The Part-Time Trader (22 page)

What would have happened if Douchay knew that I was part-time trading as well? Even though my trading did not inhibit my performance on the job, it still would have been thrown into the mix as part of the problem, and, unfortunately, management would have acted on that and shut down my ability to trade part-time and possibly my job as well. There was no point during my time in Corporate America where I was more thrilled that I had kept all my trading endeavors to myself over all those years.

The boss man loves to have a possible smoking gun to pin the blame on. If my performance was really as bad as it was said by Douchay (and no one actually believed it was), then it would have been blamed directly on my trading. That is why I was so steadfast and remaining private about all of my trading activities on the job. Otherwise, my trading would have been shut down.

I also made a mistake during this time as well, by making an enemy out of a person who could have created far worse problems for me. Sure, the unethical behavior I did not have to sign up for, but I could have easily said, “Sure I'll do it; right after my organizational boss man approves the action.” She would have been less likely to push the request had I tried to “innocently” involve my other boss man (Douchay was the project manager). Or, even better, ask for the request in an e-mail and then forward it to the boss man for approval. Another attitude I should have had was a bit more humility. What is the harm in grabbing one's coffee, though I had no reason to do so on the surface? I definitely would have looked like I was some kind of corporate tool that would do anything and everything requested by the powers that be.

Remember
Cool Hand Luke
after he had been captured following multiple escape attempts. They beat him to a pulp, and he started to cower down to the prison guards who ran the show, and submit to their every request. His inmates and buddies abandoned him, flicked burned-out cigarettes on him, and turned their backs on him in time of need. When he was busy doing roadwork with the rest of the crew, he would fetch the water from one truck, the gun from another and anything else, including when Boss Godfrey shot with his rifle the turtle in a nearby pond.

The inmates showed disdain, but all the while he was running around and doing what Boss Godfrey asked him to do, he was fetching the keys out of all the vehicles as well, so that he could eventually make his escape in the truck when asked to throw the dead turtle in the back of it. He would drive off leaving the guards without any way to pursue him and all his inmates cheering him on as they regained their long-lost pride in Luke.

Likewise, you have to be somewhat as cunning as well in your behaviors. I definitely was not as sly as I should have been when it came to Douchay, and it could have cost me big time as well. Cool Hand Luke understood what he wanted to eventually do: leave the prison forever under the newfound guise of trust that the security had placed upon him, only to break free and never have to wear those chains again.

Having to do what you ultimately do not want to do does not mean that you are flushing your dignity down the toilet, though it will seem that way to those around you, but you are giving yourself every opportunity to succeed as a part-time trader and ultimately break free of those corporate chains and drive off to your career as a full-time trader.

We have all had those awkward and uncomfortable meetings with the boss man. Often, we build up the horror of them more in our heads than what actually becomes reality. I always tended to assume the worst myself. Perhaps as a trader that is why I am constantly focused on the risk side of the trade rather than becoming enamored with the profits that I might be collecting on it.

Should you be confronted by the boss man about the trading activity, I would not try to not hide it. Once you are being asked, it is a near certainty that they know you are a trader. That is not necessarily a bad thing. I actually had the boss man ask me for my opinion on nearly every trade he made. Luckily, he left the company before that could actually blow up in my face (very early on in my career). More times than not, though, they are going to want to address a problem at hand, not immerse themselves in it. I would never recommend lying to your boss or telling him something that is not true. That, my friend, will only get you into trouble. Instead, be honest. Let the boss man know that you are fascinated by the markets and that you like to keep up with it during the day, just as a news junkie likes to remain abreast of the latest news events and developments.

The reason I say that day trading is so difficult to accomplish on the job is that it requires the constant monitoring of the financial markets and combining that with the need to do a good job with the workload the boss man has assigned to you. That means either you will not be able to successfully trade or you will find yourself neglecting the work that should still be your first priority. So when you find yourself in the boss man's office, you do not want to be confronted with the reality that you have to admit that you have been day trading throughout the day because the odds are that you are in the boss man's office in the first place because you neglected your job in some form or manner.

I did not day trade outside of the stories I have already told you about. Instead, I was a swing trader. I found that this particular approach to the markets freed me up dramatically to meet expectations that were placed on me by the boss man, all the while being able to follow the markets, but without having to be concerned with every tick and movement that the market made.

