Jim Bittman

We have an exciting series of interviews this week! I am humbled to have been chosen as a media partner for a special event with the Chicago Board of Options Exchange: 3 Gurus Plus. This online webinar features The Three Gurus — Larry McMillan, Fari Hamzei, and Price Headley — plus a panel of their peers including Fast Money contributor Jon Najarian and CBOE Faculty member Jim Bittman.

You can learn more about this educational event or register at www.cboe.com/3gurus.

We kick off the interview series with CBOE faculty member Jim Bittman. Jim has a great passion for the markets and offers investors some excellent advice:

Background

Jim: I learned about stocks from my father. Every Saturday morning, we would go to the drugstore and buy a copy of Barron’s. In the 1950‘s and ‘60‘s, my father would draw his own stock charts by hand and I helped him … for $0.35 an hour!

After college I worked at a bank and saved $35,000 so I could come down to the Chicago Board of Options Exchange and trade as a member.

Damien Hoffman: Was trading with the pros as easy as you thought?

Jim: No. I butted my head against the wall for several years. The Crash of ’87 was a big speed bump in the road. After that I started to learn my way. Since then, everything has been good.

Damien: What was the key to becoming a pro trader?

Jim: The key change was learning to trade unemotionally. That means taking both profits and losses in stride. A winning trade doesn’t make you a genius. And a losing trade doesn’t make you a worthless person. The best traders lose 40-45% of the time.

Advice

Damien: How did you let go of your emotions?

Jim: I created a systematic approach to trading — not to be confused with a trading system. I learned how to unemotionally take my losses, lick my wounds, and move on to the next trade.

Damien: Can you explain the benefits of options?

Jim: Options can enhance your trading. There are many more types of trades one can make as opposed to going long or short. With options you can make money in neutral markets. You can also hedge your stock positions. Those are huge advantages over simply owning stocks.

Damien: What three mistakes can traders avoid to provide additional advantages while trading?

Jim: The biggest mistake is people treat trading like a gamble rather than a business. Most people go to Las Vegas not expecting to win but to have a good time. Too many people get into trading for the same reason because they do not want to put in the hard effort to consistently make money.

Second, people think trading will be much easier than it is. They believe watching a TV show or reading a book will lead to riches. Obviously, the professional traders work very hard and spend a tremendous amount of time to excel.

Third, you must accept being wrong up to 50% of the time. Most people can’t do that.

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