Issue: December, 2007

Dear Readers,
Six years ago, I wrote an article titled “The Fear Factor” for the premier issue of SFO Magazine. That gave birth to Ask Slim; this monthly Q&A, which has appeared in every issue since then. My dedicated readers have sent a steady stream of questions about the technical and psychological aspects of trading, which has given me a venue to share my 34 years of experience in the financial markets.

My career has come full circle from trading in the CBOE pits (in its infancy in 1974), becoming one of the first “screen traders” in 1984, writing newsletters and this column, coaching traders, giving workshops and managing a hedge fund to now returning to my roots as a full-time, independent trader. I want to give that endeavor my full focus. Thus, this is the final Ask Slim column.

Writing for SFO has been a great experience. I remain proud to have been a part of this publication, which has become a clear standout among trading and investing magazines.

Thank you for your interest in Ask Slim and your kind words.

Great trading!
Slim

Dear Slim,
Two years ago I decided to leave my full-time job and become a trader. I had an appropriate amount of money to fund my trading account, and between my wife’s income and other resources, we could cover our expenses. During these past two years, I have learned a lot. However, I have not made money consistently, and my account is actually down a little, as is our savings. My wife has been concerned, saying, “We’re not building for a future this way.” She has said for the past several months that I have given it enough time and has asked me to go back to (real) work.

I don’t want to quit trading. What is your experience on how long it takes to turn trading around? Do you have an answer that will appease my wife?
•• Kyle D.

Dear Kyle,
The last line of your question about “appeasing” your wife is quite telling. It makes me wonder about the other aspects of your personal situation that are invading your mind when you are trading.

One of the greatest problems for traders is that life situations contaminate trading decisions. Issues that seemingly are in the background, such as present cash-flow needs, lingering debts, funding children’s college savings, etc., may have more impact on trading than is obvious. Less apparent issues may be deep in the subconscious. You may have certain perceptions of yourself that are tied to your success in trading. Self worth is a big one.

When these issues creep into trading decisions, it creates a set-up for trouble. Essentially, your mind creates filters that can cloud the way you see your positions and the markets. If losing trades bring up the fear that your wife will push you to quit trading, then you may be reluctant to handle the losers appropriately. This is a paradigm that sets up a trader for a poor “batting average:” big losers, small winners. You may be giving trading the function of making your wife happy or asking trading success to compensate for some other issue.

To be successful, you have to be clear that you are trading for the right reasons. You must follow your trading plan and be diligent with risk management. Also you need to look hard at how background issues are affecting your trading decisions. Another important factor in trading success is having a strong support system. Your wife can be a big part of that, positive or negative. Be honest with yourself about your situation and, absolutely, be honest with her. Work with your wife to develop a feasible financial plan and timetable for this endeavor.

In two years of experiencing the markets full-time, you should have already learned enough to succeed in trading. What you may yet need to learn is how to keep your mind right. That might mean finding an avenue to work on personal growth or hiring a coach so that your intuitive process can be free to flow.