, and listening to analysts brings–would interpret what was happening on the screens.

I showed her the pretty colors of the charts, and the “candles,” and how they moved up and down, changing between red and green as the day went on.

“Which color do we like best daddy?” she said.

“We like green sweetie.  Green is what we want to see.  That’s what will make us money today.”

“Yeah…..!!!  Green…!!!  We like green,” she yelled, exuding the type of joy reserved for those who never have experienced a margin call.

I soon found myself in one of those quintessential daddy-daughter moments, straight out of a Norman Rockwell painting.  Standing there in front of my quad-monitor trading desk we cheered in unison with every tick…

“WE WANT GREEN…!!!  WE WANT GREEN…!!! WE WANT GREEN….!!!”

The trading Gods were kind that day and filled the screens with green.  We celebrated in the style of the ancients by the combining of chocolate with milk.  We danced and sang our pagan victory song, cups help held high in the air, my office chair substituting for the columns of Stonehenge.  And it was good.

The next day she returned to my office, excited and eager to repeat the fun of the previous day.

“Yeah daddy!” she said.  ”We have so much green on the screens today.  Yeah….yeah……yeah….!!!”

“No honey,” I replied.  ”We don’t want green today, we want red.  Lot’s and lot’s of red.”

“But, but….I thought we liked green?” she said.

“Not today sweetie.  Daddy has a ‘short’ position today.  We make money when we see red, not green.”

With that, a confused and hurt look came across her little face, as if I had told her that Santa Claus, The Tooth Fairy, and The Great Pumpkin were all make believe.  At the tender age of four the market had already scarred her.  She has never traded since.

So with all the market’s anti-social characteristics, why then do we do it?  Why do we trade?

Life is a series of random events and our nature drives us to try to make sense of those events, to attempt to control them, and ultimately to find some sort of meaning in them.  Man has done this in one form or another since first walking upright.   In the markets we watch the randomness and try to find order.  We look for things that we can recognize and understand like patterns, and then try to exploit them to show our mastery and control.  The “meaning” we attempt to extract is money.

On the surface we convince ourselves that we trade for a number of reasons; to gain wealth, for the challenge, or for the freedom it brings, and though all these things may factor in to some extent, there are certainly other activities we could have chosen to pursue that would fit the bill.  But in fact, the real reason we trade is to experience that more concentrated, more intense, micro version of the larger quest for the meaning of life.  Or to put it another way, if everyday living is the coffee of life, then trading is the double espresso.

And as in life, we take a lot of swings, and there are a lot of misses.  There are times when we get flashes of insight and think that we have attained some permanent wisdom, only to find out in an instant that we are not as wise as we thought we were.   We try to learn from our mistakes, to keep moving forward, always remembering that tomorrow is a new day.  That with each opening bell we are washed clean again, with new opportunities to take and new challenges to face.  Ultimately we don’t know how long our journey will last or what the final outcome will be, but as long as there are markets to trade we will continue to strive for the day when we finally “get it right.”  At least until tomorrow.

If you want to learn more about trading and the markets, all while helping to kick pediatric cancer’s ass, check out my book, Trading: The Best Of The Best – Top Trading Tips For Our Times.  It includes over 200 market tips from 60 active traders and investors, and all proceeds go to the McKenna Claire Foundation to help support research for a cure.  Just click the banner below or go directly to Amazon by clicking here.

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What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

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Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Learn About The Markets While Saving A Child’s Life

Everybody likes a “two-fer,” and boy do I have a great one for you.

Earlier this year I released my book Trading: The Best Of The Best – Top Trading Tips For Our Time as a free download.  I took a different approach from traditional books about the markets by contacting sixty active traders and investors and asking them to contribute their top tips.  They came up with over two hundred, and in addition to those tips each contributor is linked to throughout the book so that no matter if you read it today or five years from today you can always access the most current content these market pros have to offer via their websites and StockTwits streams.

