The Responsible Trader

THE RESPONSIBLE TRADER – THE GURU’S TEMPTATIONS

(Meditations on my Life as a Trader, Author and a Trade  Services Provider)

 

Gotcha!    I bet the word temptation has conjured a lot of wild images in your mind. If you think this is going to be a tale of scandal and mystery you are mistaken.  Except for some, I am not going to talk about specific persons but share my personal experience and observations on my life as a Trader, Author  and a Trade Services Provider.

Whether you  are a GURU or a GURU-WANNABE  or just a NEWBIE still trying to find your way around the Philippine stock market please read on. There might be a lesson or two you can learn from the discussion that follows.

 

THE FIRST TEMPTATION – THE TEMPTATION TO BE A GURU

From being a word with very good connotation, the term “GURU” has been distorted in the Philippine trading world to mean someone who engages in “BUDOL” activities and takes advantage of his followers.

In my years of trading, I  have seen a lot of “GURUS.” They come in all sizes, shapes and forms. They all start out good but somewhere along the way some of them go astray.

Once you gain some following, the temptation to take advantage of your followers enters your mind.  You start thinking how you can personally benefit from the situation.  The thought of “front running” – buying ahead of the pack and then dishing out your recommendations is very tempting.

After I gained some following, I anticipated that I might soon find myself in the same situation. This is the reason why I have The Responsible Trader’s Creed: ONE THING I WILL NEVER TELL IS WHAT AND WHEN TO BUY, HOLD or SELL.

As a Premium Contributor of BooKAKA, I have always emphasized that my main objective is to TEACH people HOW TO TRADE,  not TELL them WHAT TO TRADE.  This is the reason why I have the TRT MRS (Most Requested Stocks) where Premium Subscribers are allowed to request for Stock Charts and Analysis of stocks they have in their portfolio or stocks they want to buy every week and I give priority to the Stocks that are requested by the Majority of the Subscribers. I would rather analyze for them rather than tell them. This enables me to maintain my position and keep their trust and confidence.  As a Premium Contributor  the two qualities you should have are a HIGH DEGREE OF INTEGRITY and a HIGH LEVEL OF CREDIBILITY.  More over, being a CPA I am bound by the Code of Professional Ethics: DO YOUR CLIENT NO HARM.

 

THE SECOND TEMPTATION – THE TEMPTATION TO DISPARAGE THE WORK OF OTHERS

When you get involved in Stock Trading Services  whether it is writing books or providing trade support, whether you like it or nor,  you are automatically thrust in a world of competition   You are tempted to disparage the work of others to prove that you are better than them to gain more patronage.  In the business world, we call it Comparative Advertising.

As a Premium Contributor, I have been approached by traders who claim that they are a Subscriber of so-and so Newsletter and/or  they are a member of so-and-so Club and they want my opinion because they are not satisfied with the recommendations they are getting. I always want to work prospectively. I refuse to comment on other people’s work because I am not privy to the trade setups and the prevailing situations when the recommendations were made.

On other occasions, my book, “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market” has been compared to the  books written by other Filipino authors.  During my promotion for the book,  I have always been asked how it compares to the “Trading Code” written by Jason Cam. The rivalry between the two books was further heightened when both authors were nominated and became finalists to the 2^nd Angat Filipinas Financial Literacy Awards – Influential Author of the Year Award.

 

My response has always been: “the two books are complementary.”  I have read Jason Cam’s work  “The “Trading Code”  and it is an excellent work on Technical Analysis. My book covers the same topic and more. Being a CPA, Fundamental Analysis comes naturally to me so I have included it in my book. Furthermore, I wanted it to be comprehensive so I covered more topics like  Money Management, Trading Psychology, Trading Strategies and Street-Smart Trading. Some have even given it the moniker “The Bible of Philippine Trading.” This inspired me to use the ARMOR OF GOD (The Helmet of Salvation, The Breastplate of Righteousness, The Shield of Faith,  The Shoes of Evangelism and the Word of God as the Sword) as one of my posters in promoting the book.

 

 

 

THE THIRD TEMPTATION – THE TEMPTATION TO THINK THAT YOU KNOW IT ALL

Once you start improving in your trading, having more wins than losses, you start thinking you are a “GENIUS.”   You start thinking you are the best, better than the rest  and  already have the best system.

This kind of thinking puts you on a dead end. Life is a series of continuous learning and if you stop doing so you are going to be left behind. As I stated in my book, in this world of rapidly-changing technology, learning is like rowing upstream. If you do not keep abreast with current developments you are going to fall downstream and overtaken by others.

When I started my website, I have posted this in the Tab “About The Responsible Trader”, to remind me to avoid falling into this trap:

This “NEWBIE FOREVER” attitude helps me to avoid this temptation and leads me to the path of continuous learning and self development.

 

THE FOURTH TEMPTATION – THE TEMPTATION TO SHOW OFF

The temptation to show our accomplishments is human nature. More so in trading. The temptation to show to the whole world to prove you are very good in trading is very great.  This is probably the reason why we see a lot of Green Portfolios being posted during a Bull Market.

However, this practice has not done anybody any good.  Those who have posted their Portfolios have been subjected to ridicule and accused of having them “photoshopped”,  edited in a manner to show very good results.  I could only feel pity when someone who shared his trading knowledge earned a lot of flak when he gave actual examples by posting screenshots of his actual trades.    Instead of  being grateful for the knowledge he shared, more people focused on his “allegedly edited trade results”,  even hurled insults at him and discouraged him from further sharing. I say so because  I have not heard from him since then.

Furthermore, and I think this is the most important part,  in the past crime syndicates and lawless elements spend a lot of time, money and effort  fishing for this kind of  information on prospective  targets.  For me, the practice of sharing your portfolio  is like volunteering information and sending an invitation to them.

You should know the limits  where the Need for Transparency to the Public ends and where your Need for Personal Privacy begins.

 

THE FIFTH TEMPTATION  – THE TEMPTATION NOT TO TRADE

I would not be true to myself if I deny that this thought did not cross my mind. Sales of my book has given me good returns. In addition,  subscriptions to my BooKAKA Premium Account has provided some gravy. These are sources of income that do not entail much risk. Trading is a very risky activity.  It does not matter how good or how much time you spend doing your analytical work.  The results of your trade are still based on PROBABILITIES and you still have to deal with a lot of UNCERTAINTIES.

However, this reminds me of a poster I saw in the board  room of one of the company’s I worked with. “A SHIP IN A HARBOR IS SAFE BUT THAT IS NOT WHAT SHIPS ARE BUILT FOR.”

 

Applied to trading, this means A TRADER WITH NO POSITION IS SAFE, BUT THIS IS NOT WHAT A TRADER IS MADE FOR.  Once a trader, you are always a trader.  Although the sources of income I mentioned above are relatively risk free, nothing beats the satisfaction and sense of accomplishment derived from  a well- planned and well-executed trade. Trading is my passion and it will remain so for the rest of my life.

 

Taking everything altogether, I can say that being subjected to these temptations is not really bad after all.  On the contrary,  being able to transcend and overcome these temptations makes you a stronger and better person.   It is only when you succumb to these temptations  that it becomes the opposite with dire consequences not only for you but for others as well.   In the end,  It is only you and you alone who can make the final choice.

 

Have a blessed weekend everyone!