We’re traders, we’re our own boss, we decide when we trade and when we don’t.
We may trade 8 hours a day because we think of it as a job. We may trade until we hit a certain profit as we have a goal we want to achieve. We may just trade because we love the buzz and the ego of being ‘a trader’. Whatever the reason it’s in our control but we’re influenced by what the market is doing and increasingly by how we use technology to get an advantage.
Sitting in the back of a cab this week and chatting to the driver it struck me how similar our two occupations are.
Target Based Work
Cab drivers have certain costs that they need to cover: car lease, car ownership, gasoline, medallion license etc. and then an amount of money that they want to make per day. Each shift that they do therefore has a target income to cover both the cost and the target money they want to make.
If they don’t hit their income for the day then they start the next day at a loss and need to overachieve to get back to their on-target number.
- If they do hit their income number for the day then they can choose either of two options:
To carry on working. For example if it’s good weather, traffic is ok and they feel motivated. This will take them above their target income for the day and lower the pressure to hit their target income on future days.
- To quit for the day. Maybe the traffic is bad, it’s raining hard and they’re not really feeling it. This means they’ve come out at their target level and they’re back to zero when they start the following day.
Some days as Traders we start on the back foot as we know we were down the day before. Some days we over achieve, as the markets seem to be with us and we take money while we can. Other days the markets seem to hate us, everything goes wrong and we try and cut our losses and maintain capital for the next trading session.
Impact of Technology
Technology in the taxi business has not only massively increased competition with the likes of Uber, Lyft and similar but has also increased the efficiency of each individual Cab Driver through optimising route planning and providing the ability to quickly identify new rides in the location where you dropped your last ride using electronic hailing functionality.
As Traders we’ve seen huge advances in charting technology, speed of data connections and the number of brokers competing on price to get our business. The availability of Artificial Intelligence (AI) based tools means we can now augment our intelligence to make better decisions and can also trade in a way we could never do manually e.g. trading 1 minute candlesticks.
You know your typical NY Cab Driver; they want to talk, they want to tell your their problems and put the world to rights! They sit in their cab all shift long (could be day or night) and their mood will be influenced by how chatty the customers are, what the traffic is like, what the weather is like, which roads are closed, have they had an altercation with another driver etc. etc. Most of these things will be outside of their control but will directly impact how they’re feeling about work that day and when they quit.
Equally as Traders we know that sometimes we don’t feel in control, the market is not playing ball, we need to take a break but we can’t as we’re in a trade, we always out perform Joe but we’ve just seen he’s ahead of us etc.
So what can we learn:
- Targets – set yourself clear goals and trade with your own strategy and risk profile. Do what makes sense for you, do not be influenced by others. Better still use a system that takes you out of the market when you’ve made your money and go enjoy some leisure time
- Technology – it’s an enabler to your business and to helping you achieve your desired profitability. Manual trading is becoming increasingly difficult as machines start to control so many trades in the market. Level the playing field by using a system that uses millions of market data points to identify trade patterns and trade signals
- Psychology – keep your head in the game. Have a mechanism that stops you over-risking when you’re losing and under-risking when you’re winning. Emotion will always be there, so best to use a system where you set your strategy and risk profile and then leave it to trade.
Inteligex’s award winning Trading Alert System uses advanced technology to enable you to trade profitably while staying within your own personal risk profile.
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