The Same Respect

By Zach Hurwitz hurwitz, Uncategorized

By Zach Hurwitz

Why are we so awful to ourselves?

Maybe no one told you, but your account deserves the same respect with which you’d trade someone else’s money.

“This trade is gonna be huge, your internal monologue boasts, “and I have absolutely no qualms about applying leverage to my son’s college account in order to purchase more gamma-heavy puts.

Whoa there — that sentence went from psychological to pathological quite quickly.  The road to hell is paved with good intentions; risk management is no different.

Take a moment at the beginning of every trading day and remind yourself that your account is not just your account, because it’s easy to forget when you’re in the midst of a gigantic PCLN short.  We’re working to secure an easier future path for our spouses, our children, our pets, ourselves, but all too often, we act like our asses are the only asses on the line — somewhat understandable, given there’s limited input from the periphery as to how we should trade.  Too frequently, we apply inappropriate risk to trades we’d never otherwise approve were we managing someone else’s account.

This is your spouse’s/significant other’s account.  No, your graphic designer girlfriend doesn’t have an opinion on Black-Scholes versus Bjerksund-Stensland, but she does care that you aren’t kept awake in the dark hours of the night by an oversized trade.  Would you carry six thousand shares of JDST overnight for your sweetheart’s modest account?  No?  Of course not, that’s irresponsible.  So why are you trying to pull this shit with your own money?

How most traders think adversity works.

This is your parents’ account.  Your mother doesn’t know volatility from volume and your father, though his name is Edgar, can’t find the SEC filings website.  But they labored tirelessly for years in an honest grind so that you’d see the benefit of hard work, consistency, and commitment — not so that you’d dick around with weekly options like an unsophisticated gambler.  Do you expect your retiree father to comprehend the nonlinearity of options’ time decay?  No?  Then perhaps you should review what-exactly-the-hell a butterfly is before you try to compete with the Luccis of the world.

Barry can’t handle a coffee mug.  Good luck with nonlinearity, Barry.

This is your child’s account.  Your kid doesn’t understand indicator divergences (he or she may not be able to spell ‘divergence’ yet), but they will learn from your journey as a trader.  Until adolescence, children rarely experience totally individual successes or failures — dependent on solely intrinsic factors instead of randomness, like the outcome of an elementary-school boys’ basketball game — but when they do, whether through inadvertent conjuring or just genetic ‘echoes’, they will relive every fear and dream you’ve had as a trader.  Prepare them well by preparing yourself well to encounter adversity; espouse consistency to others by employing it yourself.

Your account may be numerically smaller than you’d like, but it’s thematically bigger than you give it credit for.  Start acting like it.

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About the Author

Zach Hurwitz


Zachary is an independent equities trader, trading coach, systems developer, consultant to emerging hedge funds and proprietary trading firms, Volume-Weighted Average Price (VWAP) specialist, and in his spare time, a totally average guitarist. Zachary graduated with an Economics degree from Tufts University in 2008 and resides in Cincinnati, Ohio.

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