 Welcome to the Market Watch podcast by Amplify Live, where you can access the latest market insights with me, Anthony Chung, the head of market analysis, and joined by Head of Trading, Piers Curran, getting you up to speed on what mattered in markets this week. Hello, and welcome to episode 14 of the Market Watch. As ever, I'm joined by Head of Trading, Piers Curran. What we wanted to do with today's podcast episode is, if you go back to episode 11, we talked about what makes a good trader. And thankfully, Piers, we had some really great feedback, lots of comments on that one specifically, because I think it really resonated with a lot of people. There was this idea about what was the key component, and one of those was an ability to take risk and deal with loss. And so on that particular point, what I wanted to do was you're a guy with 20 years experience, and I'm sure there's been highs and lows along the way. And just really delve into that, because I think there's a lot that the audience could really take away from some lessons and points from your experience. So, yeah, I guess the topic title then is kind of the lessons learned from loss and your biggest loss and experiences around that. Yeah, absolutely. It's such a, I don't know, trading is such a, it's such an interesting job. It's such an unusual job, I think, and it makes it very hard. Some of the aspects of it make it incredibly hard to deal with. I mean, it's just the sort of, especially if you're kind of like I was doing for most of my careers, like short-term looking to trade, short-term volatility, macro-generated volatility. A lot of my trades were intraday. So, you know, you're holding positions for anything really between, like literally a few seconds sometimes, you know, up to, let's say, four, six hours. All right, so as an intraday trader, but you know, the ups and downs you mentioned there, that kind of roller coaster and the emotion, and it's an emotional, it's not just a P&L roller coaster, of course. It's an emotional roller coaster along with that. And I think the frequency of the ups and downs in a trader's life is much, much, much greater than the frequency of the ups and downs in other, in most other jobs, you know, there aren't many other jobs where you can work your absolute hardest all day, get in early, grafting all day long, you know, stay late, you know, really put in the hours in and then finish that day worse off than when you started. You know, there aren't really many jobs like that. It's like, we'll, we'd always talk about a guy building a house, you know, it's like you spend all day building a wall, then right at the end, you get your sledgehammer out and knock it all down. And actually don't only knock it all down, then dig out the foundations as well and throw it away. So you're actually worse off than where you started. So I think from that reason, trading is incredibly difficult to kind of deal with, which is why it's so difficult and why most people who kind of attempt it sort of fail, but of course, loss is, as we said in that podcast before, loss, I think is, you know, you can't really start to, to consistently make profits until you've really learned how to lose. Now, no one, let's just make this clear. No one wants to lose, you know, no one likes losing. And so, but it's, it's an, it's, it's almost an everyday reality of our existence, yeah, especially if you're trading short-term. And so, you know, I wanted to talk about how I've experienced loss and, you know, how have I been able to deal with it and get over it and, you know, move on. And so, yeah, perhaps we can kind of talk about, well, what's what my biggest loss is? I mean, yeah, I mean, everyone, you know, there's always like an imprint, right? Say, when you broke up with your first girlfriend or you had your first big argument or something like that, your first fight at school, you know, it's not that we, we don't think about it consciously all the time, but obviously we compartmentalize it, we can probably recall it. So I'm sure there's one trade or one period that you can remember where there was a, there was a significant loss or not P&L, but maybe loss of confidence. And is there one that really sticks out for you? Would it be weird to say no? I've definitely lost money and I've lost a lot of money. I've made more than I've lost though, but I don't know whether either I'm really good at dealing with it or it's buried back there somewhere. And I don't know, we need some kind of psychiatrist to dig it back out. But I know that I've been through weeks, obviously, there's single trades. Obviously, there's days, there's weeks, I might even go as far as to say, there's a month, you know, we've very much defined our performance over those kind of time periods. It's like, what's my P&L for the day? What's my P&L for the week? And certainly for the month, that was the big one in our business. We'd always be looking to be, you know, you definitely want to be profitable over a month, right? And that's talking about consistency. You know, if you're not profitable after 20 days of trading or something's gone wrong, and what's gone wrong is either you've taken a massive hit at some point, and you've let that discipline slip and it's really hurt. Or you're not cut out for trading, right? Or, you know, the strategies you're trying to run are just not right. Or, you know, you're just not able to deal with the emotional side. And so you're often in that irrational zone, which means you're making a lot of mistakes. But I've definitely had big losses. And I think, you know, what's important, I think, the most important thing about dealing with loss is actually recognizing, it's like self-awareness. It's recognizing how you're feeling. And it's identifying, hang on a minute, right? I recognize this feeling. Okay, I know this. This means I'm in a bit of trouble here. This means actually the danger level has just ratcheted to max. And I now need to extract myself. Now, so what type of feeling? You mentioned like breaking up with your first girlfriend, right? Or it might be, I don't know, you're about to walk into the exam room hall. You're about to take your A-levels or you're about to take your finals at university. It's basically a moment where it's like a life-changing moment, right? Where something is about to happen and it could change your life. And there's quite a unique loss of, it's like when you lose control. Another analogy might