NEW YORK (HedgeWorld.com)–As if trading is not hard enough, the terrorist attacks of 2001added another dimension of uncertainty to the environment.
In the three years since that shock, the geopolitical picture has been complicated by war and fear of continuing violence. Markets have vacillated, nobody has firm ideas on how to read them and approaches that did well in the past don’t seem to be working.
As many hedge funds go through rough patches, there is real danger that managers and traders will make mistakes in response to the stress. Classic examples are overreacting, becoming paralyzed or compulsively gambling by doubling up on losing trades in an effort to recover.
Some people have found the current market so difficult that they are retiring much earlier than planned. “Trading is always very stressful,” said Ari Kiev, a psychiatrist whose clients have included top traders as well as Olympics athletes.
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“I think it’s probably wise, if somebody is relatively new, to talk to more experienced people who have been through some difficult markets,” he said. Such veterans may have a longer time frame that helps put current investment troubles into perspective.