Avoiding Burnout in a Hedge Fund Job

If you want to stay motivated in your hedge fund job, through good times and bad, you’ll find sound advice in a recent guest article by Brett N. Steenbarger, Ph.D. in Business Insider.

Steenbarger is a Clinical Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY.  But he’s also a professional trader at a U.S.-based hedge fund.

First, he acknowledges the contribution of another post by Dr. Jonathan Katz, who pointed out that the motivation to make money is simply not good enough to sustain a professional (or even amateur) trader over the long term.

That’s because “At every firm where I have ever worked as a trading coach – and those firms include investment banks, proprietary trading firms, and hedge funds – I have seen skilled, successful traders go through lengthy losing periods,” says Steenbarger. If making money is the sole determining motivator behind why you trade, these normal and predictable drawdown periods will have a damaging effect on your sense of self-worth. In other words, you’ll start feeling like a loser, and that’s likely to turn mild setbacks into protracted trading slumps.

Instead, Steenbarger says your gratification, much like that of a physician, teacher, or builder, must be separate from the monetary rewards. For him, it’s all about mastery: mastering the market’s complexities and the ongoing challenge of adapting to a changing environment.

In this context, making money is simply an affirmation of one’s mastery at a given moment. While drawdrawns and setbacks are something to be “embraced” because they show that we have lapsed in our mastery of our craft, or the self-mastery of our own goal-setting and self-discipline.

“Perhaps markets have shifted regimes and are responding to new factors; perhaps we have failed to remain consistent in the best practices that generate ideas, translate them into trades, and manage those positions.  Either way, losing money has a purpose:  to make us better.  It does not have to be a threat to self-esteem:  it can be an opportunity to expand oneself,” Steenbarger says.

It’s why he was writing his article early on a Saturday morning. And why he woke up at 4:30 that morning to do research on identifying why market corrections with low correlations among sector groups and low volatility were taking place.

What about you? What drives your trading? Mastery? Passion? Would you spend more time studying the markets, if you could? Add your comments below.

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