Relieving the Stress of Trading

In answer to my previous article, The Search for Edge, Boris (probably not Johnson) left a comment that I felt would be best answered in a dedicated article rather than as a reply in the comments section of the original article.

Last week's article saw me state facetiously that I was loath to publish details of my trading lifestyle, "Primarily because it is so dreary. No poolside selfies from me, courtesy of a cheap AirBnB holiday."

Boris commented

James you have never been keen on showing the poolside life of trading, I understand why. But wouldn't it be better to say it's a highly important part because of how stressful trading is? - or any high level competition and learning to turn it off and turn it on is one of the most important parts of high level competition (Trading & Business). Which is why business and trading is the two more difficult domains to achieve substantial success in is becuase it run's 365 and your neck is on the line everyday. My point being as long as people understand intermittently busting your ass then having a week of in capetown once a quarter will do you much better in the long run then just solid grind in which you become more likely to make errors and costly mistakes. Rest is key whichever way you get it.

I didn't know there was a poolside life to trading. Did I miss a clause in my agreement with Betfair?

Betfair User Agreement

15.2 - All users of the Betfair exchange are expected to post nauseating photographs of their chest hair from different poolside locations on a regular basis or forfit their exchange rights and privileges.

That'll teach me to scroll immediately to the bottom of those tiresome service agreements and click "I Agree" without reading anything.

Boris says, "But wouldn't it be better to say [poolside life is] a highly important part because of how stressful trading is?"

Why? Is chlorine invigorating for you? Personally, my ears clog up when I'm in a pool and I become very grumpy for the rest of the day so no, being poolside, toasting my chest hair (singular) would not be a good idea. A grumpy bunny does not a trader make.

Reading Boris's comment in its entirety suggests that he is talking about himself, a manual trader, who sits in front of a screen all day long. If I did that then I would not be looking for a pool, I'd be looking for an optician and maybe a psychoanalyst.

If Boris (and others) took the time to read more of this website then he (and they) would realise that I am an algo-trader, one who doesn't sit in front of a screen all day long.

Maybe it is not fully understood what algo-trading is. Yes, there is research and programming to be done in front of a screen but that is varied and enjoyable work and not the chore that the ladder lovers have to endure.

When a manual trader has constructed (or guessed) a strategy they have to implement it by hand in front of a screen from entry to exit. An algo-trader codes the logic of a strategy into a bot (i.e. entry, exit and any money management strategy) and then leaves the bot to get on with it. Therefore, the algo-trader has a lot more free time and suffers a lot less stress (if any) because they are not physically trading.

Boris is rather behind the times if he believes that manual trading is still the mainstay of the financial markets. Most open outcry trading pits have gone. Some of the jobbers have swapped their brightly coloured jackets for a shirt and tie, and sit at electronic terminals but the bulk of financial trading is automatically performed by computers. Yes, the markets are running, somewhere on this planet, 365 but news and data are being processed and acted upon at the speed of light and that's no place for a human.

If you want to relieve the stress of trading then don't trade. Build a trading strategy and leave it to an automated trading system to implement. If you truly have an edge then why are you allowing your human frailties to get in the way of your potential profit? If you have to constantly jump in and take control then your system is not quantifiable and there is no proof of edge.

There are those who claim to have a sixth sense when it comes to manual trading. Some call it a gut feeling and use poor research (since when did high-frequency trading involve manual trading?) in an act of confirmation bias to prove they can do it. However, if you can quantify your trading then your strategy can run as an algorithm in a trading bot. Otherwise, there is no strategy and it is all guess work. There are no excuses for not wanting to automate your trading and benefiting from the scaling up of your income that automation will provide.

Back to Boris's poolside angst. I have no problem with people taking holidays. What I have a problem with is people using exotic holiday imagery as a marketing exercise to sell an unattainable lifestyle to the many. After all, if a trader is that good and earning plenty of money then why doesn't that trader set up an office in his favourite sunny clime and use a VPN for trading or better still, run an algo-bot from a server, rather than living in a shabby rental in dreary England?