The Real Wolf of Wall Street - A Trader's Perspective




The Wolf of Wall Street, one of the top films of 2014 is based on the true story of New York stock broker Jordan Belfort. The film is quite an accurate portrayal of Mr. Belfort's life, as skeptical as one would be after seeing the movie!


Yesterday I had the wonderful opportunity to see Jordan Belfort, the Real Wolf of Wall Street live,as he discussed with us his life experience, the movie, entrepreneurship, sales and achieving success.


As I heard Jordan speak, I could not help but realize how many of his principles can be applied to our day to day lives as Traders. In this article, I will share some of his best materials for success and my interpretation for everyday practical use in a trading environment.


Movie Fun Facts

  • In the movie, Matthew McConaughey thumps his chest and hums a tune in one of the earlier scenes, to get him into the right mind state to perform. This was not from Jordan,in fact, Matthew actually does this to prepare for acting. The director, upon observing this behind the scenes, liked it so much he decided to incorporate it into the movie!
  • The “F” word was used 506 times in the movie, reportedly setting a record for most uses of the word in any film! Jordan expands that on Wall Street the curse word is as popular as the word “The”. Also he curses to accentuate a point when he is speaking.

Mastering your inner world - 4 Essential items for success

  1. Overwhelmed & State of mind– Often we feel overwhelmed to the point that we cannot accomplish anything at all. A state of mind that leaves us paralyzed to the actions we need to complete. Jordan demonstrated some techniques similar to Matthew thumping his chest. Essentially getting to a good state of mind and then “anchoring” that state. Anchoring is a technique used by many NLP practitioners.

    Trader's Perspective – Our state of mind is crucial for trading performance. Sitting down to trade for the day it is important to do a quick self check up. Are we feeling tired, hungry, agitated, still thinking about a missed trade or a recent loss? These things can affect us to a point where we may be setting up for a losing day before taking a single trade. Essentially this is Trading Psychology.

  2. The Why & The Vision –Jordan talks about having a clear vision of the future. To work towards something and know the reason for it. In his example he wants his children to look up to him and that's his “why”. It's important to know where you want to be 5 years from now, when it comes to where you live, work, if you will have a spouse, kids, how many vacations you take, which charities you will work with and what your social life entails.

    Trader's Perspective –
    It is beneficial to have overall vision, to drive a trader to success in all aspects of life. In that vision, aspects specific to the trading career should be included. For example, is the plan to trade your own funds or to manage funds. If you plan to manage funds, making a large profit is not nearly as important as a low drawdown, good risk to reward, and money management. This might require an immediate change in strategy, perhaps alleviating the pressure to make high returns and focusing on good trading. This type of action can have a drastic positive reaction on a trader's results. Also, why do you want to be a trader? This will serve as a reminder and motivator on off days which we all have. The Secret is a decent book on the importance of a vision, however it offers no follow through. Jordan in fact mocked the book for the lack of importance on taking action. But if having a vision is a new concept, the book is a good starting point.

  3. The System – The importance of having a system creates a lot of value in any business. It shows professionalism as well as greatly assist in preventing the first topic of being overwhelmed. It keeps you grounded.

    Trader's Perspective – After reviewing our trading journal for the most successful trades, using the 80/20 principle, it is easy to single out the most profitable trades with least risk. Developing a system with strict rules, reduces emotionally induced trades and fear based trading, all major causes of downfall for many traders. Strict rules for when to take a trade and when to sit out will elevate a trader's performance significantly. Developing confidence in the system will remove the “emotional roller coaster” that can be experienced in trading and stress associated with fluctuations in equity.

  4. Ability to sell – The most important focus in Jordan's opinion. Without good sales even the best business ideas will fizzle out and inevitably fail. A great deal of time was spent on this subject alone, to the point that I would not give it justice to try and sum it all up in one paragraph. From subtleties in Tonality and body language to cold calling, Jordan covered it all in great detail.

    Trader's perspective
    – As a trader, we generally get away with not having to converse with the public. We buy and sell online and the greatest asset of the Forex market being liquidity means there is always someone to buy what we are selling with no effort. However, if the long term goal is to eventually manage money, you have to be able to sell yourself and your trading record. The key thing here is not just selling your track record, but your vision. Jordan emphasizes on the ability to sell yourself as an asset in many situations. It is invaluable, and inevitable to acquire and master this skill.


Points of Value


Money makes who you areone of Jordan's quotes that really stood out. He comically references alcohol. He states that similar to when you consume alcohol a happier person will become happier, money will do the same. He makes an important note that money does not make you happy, but a lack of it can make you miserable


Failing elegantly – Mistakes will be made along the way and how we handle these mistakes, or how it affects us is important. This is an easy comparison to FX trading where we cannot get caught up with the trades we lose, and the importance of taking a loss without emotional involvement.


Reason people vs Results people– He compares reason people to ducks and mockingly quacked throughout this part to make his point. Reason people will ALWAYS have an excuse or try to blame others. Results people just get things done. Results orientated Trader's tend to spend less time talking about events related to the market and more time studying the chart. They find trade setups and execute them with discipline. They spend less time in front of the screen, which consequently provides them a clearer frame of mind to work from.


Performance based benchmarks –In a deal with Steve Madden Jordan invested a sum of money in exchange for 85% of company equity. A bad deal for Steve Madden, however gladly taken. Had Steve propose that he get a certain equity percentage back if he met proposed performance goals, Jordan would not have objected. To this day, Steve Madden owns a small percentage of his own company. Similar deals can be made when negotiating with investors for money management.


Believing in success – You have to truly believe that you will be successful, eliminating any doubts. Any type of “limiting belief” can hold a person back greatly in the journey to success. There is a concept called self sabotage. Commonly seen when a trader has one big loss after many gains. This stems from having “limiting beliefs” such as believing you will never succeed or deserve to make money.



Conclusion


There was a great deal of material in the 3.5 hour session. So much so that it has been difficult to sum everything up in this article. I've reflected on the most relevant information from a trader's standpoint to be most beneficial to the Dukascopy Community. I hope you can take something away from this article to take your trading to the next level.




Some further studying material I would recommend.


State of Mind -


NLP Comprehensive, NLP: The New Technology of Achievement

Joseph O'Connor, NLP Workbook: A guide to achieving the results you want
Mark Douglas,
Trading in the Zone
The Disciplined Trader
How to Think like a Trader [DVD Program]


Vision -


Rhonda Byrne, The Secret
Napolean Hill, Think and Grow Rich



System -


Micheal E Gerber, The E-myth Revisited

Richard Koch, Living the 80/20 Way



Sales -


Jordan Belfort, The Straight Line System

Brian Tracy, The Psychology of Selling



Self Limiting Beliefs -


Gay Hendricks, The Big Leap
Translate to English Show original