How do traders manage their stress?

Hi guys.
It seems quite clear that traders get a great deal of stress from the start to the end of the market, since they have to be fully focused on the PC monitors for that time. I wonder how do traders manage their stress while concentrating on the market.

Thanks.

 
Best Response

I was also worried when i first started about the potential effects of stress of always dealing with real time P&L, but you have to develop an understanding that you cannot control the lines on the screen and how they move. Its a job with a lot of uncertainity, and you have to embrace that. Now this perspective is only possible if you are prepared every day and do your homework, because only then can you think, whatever happens, I am positioned the right way according to the information I had this morning. If something comes out like a company unexpectedly profit warns and drops 10%, you need to think, did I have the info before the event to expect that? If yes, then you need to learn from that mistake, if no, you need to write it off as a cost of dealing with uncertainty.

I have found that the only times i get stressed are when i cannot explain myself to my boss. If i lose X but i can go to him and say this is why i was positioned this way, it turned out wrong and ive done this since, then that means you have a game plan, and a good boss will understand that. On the other hand, if you lose X because of a mistake, thats a problem. I go in every single day my goal being that any money lost will not be due to an error on my part. The only stressfull situations i find are cases where yu make an error, and cant do anything about it the P&L from that error is at the mercy of the market (ie you mishedged something over the weekend and have a large exposire, and are just hoping no news comes out over the weekend).

Now I am not saying that even if you lose money but had a gameplan that you wont be fired, if you are losing money consistently you will probably be let go, but you need to have that understanding that you are making decisions under constrained information at the time, and sometimes people love to buy lookback options for free in this industry and a lot of the times yo ucant do anything about that, just understand that you cant stress about things that are out of your control.

 
derivstrading:

I was also worried when i first started about the potential effects of stress of always dealing with real time P&L, but you have to develop an understanding that you cannot control the lines on the screen and how they move. Its a job with a lot of uncertainity, and you have to embrace that. Now this perspective is only possible if you are prepared every day and do your homework, because only then can you think, whatever happens, I am positioned the right way according to the information I had this morning. If something comes out like a company unexpectedly profit warns and drops 10%, you need to think, did I have the info before the event to expect that? If yes, then you need to learn from that mistake, if no, you need to write it off as a cost of dealing with uncertainty.

I have found that the only times i get stressed are when i cannot explain myself to my boss. If i lose X but i can go to him and say this is why i was positioned this way, it turned out wrong and ive done this since, then that means you have a game plan, and a good boss will understand that. On the other hand, if you lose X because of a mistake, thats a problem. I go in every single day my goal being that any money lost will not be due to an error on my part. The only stressfull situations i find are cases where yu make an error, and cant do anything about it the P&L from that error is at the mercy of the market (ie you mishedged something over the weekend and have a large exposire, and are just hoping no news comes out over the weekend).

Now I am not saying that even if you lose money but had a gameplan that you wont be fired, if you are losing money consistently you will probably be let go, but you need to have that understanding that you are making decisions under constrained information at the time, and sometimes people love to buy lookback options for free in this industry and a lot of the times yo ucant do anything about that, just understand that you cant stress about things that are out of your control.

Damn. This man nailed it in the most eloquent manner.

"Sounds to me like you guys a couple of bookies."
 
derivstrading:

I was also worried when i first started about the potential effects of stress of always dealing with real time P&L, but you have to develop an understanding that you cannot control the lines on the screen and how they move. Its a job with a lot of uncertainity, and you have to embrace that. Now this perspective is only possible if you are prepared every day and do your homework, because only then can you think, whatever happens, I am positioned the right way according to the information I had this morning. If something comes out like a company unexpectedly profit warns and drops 10%, you need to think, did I have the info before the event to expect that? If yes, then you need to learn from that mistake, if no, you need to write it off as a cost of dealing with uncertainty.

I have found that the only times i get stressed are when i cannot explain myself to my boss. If i lose X but i can go to him and say this is why i was positioned this way, it turned out wrong and ive done this since, then that means you have a game plan, and a good boss will understand that. On the other hand, if you lose X because of a mistake, thats a problem. I go in every single day my goal being that any money lost will not be due to an error on my part. The only stressfull situations i find are cases where yu make an error, and cant do anything about it the P&L from that error is at the mercy of the market (ie you mishedged something over the weekend and have a large exposire, and are just hoping no news comes out over the weekend).

Now I am not saying that even if you lose money but had a gameplan that you wont be fired, if you are losing money consistently you will probably be let go, but you need to have that understanding that you are making decisions under constrained information at the time, and sometimes people love to buy lookback options for free in this industry and a lot of the times yo ucant do anything about that, just understand that you cant stress about things that are out of your control.