To date over five-thousand people have downloaded the book and I have to say that the response from readers has been overwhelmingly positive.  I wanted to take that positive energy and do something meaningful with it, so I have a special favor to ask of you.

As of today the free download period is over.  With the agreement of all the books’ contributors I have listed it on Amazon (and soon to follow, iTunes and Barnes & Noble’s web site) and will be donating any profits from its sale to charity, in perpetuity.

That charity is the McKenna Claire Foundation, named after McKenna Claire Wetzel, the seven-year old daughter of my high school friends Dave and Kristine Wetzel.  McKenna was diagnosed with DIPG (Diffuse Intrinsic Pontine Glioma), a particularly deadly type of brain tumor that exclusively attacks children ages five to ten years old.  The fatality rate from DIPG is 100%.

McKenna was diagnosed in mid-January of 2011 and died six months later; two-weeks shy of her eighth birthday

DIPG gets little funding because it is not seen as a “profitable” disease by big pharma companies, so the McKenna Claire Foundation raises money to directly fund research into a cure for this deadly disease.  This is where the “two-fer” comes in.

If you haven’t bought the book, head on over to Amazon, drop $4.99, less than the cost of one trade commission, and pick the book up.  Not only will you learn a ton about trading the markets but you will help contribute to finding a cure for DIPG.

But if you were one of those five thousand who got the book for free, I have two favors to ask of you.

If you found ANY value at all in the book, please;

A) Go to the Amazon page and write a positive customer review.  The more positive reviews, the more sales, and the more sales the more money that goes towards pediatric brain cancer research.

and/or

B) Buy another copy of the book!  Yeah, I know you got it for free already, but buy a copy for a friend or client, or maybe even twenty friends or clients.  Just think of it as a donation to a very worthy cause and a “thank you” to all the books’ contributors for allowing their content to be used to help support a worthy cause.

And if you do either A or B, or both, you will have my deepest appreciation as well.

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Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

How To Use Real-Time StockTwits Tweets During The Day

There are a lot of sources for end-of-day market analysis.  This information can be used for anything from forming a macro picture of the markets to finding potential trade setups for the coming day.  But one of the unique benefits of being on StockTwits during the trading day is the actionable info you can glean from the streams.

Let me give you an example of something I tweeted yesterday and how you could have used it in your trading;

“Just popping it’s head over that down trendline here. $SPY http://stks.co/baM9”  (click the image below to expand)

StockTwits Tweet

Now what was so special about the information in this tweet?  It doesn’t seem to have any deep analysis attached to it, and in fact, truth be told, yesterday I had no time for deep analysis as I had two sick kids and was working from home.  However, in between the coughing and sneezing and complaining, I happened to glance at the $SPY chart and notice that price was right at a down trendline.  That seemed significant enough to me to tweet and and if you saw it and were trading yourself it should have factored into your plan.

This chart in of itself wasn’t going to make you any money, but it was a “heads” up, something to be aware of especially if you were day trading.  It suggested that the $SPY was at a potential resistance area and that by watching it on a shorter time frame you could get a better idea of what was going on.

If $SPY on a 5-mn chart gapped up, based, and then broke into new highs for the day that would be a confirming sign for any individual long setups you were watching and contemplating entering. However, if the $SPY gapped up, faded, and just went sideways (as you can see it did in the chart below), then that would be a caution to hold off on any new longs, or at the least enter them with a reduced sizing.

SPY 5-min

And if because of that tweet you were closely watching $SPY, and saw that it was going to close right at the down trendline, it might have influenced you to pare down a swing position you have been holding.

The point is that not all intra-day information is black or white, long or short, buy or sell.  However if you spend enough time on StockTwits you will get a feel for which people and/or streams can give you valuable pieces of information during the day, which if used properly can help you make better informed trading decisions.

Make sure to check out my new book  Trading:The Best Of The Best-Top Trading Tips For Our Times  (just click the banner below).

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Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.