Marilyn’s Business and Life Plan- Step 5: A Trader’s Job Description


By Sherrie Nish

At some point in your life, you have probably had experience with job descriptions. Perhaps you were an employee and were given a job description for your new position. Maybe you were a business owner and had to write the job descriptions for the people you hired to work for you.

Most new traders come into trading never giving a thought about what this job really is. It is simple: If you are a Trader, then your job is Trading! But think about it. Is it really?

A young man came to an experienced ex-floor trader seeking help with his trading. They reviewed his trading activity, his numbers and it all looked to be in order. His win ratio was adequate. He had a good risk management system in place. Yet, he was not profitable; nor could he understand why. This baffled the experienced trader as well, until he noticed the commissions. Although commission fees were in line, this trader was paying out approximately $1600 per day in commissions! Clearly, this young man thought the job of a trader was trading and that was exactly what he was doing… lots and lots of trades, but no profit.

If you accept the premise that trading is NOT the job, then what is it? If it’s not trading, making money or picking special markets, then what exactly is this job?

Marilyn suggests that you make out your own Job Description for the job of trading. This will help you keep the focus on what is important. Marilyn has narrowed it down to three main components to trading. You will notice that trading itself is definitely not the main thing, not even close! The following sections are her three main components.

First: Evaluate Information The first order of business every day is to evaluate the information available to you. Here are some things to ask yourself:

  • What did your chosen market do overnight, or since you last had the charts up?

  • What happened in the news, both domestic and global?

  • What numbers have been recently or will be released while you are trading?

  • What other external things could affect your trading session?

Evaluate the information your charts are telling you, such as:

  • Are there any good set-ups in the process of completion?

  • Were there any set-ups that you missed because they occurred prior to your trading time?

  • What are the indicators telling you?

Be a Professional Information Evaluator!

Second: Make a Decision Based on the first element of evaluating information, you need to make a decision. The good news here is that it is a multiple-choice question with exactly the same options given every single time. The choices are:

  • Long

  • Short

  • OUT!

Seems easy enough, right? But, how many times do you sit there and say to yourself, “I don’t know. Maybe if…ooohhh, uuuhhh, etc. Make a decision! The “I don’t know, maybe, uhhh, oohhh” answers are all OUT! Decisions you just haven’t committed to yet, so make it a definite OUT! Long or Short are relatively easy IF YOU FOLLOW THE RULES! It is the failure to fully grasp OUT! that sometimes gets us into trouble.

Third: Risk Management This is probably the single most important element. However, if you never complete the first two, then it matters little because you haven’t done the “work” of the job. Although there are different ways to use Risk Management, one of the best is from Darrell and known as his five percent rule. If you aren’t familiar with it, here is a LINK to an article about it.

Risk Management is essential to keeping a trader in the business of trading for the long term. As Darrell often admonishes, take your profit out of your trading account as it builds. Do not allow profits to accumulate in your trading account. There are several reasons for this but an important one is that it gives you a false sense of abundance. This can lead quickly to taking more risk or more contracts than is prudent. This is a big exercise in managing yourself.

Writing a Job Description for the position of Trader and putting it in your trading business binder can be a useful tool in helping you to keep your focus on what is important. It is strongly recommended that you think about this seriously. Take the time to write down what the job description is for you. Pushing buttons and “trading” just to be “trading” likely will not be in your best interest.

Marilyn’s Business and Life Plan-Step 6: Psychology Pages