The Trader’s Pendulum

Reading The Markets‘ Brenda Jubin has penned a “jaded book reviewers” take on Jody Samuels’ new book The Trader’s Pendulum: The 10 Habits of Highly Successful Traders (Hoboken, NJ: John Wiley & Sons, 2015).

 

A couple of things are going on here to explain Jubin’s concerns. Samuels’ book expands on a highly cited Stocks & Commodities article about trader development. Wiley’s acquisition follows other successful books on trader development by SMB Capital’s Mike Bellafiore and other authors. Samuels’ coaching emphasis on factors like goals, business planning, personality awareness, and measuring performance for new retail traders also mirrors entrepreneurship advice by authors like Eric Ries and Guy Kawasaki.

 

In other words: cultivate deliberate practice (K. Anders Ericsson).

 

I’m thankful Samuels’ book is available on the Wiley Online database. I do wonder though: as an ex-institutional trader what specific advice would Samuels give new and emerging traders on dealing effectively with today’s electronic execution services: algorithmic trading, dark pools, and high-frequency trade firms?

Trading Lineages

For about three years I have been looking at financial markets as part of a practice-based research program. This past week I honed in on some specific material for a longer-term project. I then realised that much of the research material is traceable to several key sources.

 

In the 1980s, Stephen Brill’s American Lawyer Magazine helped develop the careers of several financial investigative journalists. Connie Bruck (The Predators Ball) and James B. Stewart (Den of Thieves) documented the insider trading scandals involving Ivan Boesky and Michael Milken, who both influenced Michael Douglas’ portrayal of Gordon Gekko in Oliver Stone’s film Wall Street. I recently discovered that Jim Cramer (Confessions of a Street Addict) was briefly at American Lawyer Magazine at the same time as Bruck and Stewart: Cramer founded a hedge fund, was involved in TheStreet.com, and is now a high-profile CNBC presenter. Bruck and Stewart’s detailed reportage foreshadowed the recent insider trading cases involving the Galleon and SAC hedge funds. Cramer’s experience is far more cautionary.

 

Another personal influence is the work of performance psychologists who have worked with traders. Ari Kiev (The Mental Strategies of Top Traders) worked with SAC’s Steve A. Cohen. Brett N. Steenbarger (The Psychology of TradingEnhancing Trader Performance) has worked with several firms including SMB Capital, where Mike Bellafiore (One Good TradeThe Playbook) and Adam H. Grimes (The Art and Science of Technical Analysis) have influenced proprietary trading firms. I have found that performance psychology insights can be applied to other areas of my life.

 

Finally, I have picked up specific insights from Market Wizards traders like Linda RaschkeMichael Steinhardt, and Larry Williams, who each have lineages of hedge fund and trading students.

 

Collectively, this work from American Lawyer Magazine, performance psychologists, and specific traders continues to shape my on-going, practice-based research.