I got it. Thanks man. :)

 

By being badass and having the highest P&L on the floor.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
justin88:

derivstrading's advice is good.

also, you get used to the volatility, so the stress lessens over time. any trader who tells your their first year with a book wasn't stressful is lying to you.

Exactly. It used to be that X amount of delta risk would leave me worried sick over the weekend, but now that same amount is really more of a rounding error that i dont think twice about. Its really attributable to not really knowing what you are doing at first. When you first start managing risk you will most likely come into the office nervous and that is good, because that will make you prepare, get there early etc. It used to be that if i got in late (like 15 mins before the open) id panic a bit because i felt like i didnt know everything i should. A couple months in and you know your book well enough and your products/underlyings well enough that a lot of stuff becomes second nature, and thats when you stop worrying so much and gain some perspective on things that matter and tings that dont. As with most things, it all comes with experience and there will always be necessary growing pains.

 

And yet stress does happen, as much as we would love to say it doesn't. It's unrealistic to say that we work 100-hour weeks and get treated like crap and don't stress about it. Nor do I see much badassness in my group... everyone takes the more quiet/competent/head-down approach.

How do we deal with it? Some make sardonic jokes among themselves and their confidantes. Most drink too much at least once a week (and there's always Beer Friday to start us off). Some shop, sometimes to complete excess (both boys and girls). Lots of people try to unwind at the office with their favorite websites, whether that's sports or shopping or message boards like this one. Some work out. And some, the poor saps who are addicted to work, just work harder.

 

Mis Ind - the reality is as you describe pretty much

The 'badass' comment was an attempt to reflect the macho 'ideal' that some like to project....

From the ghetto....

From the ghetto....
 

Hey, some people (myself included) call it nargile instead of shisha. Smoking nargile with friends is one of my favorite ways to relax, actually, though I didn't say it earlier because I figured nobody would know what I was talking about. And I'm a white girl from East Bumblefuck. Weird, huh?

 

I think South Africans tend to refer to it as "hubbly bubbly". "Hookah" probably comes from the Arabic word "huqqa", but I believe most Arabs typically refer to it as nargile. Please correct me if I'm wrong; it's a culture I study but am not a part of.

I know nargile/shisha/huqqa is smoked across Persia, Turkey, the Arab nations, Egypt, Morocco, Israel and South Africa... no small surprise that there should be so many ways to refer to it.

 
Mis Ind:
I believe most Arabs typically refer to it as nargile. Please correct me if I'm wrong; it's a culture I study but am not a part of.

i think that you are correct, but shisha is a very typical word for it as well.

 

By the way, anybody in NYC know of decent shisha cafes? Horus is good for food/tea/talking but the smoke is all fruit and no tobacco. L'orange bleue is good for real tobacco but it's so loud that you can't talk.

 

Stress is for weaklings, you guys need to toughen up, you're sitting pretty in a heated building staring at a computer screen eating all the food you want, and you're stressed ??. Spoilt little brats.

 
Bondarb:
...bankers have no stress...working on a spreadsheet is not stress...when u have risk in the market at 8:29am on a payroll day or at 2:13 before a fed meeting and ur life is completely out of your hands that is stress.

true. its a different kind of stress. but at the end of the working day you close out your positions don't you? you know where you stand.

in illiquid assets the stress stays with you after you have left the office. will manangment screw up, will we get approvals, will the debt be serviced, etc...

all different kinds of stress. you need to learn how to compartmentalise, tune out or stay cool as appropriate.

sexonwax:
just to clear up the lexicon mess, sheesha is what they call it in the GCC (gulf cooperation council): saudi, kuwait, qatar, bahrain, UAE etc. Irgile is what they call it in Jordan, Syria, Lebanon, Turkey etc.

true.

 
Bondarb:
...bankers have no stress...working on a spreadsheet is not stress...when u have risk in the market at 8:29am on a payroll day or at 2:13 before a fed meeting and ur life is completely out of your hands that is stress.

Sure it's all relative, so using your logic, you have no stress either compared to a soldier fighting in the middle east who just had his balls blown to pieces by an exploding grenade.

 

just to clear up the lexicon mess, sheesha is what they call it in the GCC (gulf cooperation council): saudi, kuwait, qatar, bahrain, UAE etc. Irgile is what they call it in Jordan, Syria, Lebanon, Turkey etc. And Hooka, well, isn't really sheesha - though they're both smoked from the same instrumentation.