In fact, I found that the markets as a part-time swing trader on the job eliminated a lot of the emotional pitfalls that comes with trading. I could not watch the market all the time, so I was able to avoid being shaken out of positions due to an emotional response to the markets and instead allowed my hard stop losses that I had already set to work their magic. This was very helpful early on in my development because it is easy to see typical market spasms that run against a position and believe the position needs to be closed out to avoid further losses, even before the position gets stopped out.

Being a swing trader in the boss man's office then becomes much more explainable than if you were running a hedge fund, day trading, scalping, or some sophisticated all-consuming trading strategy. That is why planning your strategy around your workload is imperative. If you are a person who is house-sitting for a job, or a security guard monitoring a car garage, or a fireman on call until the next emergency strikes, or something similar, then you can be a day trader. Other jobs, though, where you have a daily workload and meetings and other matters that must be attended to will not give you the same flexibility, and as a result, you need to make sure that any trading strategy you adopt is conducive to your work schedule.

Plenty of people trade while on the job, and there is a good chance that the boss man does some trading of his own. It is just that the objective that he is trading under is not to become a full-time trader and rid himself of his employer. The difference is that his passions are with his regular daytime job. For the part-time trader like me, it was with the financial markets, with my job simply being a means to an end. The passion and approach were at opposite ends of the spectrum, but when you are confronted by the boss man, it does not require you to reveal your degree of loyalty to your trading versus your job. That is internal to you, and nothing that needs to be revealed to the powers that be about that.

When asked, then, explain your trading in a way that eliminates any revelation about your passion for the true career path you are on and instead focus on the basics of what you do.

I have talked about this constantly throughout the book—don't do your research when you are on the job. Instead, the research should be done the morning of or the night before. As a swing trader, you are not averaging tons of trades each day, so you are likely only doing a few trades each market session, and the time component to enter those orders is marginal. Of course, you are going to keep track of how those positions do throughout the day, but not via nonstop monitoring. Assuming that you are the employee who gets his work done and still makes his corporate job the priority (when it comes to accomplishing the daily workload), watering down your trading to the bare basics of how you explain it to the boss man and what it really is, means that it probably won't differ much from the time and effort a lot individuals spend watching the financial markets during the day. The only difference will be your passion and devotion to the markets, which is no one's business but your own.

T
here is a verse in the Bible, from Matthew 10:16, that says “… to be wise as serpents and innocent as doves.” My goal in writing this book is to help those who want to be a part-time trader while having a completely different job that they need, and furthermore helping you set yourself on the path to becoming a full-time trader one day. Whether you hope to achieve the latter or are content in remaining in the former, this book was written for you. I have shared my successes and failures and have done everything I can to open up to you as a trader and individual who lamented my job: some because of my own doing, and others because of the simple nature of what it means to work with others in a corporate setting.

All of these tricks and stories that I have written about were not always as funny when they were actually unfolding, but there are lessons to be learned from them, and all of these tactics that I employed on my job were not done to mislead or cheat the system. Rather, they were done to help me progress in a career aspiration that I had and was unrelated to the job at hand. I did this without being a malcontent at work or not performing at the level that was expected of me.

The concept of working in Corporate America is not the enemy. But there is a problem, and that arises from the individuals with whom we work. You see, we all have our own downfalls, pitfalls, and letdowns that we all have to deal with and improve on. When you introduce into your life the idea of making additional money by trading the financial markets while you are working, people are going to become jealous and envy any success that you might experience if you let them in on your supposed-to-be secret ­endeavor.

Unfortunately, the “image is everything” phrase carries a lot of weight in the workplace, and my approach to how I worked and the steps that I took to preserve the perception that the boss man and coworkers held of me was paramount to my trading success. I never changed as an employee. No matter which company I worked for, or the person who oversaw my progress, my performance never changed, and my ability to achieve the goals that were set out for me to attain were never compromised. I was sold out to part-time trading, but I viewed my responsibilities as an employee as part of my ability to trade successfully. Without a paying job, I could not have been a successful part-time trader, and without part-time trading while on the job, I could have only attained the status of full-time paper trader, because I would not have had the necessary capital requirements to do it on my own.

