Special Message: Traders Never Sleep

I started using the phrase, “traders never sleep” several years ago. Part of that is because we know traders are always looking at what the markets are doing at night but the phrase took on another meaning when I saw how scared the public became during and after the credit crisis—people were just too scared to sleep.

Back in 2007 I wrote a story about how I felt it was important to cut back unnecessary spending—fewer expensive dinners and other extravagances. It was time to buckle down and I made some good decisions about what my priorities were.

Then the 2010 Flash Crash came along and we took a $5.3 million hit. The worst part of it was that the loss wasn’t due to negligence or incompetence on our part; we were taken advantage of. That added anger and frustration at the exchange and the justice system to the loss of money.

I think a lot of people went through that during the crisis: the frustration that they were losing their jobs, their homes, their savings not through any fault of their own but because of a system that seemed rigged against them.

I was already not sleeping, but after the hit I never resumed any normal sleep patterns. In fact I went from 5 hours of sleep a night to 2 or 3. Some people say that you do not require as much sleep as you get older and I am here to say that is 100% false. Like a good diet sleep keeps your body refreshed.

Paying for the party years later

Inadequate sleep and poor health make it harder to be a good trader. Back at the old CME at 30 S Wacker everyone drank and partied. Is was part of the trading floor culture, which I should point out was mostly male.

It was even more pervasive in New York where everyone on Wall Street liked to go for “cocktails” after the close. After many trips to New York and being expected to go out I learned to hate it. Sometimes I would show up at meetings with bloodshot eyes, looking like something the cat dragged in.

Far from hurting my business prospects, it was expected. If you wanted the business you had to do it. Go for drinks after the markets closed, head to a dinner that most people couldn’t even eat, and then hit the bars and strip joints.

Sometimes we would go back to the hotel at 5:00 am and have a meeting at 7:30. It was never pretty but it was the norm that you had to “entertain.”

In the short term, the entertaining may have gotten me more big-name clients. And my clients have included billionaires, major banks and funds, “market wizards,” and leaders of countries. But the toll on my health didn’t make me a better trader.

Wake -up call

I have always believed honesty is the best policy. Maybe when I was younger I would add a little extra mustard to the story but at 56 years old I can’t do that. For 25 years, having that invincible trader mindset meant I only went to the doctor if I absolutely had to. I don’t know why men do that, but I did.

Recently that neglect caught up with me. After a lot of tests and doctor visits, I have found out that I have good blood pressure, a mild case of sleep apnea, severe hearing loss from the floor and from not sleeping, and pains in my feet and fingertips.

I came through my echocardiogram with flying colors but I have an enlarged aortic valve that may need surgery. There are a few other bumps I need to get past but it’s a work in progress. At least now the progress is in the right direction.

Like anything in life, I’ll face it head on but I also understand that not taking care of myself, eating crappy food, and going out hard is probably the cause of most of my problems.

As traders, we constantly make judgments about the value of one thing versus another. In life, we do too. As parents and friends we owe it to the next generation to share these stories in the hope that maybe, just maybe we can stop people from making the same mistakes we did. I can’t undo the past but I feel it is my duty to help my daugher make better value judgements than I did.

You’re probably wondering why I am opening up. First of all, it’s because our goal is to help you be the best traders you can be. Good health is essential to that.

The other reason is I have a lot of friends out there and as this process moves forward I want to be open about it. I am not a man who hides, nor will I from this, but a lesson learned is more valuable when it’s shared, especially with your daughter, your wife, your friends. To live your life to the fullest but without what I had to go through. I have few regrets but if I did have one it would be to lead a cleaner, happier life.

In Asia 10 of 11 market closed lower and in Europe 9 out of 11 markets are trading lower. Today we have a full economic schedule; MBA Purchase Applications, ADP Employment Report, Gallup U.S. Job Creation Index, International Trade, Productivity and Coat, PMI Services, ISM Non-Mfg Index, EIA Petroleum Status Report, Beige Book and earnings from PVH Corp PVH, Five Below, Inc. FIVE RealD Inc. RLD, Nordion Inc.NDZ.

Our View : S&P up 9 of the last 10

The S&P 500 (^GSPC:SNP) just won’t go down. It’s almost too hard to believe. I don’t care what anyone says, we have “never” seen anything like this. Yesterday our call was to sell the rallies and we had a winning trade but after covering a few times the E-mini ESM went right back up.

Today we have a heavy economic schedule so the markets are going to have to get past that first. Asia and Europe are down and there is “nothing but sell stops” below 1913 down to 1896.

I firmly believe we will run those downside sell stops but when? We are sticking with selling rallies with tight stops and starting to look at the September 1840 and 1850 puts for a small option lotto play. You can take it from there…

As always please keep an eye on the 10-handle rule and please use stops when trading futures and options.

• In Asia, 10 of 11 markets closed lower: Shanghai Comp. -0.66% , Hang Seng -0.60%, Nikkei +0.22%.
• In Europe, 9 of 11 markets are trading lower : DAX -0.24% FTSE -0.30%
• Morning headline: “S&P 500 Futures up 9 of the last 10 sessions”
• Fair Value: S&P -1.57 , Nasdaq -0.66, Dow (DJI:^DJI) -10.97
• Total volume: 947k ESM and 7k SPM traded
• Economic calendar: MBA Purchase Applications, ADP Employment Report, Gallup U.S. Job Creation Index, International Trade, Productivity and Coat, PMI Services, ISM Non-Mfg Index, EIA Petroleum Status Report, Beige Book and earnings from PVH Corp PVH, Five Below, Inc. FIVE RealD Inc. RLD, Nordion Inc. NDZ.