In Pakistan / India etc, when you say hookah it generally means smoking unfiltered and UNFLAVOURED tobacco. It seems to have assumed a different colloquial meaning in North America.

 

Shisha is great to relax.....

...but doesn't increase your mental stamina or agility....

Hookah is the term for the pipe from which tobacco is smoked (unflavoured) in the India/Pakistan/Afghanistan region - it is slightly different and less likely to be filtered through water...

Anyway, back to the khat.....

From the ghetto....

From the ghetto....
 

And that soldier, who has good protective gear and access to some of the world's best emergency medical care plus a cushy life back home and a purple heart, has "zero" stress compared to certain other victims of war, famine, rape, and brutality whose lives continue to be as brief as they are misery-filled and who have nowhere to turn and no hope for their future, for whom losing testicles would be bad, but probably not the worst thing that had ever happened to them.

Come on. "U" got to admit, Bondarb, that stress is stress. It's a lifestealer however you come by it.

 

The point is everyone has the right to do a little complaining. It's not like anyone here is holding a picket outside their bank. They are just venting a little. I think the majority of us realize we are in the top 5% or higher of people in the world with respect to quality of life.

---------------- Account Inactive
 

...no i dont "close out my positions when i go home at night"...why do you think i am online every night im not out? Something could happen right now that could change everything...the products i trade also trade overnight in Japan and then London...it never ends. But Hobbes you are right, i do not know anything about the kind of stress u face in manning a post in Baghdad when every person who passes you may be trying to take your life. Compared to those guys i have no stress.

 

Bondarb, didn't know that about closing positions. are you buyside?

i think being in control and involved in these risk taking decisions makes a difference to the stress that you face. stylised example: when a vp/md on your team does a deal that you haven't worked on but think is dodgy then you will have stress. does that apply to trading? i.e. when one of your colleagues is not doing too well does it affect you?

not to make this political, but i'm sure that that soldier in baghdad has less stress than the kids/women who pass by his post.

 

Traders on the sell side don't necessarily close out there positions each day. Tons of them take long-term prop positions, even if they're not on a prop desk. So they can enter into a trade and be "stressed" about it for months....

And to back up the military subject, I was in the military prior to S&T, and the "stress" on the trading floor will never touch the day-to-day stress of the military, let alone the stress of war.

But, the cool thing is that 99% of the people on the trading floor realize that and don't bust your balls if your prior military....

 

Relinquo, that was my point when I mentioned the victims of war. I know I'd rather be the soldier in the nice boots and clean(ish) clothes with the gun and the support team and the medical supplies than the kids who have to wash their mom's body for burial. Talk about stress.

 

Very cool. I've always believed that going to war often gives people the kind of nerves they would need in trading.

Of course, there are two kinds of people when it comes to soldiering: those that are tempered, and those that break.

 

...first of all Prop trading is not sell-side it is buyside. A prop desk at a broker dealer like Goldman/Lehman/Etc. is like an internal hedge fund, totally seperate from the sell side/dealership trading desk. Sell-side traders also take positions and hold them overnight though. As a prop trader, you really only feel stress about your own P&L, as that is what you are paid based on. that said, everybody is obviously on the same team and you root for and help out other guys on the desk where possible. If you run the desk you stress about everybody's positions because you are in part responsible for helping them manage risk.

On Iraq, I agree that having a bunch of soldiers who speak a different language and look totally different from the populace running around with machine guns does raise the general stress level. Who feels more stress, the soldier or the citizen? I dont know, thankfully i've never been in either position.

 
Bondarb:
...first of all Prop trading is not sell-side it is buyside. A prop desk at a broker dealer like Goldman/Lehman/Etc. is like an internal hedge fund, totally seperate from the sell side/dealership trading desk. Sell-side traders also take positions and hold them overnight though. As a prop trader, you really only feel stress about your own P&L, as that is what you are paid based on. that said, everybody is obviously on the same team and you root for and help out other guys on the desk where possible. If you run the desk you stress about everybody's positions because you are in part responsible for helping them manage risk.

thanks. this is what i had though initially. are you involved in convertible arb? is it still profitable enough? i was under the understanding that it was becomeing less so as more people were pursuing the strategy and with relatively less issuance of these securities, although i could be compeletly wrong about this. i don't work in this space but find it interesting.

Bondarb:
Who feels more stress, the soldier or the citizen? I dont know, thankfully i've never been in either position.

the citizens do. i know this as i have friends on both sides. it is stressful for all. hopefully it need not be for long.

 

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