Brendon Chan (@brendon_chan) is currently an undergraduate at Fordham University pursuing a B.S. in Business Administration and a dual concentration in Business Economics and Finance.
By Brendon Chan
I named my post The Darker Side of Finance not because I think Proprietary Firms are evil, but rather the lack of knowledge most students know about them because they are quite secretive; so secretive that it seems like they are hidden in the shadows of Wall Street. I am serious, go Google Proprietary Firm and take a look at their websites; there is not a lot of information on or about them.
Be that as it may, I want to shine some light about prop firms and what I learned at SMB Capital this summer:
1. Reading the tape
Reading the tape is a study or a skill that is used to understand the price action of a stock, the bid and the ask.
2. Controlling your emotions
Sadness, happiness, greed, and fear are a trader’s greatest weakness; this is their Kryptonite. If one cannot control their emotions, then this will be your GREATEST weakness and you will lose a lot of money, why? Because the market does not care who you are, if you broke up with your significant other, and what you are studying at school, it will destroy you if you show weakness.
You have to be fast at EVERYTHING! There is an enormous learning curve in trading and you have to learn it fast! You have to act fast, type fast, and talk fast! Why? Because the stock market is fast and if you are too slow, it will eliminate you and your account.
4. Make friends
One of the best ways to learn about the market is to share and bounce ideas off of a peer on the trading floor or after work. Sharing charts and trade ideas is one of the best and fastest ways to help with the extreme learning curve because one can never learn enough about the markets. Also, if you share ideas or a stock trade with someone, they might share one back and it is always good to have more than two eyes on the market because one can only see so many stocks at once.
5. Similar to sports
Trading is like a sport; it takes time, practice, and requires healthy habits. One does not just simply wake up and become an amazing trader; they have to practice every day if they want to be good at it! If you want to go to the NBA, you would have to shoot hoops, practice handling skills, and stay healthy so you have the energy to perform. Trading is the same, except you would trade everyday and practice reading the tape instead. Healthy habits are important, eating healthy, exercising, and getting enough sleep helps a trader because it reduces stress and they need to have enough energy to watch the market all day.
Intense! Thanks Brandon for sharing your tips and telling us about your experience.