30 Lessons from Million Dollar Traders by Lex van Dam

van dam 00Have you heard of Lex van Dam’s Show “Million Dollar Traders”? The idea behind this TV Show is to give 1 Million US Dollars (of Lex van Dam’s own money) to novice traders and let them run their own hedge fund. The candidates received training for 2 weeks and all the necessary tools in order to make some profit within 8 weeks. There were two qualities that Lex van Dam was looking for: 1) the ability to handle stress and 2) being good at math. Out of 1,000 applications, 8 candidates were selected and only three (with very different backgrounds!) were able to stay until the end. Find out what the 30 lessons from Million Dollar Traders are from which we can learn.

30 Lessons from Million Dollar Traders

 

Who is actually Lex van Dam? He is a Dutch Hedge Fund Manager, investor, and writer specialising in trading in equities, financial derivatives and currencies. He was born in Friesland, studied econometrics and investments at the University of Groningen (NL) and lives in London. He started his career in 1992 when he was trading stocks for Goldman Sachs. He worked there for ten years. Lex van Dam’s latest position there was as Head of the Equities Proprietary Trading Desk. He worked also for GLG, which at that time was Europe’s largest Hedge Fund. He has been a Hedge Fund Manager at Hampstead Capital LLP, London, since 2007. He also runs the Lex van Dam Academy in which you can learn how to trade FX, stocks, commodities and technical strategies in one comprehensive course. It includes HD videos, specialist expertise and exclusive tools.  Check it out on his website for more details: http://www.lexvandam.com

Do you want to become a Trader, too? Then don’t miss the opportunity to watch these 3 videos (in total 3 hours) of “Million Dollar Traders” which will give you a real insight into the daily job of a professional trader. Let’s find out what the most important 30 lessons from Million Dollar Traders are:

# 1 – Every decision counts.

# 2 – If you can predict tomorrow’s newspaper, you will be very rich! It’s all about being able to predict what is going to happen next.

# 3 – There is no right way to trade. There is no rulebook.

# 4 – It’s important to stay up to date with current events. You need to be aware of what is going on in the world, e.g. wars, oil prices going up, weather conditions (draughts, floods, hurricanes), politics etc. All these kind of events can have a significant impact on the financial market and their stock prices. Information is everything, especially if financial markets are particularly volatile.

# 5 – There are two groups of people. Those who always want to be ethically correct and those who don’t care about it, as long as there is some profit to be made out of it. They also think if they don’t act, someone else will act, so why giving others the opportunity? By the way, to which group do you belong to?

LexvanDam3Some people are struggling with the fact that being a trader sometimes means to hope for the value of a company to go down. This would basically allow them to make some profit by buying their shares at a cheap price. You need to know what your priorities are. Be clear what is important to you. If you want to survive in this tough industry you need to be cold and ruthless.

# 6 – The trading industry is a faced-paced environment in which you need to be constantly alert. You also need to work on your strategy before the financial market opens at 8 am.

# 7 – If you are being given money to invest, have the right attitude to manage it. Think and act as if it would be your own hard earned money. Take it seriously and behave in a mature way!

# 8 – Finding the right timing is crucial in this business. The art is to know exactly when to buy and when to sell in order to be profitable at all times. However, bear in mind that no trader is able to always make profits. Accept the fact that it’s simply impossible to always be on the winning side. The question is: will you win more or lose more….

alexvandam5# 9 – You need to take risks to make money. If you don’t invest, you can’t make money.

# 10 – It’s important to read the news. It will allow you to spot opportunities to make quick profit or to avoid a complete disaster.

# 11 – When trading you need to keep many things in mind. You need to do your research, your analysis and at the same time keep your emotions in check.

# 12 – You need to be disciplined. Having long lunch breaks is not acceptable, you need to be in front of the screen to see what is going on. Situations can change unexpectedly and quickly within few seconds.

