Top Mistakes To Avoid When Running a Trading Floor – Introduction
Starting and operating a trading floor is one of the most profitable things one can do today. This is because of the nature of the financial market where you can trade for 24 hours every day. It is also an interesting field because of the nature of global finance where deals are announced every day. Having a trading floor enables you to make money and do something that is very interesting. However, having a trading floor can also be challenging. In this article, I will explain some of the top mistakes you should avoid when running a trading floor.
- Micromanaging Your Team
The success of any trading floor is the team. These are the people who do the trades for you. If you want to succeed, you need to have a high-quality team of traders. However, in my experience, I have seen many floor managers who fail by micromanaging their team. They keep on checking what they are doing and giving them instructions. This is wrong because traders want to feel to feel appreciated. They want to trade using their own knowledge, and not being told what to do. This does not mean that you should not tell your traders what to do.
- Being Bossy
As the floor manager, you have the right to feel good about your business and accomplishment. However, this should not come at the expense of your management skills. You should not be bossy. This is because employees are usually not happy with bosses who want to prove that they are bosses.
- Not firing traders
As a floor manager, you will be successful if your traders do what is good and right. However, when you have a team of people, some are likely to do mistakes. In such a situation, it is always a good thing to replace the traders. The mistakes many people do is that they are very lenient on their traders who make mistakes. While firing or suspending a trader is a difficult thing, the fact is that it is usually the right thing to do for the long-term success of your business.
- Not vetting your traders
Ideally, you want to have traders who share your vision. Unfortunately, not every trader shares your vision to start and run a successful floor. When interviewing people, you should look for people who share your vision. They should demonstrate their loyalty to you and that they will stand with you even when things don’t turn out fine. Therefore, the interviewing process should be extensive since they will be spending your money to trade.
- Being extravagant
Owning a trading floor can be an exciting thing. It can make you a lot of money. A common mistake I have seen is when traders become extravagant. They spend their money as they see other traders do. This is not a good thing. No matter the amount of money you make, you should live a humble life. Remember that you can lose your money as fast as you made it. Last month, billionaire Bill Ackman booked a $4 billion loss on a trade gone wrong. You too can lose all this money.
- Not spending
While being extravagant is not ideal, another problem is failing to spend money. As a floor manager, you should spend money on the right things. You should spend money on your office to make it look good for your traders. You should spend money on the right technologies as well. Doing all this will make you a successful trader and floor owner.