Читать книгу The Guts and Glory of Day Trading - Mark Ingebretsen - Страница 17

In 1987, Lo, who was then in her early twenties, took those lessons with her when she went to work as an assistant broker for Canaccord, Canada’s largest independent investment firm. The job gave her a unique insider’s view of the markets. And she quickly saw how astute insiders could leverage their knowledge to trade their own accounts profitably. It was an invaluable insight. Because she was fresh out of college herself, Lo had very little in the way of savings. But as an employee of the firm, that was hardly a problem. Brokers at Canaccord could trade commission-free. Not only that, they didn’t need a fully funded account. Canaccord permitted its employees to trade on generous margins. That is, the firm in effect advanced its employees much of the money they used to buy and sell stocks.

The market is not a machine, as those who search for the ultimate trading system or indicator believe. Rather, the market is made up of people who act on hopes and fears, whose motivations come from the dark recesses of the mind.

It’s a system that is common at many brokerages in the United States as well. The margin requirements some brokerages charge their own employees can be as low as 20 percent. “Basically, it was acknowledged that as a broker you weren’t paid any reasonable salary,” says Lo. So these trading privileges were regarded as a perk. As long as traders could reconcile their accounts within the allotted number of days, they could use the powerful leverage the firm gave them to rack up huge gains. Indeed, Lo saw that the firm’s best trader commonly realized annual trading profits of six figures or more.

Trading on margin is rarely a problem for those who go long in a strongly uptrending market. And the markets in the United States and Canada were steaming throughout much of 1987. Lo began trading in April of that year, focusing mainly on the Vancouver-traded penny gold stocks. In that era, long before Internet trading and the advent of CNBC, Lo’s job at Canaccord provided her with a literal window on the market that was unavailable to those outside the business. Inside Canaccord’s office was a black-and-white TV monitor that provided a live view of the Vancouver Exchange floor. Lo discovered that she could often gauge near-term market sentiment just by watching the expressions on the faces of the floor traders. In true contrarian fashion, whenever she sensed that panic on the floor was universal, it was a signal that a turnaround was imminent.

However, in the spring and summer of ’87, most traders were caught up in the buying melee, and panic was far from their minds. Penny gold stocks doubled and quadrupled within a single trading day. Stocks of obscure British Columbian mining ventures that sold for 20 cents on Monday might climb to $5 by Friday. Lo built up her profits by quickly flipping in and out of positions.

By early fall that year, Lo and other traders at her firm were beginning to suspect that a top had been reached. And many gradually cut back on their long positions. “I noticed in about August that it became really hard to make money, because things were just churning,” she says. “So I didn’t try. By some grace of God I stopped trading.”

But when Black Monday arrived on October 19, 1987, Lo and the firm’s other traders saw a once-in-a-lifetime opportunity. As the market crumbled before their eyes, “one of the floor traders came by with a list of what were thought to be the most highly margined stocks on the Vancouver Exchange.” Lo recalls the man telling everyone, “This list is going to be hit by waves and waves of margin calls. Any uptick, just sell it short.”

“So we went to work,” says Lo. “The week after the crash was horrible ... just rounds and rounds of liquidations. And most of those things never came back.”

The Black Monday incident helped Lo realize that she’d been wise to learn how to trade by working as a broker inside a firm. The mind-sets of a professional trader and an amateur trader are often totally different. Pit a professional against an amateur, and the professional will likely win every time. In one of a collection of essays you’ll find on her Web site, she writes:

A professional trader probably began studying the market and its psychology at a relatively young age and gained employment in the stock brokerage business in order to make contacts and to develop the skills required to consistently make trading profits ... A retail trader is typically a person with a real job, someone who saved up to take a punt on hope that Lady Luck might parlay the spare cash into a tidy sum.

The difference between the future professional trader and the punter is apparent at the beginning of the long journey. One believes that trading is a learned skill based on the disciplined application of knowledge, risk, and money management. The other believes the market is a gamble, so what the hell, and comes to play with whatever he or she can afford to lose. In the game as we know it, the pros are few and the punters are many. Given the attitude, no wonder the market is viewed by the majority as a lottery.