I knew that I could do well on the job. I was in a world where most were not as technically savvy on the computer as I was, and what some could do in 3 hours, I could oftentimes finish in 30 minutes. Not because I was smarter, but I was more tactical and knew how to get the job done in a way that was easier. This would afford me a lot of extra time to follow the markets when I wanted or needed to. Unfortunately, when dealing with others on the job, they are not going to look at the actual facts. They are going to assume that if you are successful as a part-time trader, you will be a horrible employee. While that might be true for some, it is not an absolute that can be applied across the board. Being a solid contributor was not the obstacle for me. It was making sure that the image that I projected to everyone matched the expectations that I was performing at.

My reason for doing so was to keep trading out of the discussion: to eliminate the need or provide a reason for being suspicious about me. ­Individuals and boss men alike can get caught up in the notion that regardless of their actual performance, the illusion or image that is being projected to others is unacceptable and changes have to be made. That is not something you want to have happen to you. The key is to remain in control of your own domain, to project the image of the successful and ideal employee, performing at the acceptable level of work required of you, all the while being a part-time trader who can navigate the financial markets at the same time.

I'm not going to tell you that balancing the workload the boss man gives you with trading part-time will be an easy endeavor. It is very difficult, and often you will be forced to choose between the two. I am not very good at doing two things at once; in fact, I do not even like to multitask when it comes to such simple things as eating. I usually only eat one type of food on my plate before moving on to the next food. Typically, I start with the food that I like the most, then I move on to the next best food, and then finally the last thing I eat will be what I dislike the most (and it's usually cold by the time I start on it). I am not even that big a fan of casseroles because I like to have my food separated and not touching one another. Sort of like how McDonald's gives you a paper-wrapped cheeseburger, a drink, and an order of fries in a box. That is how I like my food. I need to have something here, here, and here.

Unfortunately, when it comes to trading, I cannot do that. One of my best acquisitions while I was working the paper-pushing job was getting a second monitor. I got the monitor simply by strolling through an abandoned office area and noticing that there was a monitor sitting on one of the desks collecting dust. There was no computer to which it was attached, so I took it and brought it back to my office. It cannot be considered stealing when all I did was relocate the monitor to a different desk within the same building.

Let the boss man know that by having an additional monitor, you will become more efficient in your work, which is 100 percent true. By having that second monitor, I was able to better balance that relationship between trading and job responsibilities (which, of course, made me more efficient!).

While there is this idea that you know what you are likely to be confronted with when you arrive at work, we all know that rarely does a day on the job go according to plan. Instead, you are thrown curve balls that you were not expecting to have, and you have to adjust accordingly. Trying to research at work is far too time consuming to do before the market opens, and if you think you can do so uninterrupted, the likelihood is a farce. Leave the research for at home, have it done by the time you arrive, and simply focus on implementing the plan you have already laid out for yourself.

Once you have a position that is on, you cannot simply sit there and watch every tick at the expense of what you should be doing. Most traders, full-time and part-time alike, get themselves into trouble when they start watching the markets too closely. When you have your stop-loss in, let your analysis and studies do their work. Of course, there are times when you should adjust your stops to take advantage of market situations, and you should no doubt be cognizant of what the market is doing throughout the day if that is possible. But do not get absorbed at the expense of everything else that you should be tending to.

Most companies have a protected network, but what they also provide guests access to the network without requiring login and user password. When I was on the job, unless I needed to be logged in to access the network, I did all my work through the guest portal. Since I saved everything on my computer and would always wait until an assignment was completed before uploading my documents to the server, I would log on through the guest network and stay there throughout the day.

Guest networks give you a little bit more anonymity (let's face it, nothing on the Internet is anonymous) as your information technology (IT) group is less likely to monitor this part of the network's activity, since it is open access to anyone and everyone. Anyone could be using it—from the person in the parking lot that is just looking for quick access to some free Wi-Fi, to the person waiting in the lobby. Guest networks are much more difficult to track and often times overlooked, which is why it is so hard to monitor or even spot if an employee is on it. That is why I chose to connect to the guest portal once I made sure I did not need to always access the company server.

