Stock Doc: Motivational Catalysts for the Trader

"Dave" is a relatively new prop trader who came to me as a consequence of his behavior following a huge winning streak. He had been on a tear within the past month, bringing in high-dollar returns. He admitted he felt like a "rock star" and had begun to live like one as well. Late-night partying with his younger counterparts at work developed into problems with his new fiancée.

He was noticeably hung over each morning and slowly began to take more risks with his trades each day. The alarm clock became a signal for him to reach for his bottle of Advil, and he began showing up to work well after the morning data points were already in. Despite his recent trading success, his fiancée urged him to rein it in, as he was becoming emotionally numb and reckless.

The Breakdown

Jon is more exemplary of the typical client that I see on a daily basis in practice. Perfectionists hate being wrong for any long period of time. They measure their success by the size of their monthly returns and look around the trading floor to see who has been right more frequently than they have been.

Emotional numbing and work apathy at the start of each morning are consistent outcomes for individuals struggling to produce with this mental makeup. Jon needed to stop second-guessing his strategies, as that was decreasing his risk appetite.