# 13 – There is a risk in every trade. And a lot of trading is connected with pain. Not everyone is born to work as a trader and not everyone can take it. There is no time for crying in this kind of business. The negative mood of one person can distract others and have an impact on other people’s moods and their performance. It’s not a summer camp, you need to stay focused. If this is not the right job for you, move on to something else that you feel more passionate and positive about. Be honest with yourself! Don’t be scared to take that step. Learn from your mistakes and experiences.

# 14 – To reduce the risk you need to find out when the best moment arrives for selling your shares.

# 15 – Build a strong personal portfolio. Do it in a logical, strategic and independent manner.

# 16 – “Selling short” is a complex process and includes: borrowing, selling and buying back shares; it allows the trader to make a profit when the value goes down.

# 17 – Don’t allow yourself to get influenced too much by what others are telling you. You will lose focus in the end. Often it’s about following your instinct.

# 18 – Generating ideas is good, but you need to put them also into practice.

# 19 – You should not hedge for just 10 minutes, that strategy doesn’t work.

Lexvandam4# 20 – Higher oil prices means higher costs, forcing prices of many stocks to slide.

# 21 – You can be the best trader in the morning but turning into the worst trader by the evening. It’s always a highly unpredictable situation.

# 22 – There is no space for soft people. You can’t let emotions get in the way. Be focused and don’t distract other people with your personal or corporate issues.

# 23 – Trading doesn’t change the world.

# 24 – You can’t learn this by the book. It’s all about the experience. It’s an unsentimental job with many unwritten rules.

# 25 – A good Hedge Fund Manager needs to be able to sell short as well as long, if they want to make a profit. Getting the balance right is the art.

# 26 – Everyone has their own unique management style. For some people it’s important to have a good relationship with a broker on the phone, for others it’s about being direct and keeping the conversation brief and focused on the task. The advice given was to be firm with your broker in the first week of trading in order to be respected and taken seriously in the future.

# 27 – No matter how much pressure you are under and how demoralized you feel, always try to stay calm. Your job in this profession is to make first the money, not necessarily friends.

# 28 – If you hold on to bad stocks, you need to get rid of them – no matter how much pain you will feel. Similarly, if people over a longer period of time are not performing as expected, you need to let them go. Instead give the money to those people who are performing well in order to increase profits.

# 29 – Using F-language is never appropriate. You surely don’t impress anyone with it. So stay professional at all times.

lexvandam2# 30 – Just walking out in an emotional manner after realizing that you can’t do the job (especially if you lost money in the process) is a sign of weakness. If you have been fired due to your poor performance, look at it in a realistic way and try to keep your emotions under control. One of the most important skills that you need as a Trader is to be emotionally very well balanced. If you are emotionally unstable, being a Trader is not the job for you. Learn from other peoples’ experiences. Seriously!

You can follow Lex van Dam also on Twitter @lexvandam. Now don’t wait any longer and watch all three episodes!

Watch all the episodes of Million Dollar Traders here

 

 

What was your biggest takeaway today from these lessons from Million Dollar Traders? Which lesson was most valuable to you? I would appreciate it if you could leave a comment and let me know. If you know anyone who could benefit from this article and videos, make sure you share it. You’ll be helping them out and me too! Thanks!

 

Author: Karin Schroeck-Singh

Karin Schroeck-Singh is a trilingual Career Optimizer at www.Careerheads.com. She has an MBA from the University of Leicester (UK) and gained 20 years of international work experience in various industries in Italy, the UK and India. Her passion lies in creating multilingual, high-quality content in career matters, giving highly engaging public speeches and helping job seekers to optimize their career by providing professional coaching. She is the author of several ebooks, among them “44 Tips for a successful Video Interview” (http://careerheads.com/product/ebook-44-tips-for-a-successful-video-interview/). She has written several career and business articles for international HR and Marketing companies. Her favourite motto is “Learn from anyone, anywhere, anytime!” Follow her on Twitter @CareerHeads.

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