In those cases where I did need access, I would simply discontinue any web sites that were not needed for me to function in my job, and then switch to the employee side of the network. This would provide me access to the servers and any documents that I needed or wanted to upload. In doing this, I was able to curb my exposure to corporate monitoring, and while nothing in the world of IT is failsafe, you can create favorable odds for yourself of being able to trade in an uninterrupted manner.

When it comes to bandwidth, you must be careful about how much you use of it. Streaming real-time quotes, charts, and Bloomberg television on your desktop could easily lead to some flags being raised. In doing so, you are consuming far more bandwidth that you should be and much more than the average employee, and frankly that causes you to stick out like a sore thumb.

If everyone else is consuming a half megabyte per second and you are consuming five megabytes per second, well then you can be sure that someone in IT will notice this and look into why you are having to consume so much bandwidth while on the job. When they see what you are doing and the applications you are running, it will not matter how much you are accomplishing at work; instead, they will go into regulation and assumption mode and make your life very difficult.

Instead, use applications that will not consume as much bandwidth and, as I have said throughout the book, ones that will help you stay off the radar. Use static web sites that do not stream real-time quotes. There may be times where in order to get into a position you will need live streaming quotes. If you do, I would limit it greatly, and simply do so to get in or out of a position as necessary. Opt for those sites that provide a static quote and require refreshing to get a new quote. By doing so, you will limit how much you watch the markets, thereby preventing you from micromanaging your positions like a “Debbie” while also trying to accomplish the day's work.

If you are going to want access to your brokerage platform's real-time streaming or other sophisticated tools, get an unlimited data plan and use your tablet or smartphone for doing that. Buy yourself a portable stand for it, and you will be able to prop it right up there with your monitors and in the process increase your workplace efficiency.

Ultimately, how you get in and out of positions is up to you as well as how you decide to trade. When I am asked how I enter in a stock, I tell them that I get in all at once. One price, one order. When it comes to getting out of a stock, very rarely will I scale out of a position. Instead, it is just like the entry where my exit price consists of only one lot transaction. When I made the transition into the full-time trading career, I kept to this practice. It keeps everything simple and less discretionary, and when I was part of the corporate scene, it gave me all the ability to trade in a manner that met my work schedule and demands of the job.

If you can manage to scale in and out of positions while on the job, that is great, but make sure that you are doing it because it suits your personality and trading profile as well. A lot of traders use scaling methods because they think it helps to limit risk and allows them to get out closer to the top of a move. In essence, it is kind of like having a second chance at getting in and out of a trade.

I actually disagree with this concept, though. Unless you can systematically do this using exact percentages and prices that show doing so provides a noteworthy difference in your trading results through years of back-­testing, I would stick to trading entries and exits that consist of one transaction for each of them.

Here's the reason behind doing this. Say you are trying to stage your entry into a position, and you are going to break up the capital that you want to commit to a trade in quarters. For the sake of simplicity, let's say that you want to get in initially at $10 per share. If the stock goes to $10.10, you will buy again and subsequently at $10.20 and $10.30 as well. The belief is that if you get stopped out, you only get stopped out of a quarter of a position. But actually, the possibility exists that a stock could hit $10.30 and reverse course and you get stopped out instead losing the profits that you had, and taking a much larger loss than had you simply got in with a full position at $10.

If the stock is profitable, and you sell out at $10.50 with the average fill price of all four stages of $10.15, then instead of making 5 percent on the trade, you are left instead with just a gain of 3.4 percent.

That is assuming as well that you are not staging out of your position. Let's say that you get out of your first quarter position at $10.50 hoping it will go higher. Instead it retracts. Your next quarter position is at $10.40, then $10.30 and then you close out the position at $10.20. Sadly, that solid swing trade has been reduced to a 1.9 percent gain. Throw in commission costs—eight of them in total—and you probably have a trade where you may actually have taken a loss overall on it. Had you got ten in all at $10 and gotten out at $10.50 like you could have, you would walk away with less in commission costs and a 5 percent gain on the trade itself.

On the flip side, let's say you scaled out at $10.50, but benefited from an additional upside move by getting out at $10.60, $10.70, and finally at $10.80. Your exit price was at $10.65. With your average entry still at $10.15, you still make less at a 4.9 percent gain, plus six additional trades that had to be made because you chose to scale in and out.