Learn To Trade As A Hedge

Learn To Trade As A Hedge

This post was originally published 8 February 2012… however, the conclusion(s) remain the same.

If you take the time to learn to trade as a hedge, it can be an extremely effective way of mitigating the risk and volatility of a shifting (some say dissolving) job market. 

I spent a lot of time this week looking at the “improving” employment data and reading about the “surprisingly strong” state of the U.S. economy. It seemed everywhere I turned, a pundit was spouting off about the return of the economy to a time of tight labor markets and unmitigated strength.

Yet, in talking to friends and former colleagues (all of whom are nervous about keeping their jobs) I’m astounded by the sheer magnitude of the disconnect.  And lest you think me the friend of a bunch of unemployable malcontents, you should know that the friends of whom I speak are all smart and highly educated/trained/skilled.

I’m not interested in attempting to parse the madness and tell you why the job landscape is so tenuous.  Local and national “professional” media do a sufficient job of pushing the public closer and closer to slitting its collective throat with that narrative.  I prefer to spend my few minutes of your time sharing a couple of reasons why taking the time to learn how to interact with the securities markets can be an effective salve for the very real apprehension facing employees.

  • First, trading need not be an all or none activity.  As with other things, the market is impervious to your status as full-time trader, part-time trader, professional, amateur, or hobbyist.  The market does what it does and your interactions with it determine your level of success (profitability).  Novice or veteran… idiot or savant, the market is UNAWARE of your status.
  • Second, you can learn to trade as a hedge because trading is an exceedingly learnable SKILL.  No matter who you are or what your background is, I’m certain there is something in your life that you once considered insurmountable…riding a bike, driving a car, public speaking, managing a team… that you now consider an easy, mindless activity.  I contend that ALL trading strategies with successful, long-term track records are, at their core, simple.  As a result, I emphasize simple, logical approaches to short-term trading, the mechanics of which are, by definition, easy to grasp.  These strategies become second nature with sufficient practice.
  • Finally, as any current (or former) resident of South Florida will tell you, the best time to develop an emergency or “backup” plan is BEFORE its needed.  I.e., before a new storm leaves the coast of Africa.  I know of several traders (including myself) who began developing their trading approach and style while working with a corporate employment safety net.  Because of the fractal nature of markets, starting with swing trading and moving to day trading is a natural progression requiring only a small adjustment to the strategy of a price action trader and a requisite increase in Emotional Capital™.

So if you’re close to retirement, but unprepared… or a corporate indentured servant… or a road warrior… or an artist looking to support your art… or an entrepreneur looking to fund your latest ‘preneur… take a look at short term trading… at worst, you’ll figure out that you hate it… or that its not for you… 

Or maybe, you just might find help/an escape route. 


The Trader