Charles Poliacof has been a trader for more than 12 years. He’s trained hundreds of traders. manages between $10 and $20 million, and is considered one of the top traders on the Street. This week, he talked to market coach Doug Hirschhorn about his approach.
Bonus: On the Fear of Missing Out
“As a professional trader, this is probably the one element I’ve wrestled with most in my career,” says Poliacof. He says a fear of losing is healthy, but a fear of missing out can be destructive. Why? Because you end up making “shot” trades.
Everyone has an approach. If your viewpoint is to focus on the fundamentals, then you’re going to say a certain price multiple to earnings, or EBITDA, or macro turn, these are all the things that make you want to put out a position.
It’s the same in the short term trading world, says Poliacof. “If certain technical indicators are hit, a confluence of quantitative elements that are hit for me, then I put on the trade. But, it’s that ‘I’ve missed out on one opportunity, and I don’t want to miss out on the next,’ that forces me to relax my discipline.”
The end result: over trading and positions you normally wouldn’t take.
Self awareness is the most important thing. Know your triggers. “Know what it is that goes off inside of you, that creates this series of events,” says Poliacof. “For me, it’s the fear of missing out. Instead of being proactive, I become reactive.”
What does he do? He walks away…literally, even though there may be an opportunity to make money. “I’m not thinking clearly, and that means I shouldn’t be participating in the market,” he says.
If everything doesn’t line up the way he wants, there should be something going off in his mind. Sometimes that means taking a huge step back. “I’ll cut back to five percent of my shares in capital if I need to be involved. Even then,” he adds, “that ends up being a loser.”
The best advice he can give? “If you’re not where you need to be, simply take a step back.”
Tags: Charles Poliacof, Doug Hirschhorn, dr.doug, economy (global), economy (u.s.), Investment Strategy, Stock Market, Stock Options, trading strategy, Trends & Fads
