Have you ever worked for others before? If the answer is yes, chances are that you might have encountered one or more bad bosses. Putting up with a bad boss at work can be miserable and frustrating. It might be one of the top reasons why so many workers are quitting their jobs and work for themselves, such as becoming a retail stock trader.
If you are starting the journey of stock trading, there are 4 bad manager traits that could actually make you a more profitable trader.
Micromanagement
Many of the bad managers share this behavior – micromanagement. They want to be in total control of every aspect of the business, looking into and trying to manage every single detail, including directly dictating how their employees should work, down to the most granular level.
While this is certainly a very frustrating manager trait to deal with, micromanagement is necessary for stock traders when managing their trades.
Most profitable stock traders are in total control of their positions most of the time, pre-defining steps to anticipate all possible movements, such as when to enter a position based on risk/reward ratio or particular indicators, when to cut losses if the stock falls, when to take profits if it’s on the way up, or what to do when the stock moves sideways. The shorter timeframe the trader has, the more micromanagement will likely be put in place.
A swing trader with a timeframe of a few days or weeks may not need to micromanage their trades as much. Whereas for the day traders who get in and out of stocks multiple times within the same trading day, strategies will be set at a more granular level. Not only will they be monitoring stock movements minute by minute, second by second, some of the top day traders would even pick which particular exchange should the trades be routed through in order to minimize transaction fees and slippage.
Focus on Short Term
Overly focusing on short-term results might create tension and stress at a workplace. Imagine a manager relentlessly chasing short-term sales results at all costs, and judging their employees’ performances based on these short term indicators, without taking their past performances and long term potentials into consideration.
A good stock trader, however, will definitely need to be able to make quick judgements based on short-term signals to maximize profit or minimize loss. There’s no incentive to hold a stock if it’s in a losing trade, it doesn’t matter how much profit the same stock has made in the past, you need to cut the loss when it reaches your pre-defined exit level and move on. Conversely, a penny stock that performed poorly in the past will be considered a good stock to trade for the day, if there’s a surge in trading volume and volatility.
Favoritism
Have you encountered managers who play favourites? They favour certain employees over others based on personal relationships, personality or work style.
Although favouritism is a sign of an unfair and toxic manager, a good stock trader definitely needs to pick favourites when it comes to trading. With so many stocks and trading strategies out there, it’s impossible to learn and trade all of them.
Most profitable traders usually have a list of preferred strategies and types of stocks to trade, based on their personality, trading style and performance. There are profitable traders who have been trading just one set up with one type of stock for their entire profitable trading career.
Use Employees as Pawns
As a manager, staying objective and focusing on business results is one thing, treating employees as pawns or replaceable resources to achieve goals is another. Managers who don’t value their team members won’t be able to build a successful team and business in the long run.
From traders’ perspective, however, treating stock positions as no more than profit-making instruments is a key to success. Without emotional attachment to the ticker symbols and biases towards past performances, it’s much easier to quickly jump in a trade if a set up is met despite the ticker’s past history, or cut losses without hesitation when a trade starts to derail, regardless how beloved the stock is. Poor trade entry timing and loss-cutting delay are two of the main reasons why traders lose money.