be, when you're on a roller coaster and you just go off the big dip and you're heading down that loss of gravity, that kind of sense of actually, hang on a minute, I'm not in control of this situation and this could really hurt. And if you're trading and you're trading huge sums of money, it goes beyond just this is going to hurt. It could be actually this could change my life. This could end my career. That's the weird thing about being a trader. If you're not in control, you're only ever seconds away from ending your own career, right? So it's quite a weird situation. So I always find you've got with experience now, don't get me wrong. I've lost control and dealt with it badly and lost a lot of money. And so it's about coming back from that and making sure it doesn't happen again or making sure that next time, I control it better and I lose less. It's about minimizing your losses. And the only way to do that is discipline and control and self-awareness and recognizing when you're in that danger zone and having that discipline to pull yourself out of it. That means cut the trade, get out, walk away. I always say the best form of risk management is to physically separate yourself from your trading terminal. That's harder these days because you can do it on your phone, of course, but throw your phone in the bin or whatever it might be. So I've lost definitely lots of money. And I think the thing is about how do you deal with it? Because the problem with loss, it's not just the loss of money right there and then. It could, if you don't deal with that properly, that emotional feeling and reaction to that event will then carry on and continue and stay with you and heavily influence your decision-making in the future, your decision-making the next day, your decision-making the next week. And when you start to get in that zone of desperation, trying to make your money back. If you ever think, if you ever step back and be honest with yourself at any moment, like, hang on a minute, I'm just desperately trying to make my money back here rather than, hang on, I'm doing some logical analysis and I'm making some trading strategies based on that analysis. If you're desperate to make my money back, you're dead. I mean, the irony, the great irony, the more you try to make your money back, the more you're going to lose. So I think. It's just, it's so funny how it's so even outside of trading, you know, I was just kind of, maybe the scars cut deep, but it sounded like, you know, how I felt when I did break up your first girlfriend and you're like, you want it so much. And you're like, why did it go wrong? And you're chasing it, you lose all rational control. And then you know what you should do, you just can't do it. I'm taking it, you got dumped. How did you know? Well, you've got to learn from your mistakes. But I like, so that's perfect. If you get dumped, it's a really good analogy. If you get dumped, if anybody has been dumped, there's so many different emotions. Like when I lose money, it's like, there's like embarrassment. You know, it's like shame. It's like, hang on, I don't want to talk. I don't want to admit to my mates that I've just been dumped. So hang on, I'm going to really bottle this up. And I'm going to, I don't want to tell anyone. I want to go and just hide in a black hole somewhere. And when I come out, hopefully magically, this whole situation would have been just a bad dream. And actually it didn't happen. So it's like embarrassment, shame. And the problem with trading, traders, it's like you're trapped a little bit because do you want to talk to your colleagues and confide in them and use them as a bit of a counselling sort of session. But then, you know, it's hard to admit to them that you've made an error or it's embarrassing that you've performed like that. But then outside of the trading floor, it's incredibly hard for people to, if you've never traded, it's really hard for people to understand, you know, really what you're going through. So either, it depends what type of person you are, either you're fine and you'll blurt it all out and you'll get it off your chest. A member will have a good example of this where he lost a lot of money and then one of the risk managers just fished him off the desk and took him out for some beers. And the risk manager called it, let's go and have a wake to kind of mourn the death of this money and to have some closure and to say that money's gone. You know, you can't get it back. That's gone. So let's just take a time to mourn it and learn some lessons. But then very much that's gone and that's behind me. And now, right, let's move on. So that mourning process is getting very morbid now, but that mourning process, people deal with grief in many different ways, right? And that's an important thing as well. There is no uniform one way here because I know you've got some stories of how traders over the years have managed that frustration or loss. Now you've got some good stories there. Well, yeah. And it's so interesting human beings and just how different we all are and why life is so interesting. But yeah, that was a great, very one of my vivid memories of life on the trading floor was a Canadian guy. I won't mention his name, but in case he's listening, but hi, Andrew. But so he was one of the best traders on the floor. You knew who the best ones were and he was right up there. He didn't like the top three. And the way he dealt with loss was he had a stack of keyboards like propped up against the wall next to his desk, not plugged into any computers, just like three or four keyboards. And when he lost or when the market did something he wasn't happy about, he would stand up, he'd pick up one of his keyboards and he'd start smashing it on the desk. You get buttons flying off everywhere and he's like going through that rage for like, you know, 20 seconds. And then he'd just calmly put the keyboard back on against the wall and sit back down and then get back on with his day. So he would really vent in a very visual way. I mean, I was very different. I was like the opposite end of the spectrum to that. I would internalize everything. As I said, I mentioned embarrassment and shame. I was very much one of those people. I didn't want to admit to my colleagues what was happening. And then so actually for me, the release for me was actually, I mean, at the time when I was trading, you know, perhaps at my peak, if you like, I had kids. I was