How to Generate a Bigger Bonus While Trading From Home

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That’s the advice of Brett Steenbarger, a clinical associate professor of psychiatry and behavioral sciences at SUNY Upstate Medical University in Syracuse, New York. Steenbarger specializes in trader psychology. Legendary investor Paul Tudor Jones employed him from 2010 to 2014 as the director of trader development at his global macro fund, Tudor Investment Corp. Since 2003, Steenbarger has published five books on the psychology of successful trading.

I caught up with him by telephone on Wednesday, soon after he’d finished feeding his four rescue cats. “I’m a firm believer that we set the tone for our day by what we do at the start of the day,” he’s written. “I don’t start by looking at market quotes, news, emails, or chats. I start by loving and serving those I love. Actions, repeated, transform us: We become what we do.” Below is a lightly edited transcript of our conversation.

Mark Gilbert: On your blog, you talk about re-viewing trades, by going back through charts showing things like price action and volumes minute-by-minute, rather than just reviewing them. What do you mean by that distinction?

Brett Steenbarger: What we’re doing is not just looking them over, we are re-experiencing them. What we experience is what we internalize. Traders I worked with in Chicago some years ago, they had a recording, they would replay the markets they had traded and literally re-experience what had happened, what they had been thinking, but now in the context of being an observer and being able to see the opportunities that they perhaps missed, correct the mistakes that they made. That re-viewing accelerated their learning curves and was probably the number one thing they did that was most effective in spurring their development.  

MG: You’ve written about the benefits of talking through trading ideas out loud to yourself. How does that work?

BS: Any time we talk aloud, we become the listener as well as the speaker. It gives our ideas a greater objectivity. We become more aware of those ideas, it adds a layer of mindfulness to what we’re doing. Let’s say I have an impulse to buy or sell an asset, maybe because it’s moving a particular way and I don’t want it to move against me. If I say out loud what I’m thinking and what I’m about to do, immediately I can recognize if it sounds ridiculous: “This is not how I do my best money management, I’m being completely reactive.” I would be embarrassed to speak it out loud to a valued colleague. We get a layer of self-observation when we talk out loud that can be really useful. It makes us in a certain sense accountable.  

MG: How are the most successful traders dealing with lockdown?

BS: That is the top question I’ve been dealing with in talking with portfolio managers, team members at hedge funds and individual traders. Being in this lockdown mode, working from home, they don’t have the same level of stimulation that they had when they were in the regular working world and they don’t have the same level of stimulation in their personal lives. They are overwhelmed because they have no balance between the work and the responsibilities. All those things that would normally be balancing factors, that produce the positives, they have less access to.

Positive emotional experiences really provide us with a buffer against stress. We can deal with a lot of pressure, a lot of uncertainty, if we have positive experiences to balance that, so the stress doesn’t become distress. So many people I work with are lacking those positives.

MG: How important is teamwork and staying connected?

BS: There are two forms of teamwork. One is the teamwork that goes on purely professionally when money managers are generating ideas, sharing information. Staying connected to others is an important source of stimulation intellectually. I’ve done some research on what makes portfolio managers and traders successful, and the number one factor has been intellectual curiosity. Really successful money managers love generating ideas, they love the hunt for new opportunities. And so by connecting via teamwork they’re able to feed that curiosity that keeps them stimulated even when they’re working from home.

Then there’s the other kind of teamwork. Working together closely in our social lives, with friends, with extended family, with the family we’re living with, but using the time creatively to get that stimulation that we might not be getting because we’re not doing the same travel, going to clubs and so forth. Interaction is not just inspiring, it gives us energy.

MG: Finally, going back to your blog, you’ve written about a trader who adopted a kitten during lockdown and found that it’s helped him cope with frustrations during the trading day. What’s going on there? 

BS: What the cat provides, or any pet or even a small child, is it takes us out of ourselves. In the case of this trader, having this little one is a way of cultivating emotions that otherwise might be difficult to access, such as caring emotions or loving emotions. It’s easy for even the best traders to become quite hard on themselves, to become perfectionists. When we have a little kitten, it takes us to a different emotional place that we reinforce, and we can recruit in dealing with ourselves.   

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”