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Conquering Fear in Trading

In this exclusive to Traders Magazine, therapist Storm Copestand examines how traders can manage expectations and conquer their fear during the entire execution process.

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September 1, 2010

The Retail King

By James Ramage

So Nagy decided to drop his studies at Arizona State and work for Shearson Lehman. He was told he'd need to start at the bottom. He accepted a position there as a sales assistant in equities for $16,000 a year in the mid-'80s.

He learned as many different positions as he could over his first few years to build an understanding of back-office operations. The experience would prove critical to understanding the business, Nagy said.

"I gained so much back-office experience that you could put me in any back-office role and I'd know it front to back, completely" he said. "Coming out of Harvard, you don't know how the back-office works. So, because of that, you don't know the structure of how things are going to clear, or how things are going to work in times of crises."

In 1990, he had moved on to the retail trading desk for U.S. Bancorp, in Minneapolis. By 1998, Nagy ran equities trading there and oversaw the firm's integration with Piper Jaffray. A year later, Ameritrade contacted him to see if he'd be interested in running trading for them in Omaha.


Lessons From '87

Learning the back office may have given Nagy an indispensable foundation. But it was the crash of 1987 that gave him a cause. It taught him how fear ravages the markets. It exposed him to the retail investor's vulnerability. Nagy described his firsthand experience of the crash as the defining moment in his budding career.

"It really started to set things in motion for me, for who I was to become and where I was to go," Nagy said. "The average Joe didn't stand a chance in the marketplace, compared to everyone else, because the only way the average Joe could get access in the marketplace was through the means that were provided back then, which were limited.

"And the information the average Joe had was paltry," he added. "I realized that this market wasn't really transparent, or fair. Information in the market was very hard to come by. And there, the average Joe had nothing."

Nagy has held that memory close ever since. Subsequently, he views Ameritrade's relationships with the wholesalers in terms of its own retail clients. When Ameritrade makes any suggestions to or demands of the wholesalers, it's for the benefit of the retail investor, Montemayor said.

"It's why we do what we're doing," he said. "It goes further than best execution. We're trying to improve the markets. We're doing anything we can to tweak them to get improvements in their systems, or trading hours, or new products that are coming out--we're involved in them before they come out. Everything we do pushes that client agenda down the road."

The constant communication is important, Montemayor said. It gives the wholesalers the opportunity to make adjustments and fixes with their systems when problems emerge, he added. And when Ameritrade shifts its volume to another destination, it rarely comes as a surprise; the wholesaler has plenty of advance warning, Gary Sjostedt said.


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