having, I had a young family. And so I had two kids. Like one was like six months old and the other one was sort of two years old. And, you know, one great way, I think one really important thing for traders is to detach yourself from that job, that existence of being a trader, because it's so addictive. It's like, you know, it's like, we're talking about addiction here. Let's not shy away from this. Trading is very addictive. It's like gambling, all right? And people get into all sorts of problems with addiction. And so I think you need a way to release yourself and step out of that world and into something else. And for me, my young family was the perfect scenario because it didn't matter if I'd made a lot of money, lost a lot of money, was flat on the day. You know, when I opened the front door at home, you know, my six-year-old son doesn't care, right? Well, that's what's happened to me. And they require, you know, what young kids are like, you know, very well. But, you know, they require your full attention and it's just such a release. And it's, for me, that was incredibly, looking back, I didn't perhaps appreciate it at the time, but looking back, it was a really healthy reality for me to step out of that world of profit and loss and just entirely switch off. And that helped me, like, if I had a bad day, back home, play with the kids, great. And then, you know, it helps you kind of separate it and deal with it. And then the next morning, you're back into the office and, you know, you've dealt with it and it's gone, right? And now I'm going to move forwards without that hanging, without that baggage kind of hanging on me and influencing how I behave. Just a question that's kind of slightly tied to this is, were you one of those people that had like a routine that helped you stay on point? You said about almost like segregating like your professional and your personal life and that kind of helped manage the psychology. But was there a routine? And if so, what was that? And were you, and again, this is very unique to different people. Some people are a slave to it. Some people are much more like to freestyle it. But was that beneficial for you, that process or not? I'd say that I would more like have a routine rather than a, I wasn't much one for, you know, I'm not like superstitious or anything. I wouldn't have a routine in the morning, like before even getting to work. I know some people, you know, almost at the superstitious, you know, they'd always make sure they're putting, like Sam North would always put his left sock on first before his right sock. And God forbid if he got it the wrong way around because then the whole day is going to be a disaster. I was definitely nothing like that, right? So I was quite, I wasn't particularly one for, you know, I've got to get on the same carriage of the tube train each day. Otherwise I'm going to lose all my money. You know, I was definitely one that I'm in control of my money. I'm in control of my profit or loss. Did I get on the right tube train? Has absolutely zero to do with my performance. And I think maybe superstition, I don't know, it's a way of people perhaps dealing with it. But that was never for me. So, but I did have a very key process for each trade. And I think there's a lot of the best parallel here is sport psychology. And it's like, how do you deal? Like if you're operating in an environment of high risk, uncertainty, you know, that it's every decision you make is absolutely critical. And there's a huge amount of pressure. So you're actually, you're in the conditions where making the best decision, it couldn't be any more difficult to make the best decision at that moment. And so how do you deal with that? And for me, it was that process around the trade where it's like analysis is making sure I'm doing my macro analysis and my technical analysis for each trade. I'm building a trading strategy using that analysis. Because I know that when I'm not in a trade and I'm just analyzing, I know that that's when I'm at my most rational. Peak rationality is when you're not in a trade. So I'm going to be most logical and rational when I'm building that strategy, right? So I've got my plan, then I execute. Now, as soon as you step into the market and trade, well, now you're at risk, like you're taking risk. And so here that rationality is also at risk. And this is where you now have P&L fluctuation, which triggers your emotional side, which means that then your rational side starts to come in. And so for me, it was always about having a fixed anchor point in what is an incredibly high fluid environment where everything's moving, everything's changing, not only price, but P&L and emotion and everything's swinging around. And it's like in a storm at sea, but latching onto a fixed anchor point. And that fixed anchor point is my process. Always go back no matter what's happening, no matter how I feel. It's like going back to that process, right? Analysis, strategy, execute the strategy as I had planned it, come out of that trade, and then write review and see what happens. So for me, routine-wise, it's per-trade routine rather than necessarily my day-to-day life routine, if you see what I mean. Okay, well, great. I mean, that's a really excellent example, I think. And much like all of this is what we described, it's, you know, a lot of it is psychological. So I think you do need to go through your own experiences and, you know, there is no substitute as the saying goes for screen time and experience. I guess it's kind of going about your early phase of your development in the right way to buy yourself that time is really quite key. But let's wrap it up there. As we said at the beginning, if you go back just a few episodes to episode 11, this being 14, there's kind of the lead-in to this discussion. This is almost like a two-part episode series. So check it out. Otherwise, Piers, anything going on this weekend? Quiet one this weekend. Just relax, actually. Okay, so there's no half-maritans in the gym sessions then. I see your Apple Watch points. You know, I do come to see you from time to time. I can tell you now, I will never run a half-marathon in my life. It's never my demarathon. I know Will's gearing up for another. It's fourth, I think it might be. I'm just not cut out for that kind of thing. It's not for me. And I'm okay with that. There you go. And there's the acceptance of loss. And on that note, everyone have a great weekend.