9 Compensation Trading Strategies That Work (2023)

Once an employer decides they want to hire you, your bargaining power is at its maximum, so use it! Your ability to negotiate well will not only affect your livelihood for years to come, it will also set the tone for your working relationship. So it's important to take good care of yourself and do it right. Regardless of your comfort level in trading, it's a skill you can develop through practice. It's a delicate and nuanced balance between "you don't ask, you don't get" and "pigs are slaughtered".

In my work with dozens of clients over nearly two decades, I've found that many people previously didn't bother negotiating or didn't negotiate as well as they could due to either (1) lack of skill or (2) discomfort and an extreme need for closure. . Unfortunately, in doing so, they cost themselves dearly.

on aStudy by Linda Babcock at Carnegie Mellon University, MBA students who negotiated their salaries (mostly men) were able to increase their salaries by 7.6% (just over $4,000). While that might not seem like a huge margin, let's look at the compounding effects over time shown in his analysis.

Let's say Employee A traded his salary from $100,000 to $107,600 (a 7.6% increase). Employee B did not trade and her salary remained at $100,000. Assuming they are both the same age and receive a 5% annual raise, at age 65, how much longer will Employee B need to work to catch up with Employee A?

The answer is nine years.

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If employee A's annual raises are onlyhalf percentolder, this difference becomes 19 years.


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If employee A's annual raises areone percenthigher, the difference becomes 47 years.

The moral of the story is if you don't trade, you better like your job because you'll be doing it a lot longer. In other words: ALWAYS negotiate!

So how can you optimize the value you capture in your trading? Note that I said "optimize" and not "maximize". It's not about squeezing every last dollar at all costs. You want both parties to feel like they've made a good (or at least fair) deal, and you want to build the relationship. There are several strategies for achieving this that you will likely use in some combination before, during, and after receiving a formal offer. The nine listed below are just a fraction of them.

Before Offer

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Discuss an offer before making an offer.The recruiter or hiring manager may indicate that they would like to make an offer. When that happens, this is your cue to (1) show enthusiasm and (2) offer broad guidance on what you value most. For example, you could say something like “Good news! I really want to see the package you put together. I would like to share with you what is most important to me when considering an offer, which is having the majority of my compensation weighted in base salary versus bonuses, plus ample vacation time and a relocation package.” Don't give them a salary target unless you feel they are likely to lower it.

Build your "yes" package.Before receiving the offer, ask yourself: "What is the one package you would like to say 'yes' to right away?" In fact, you won't say "yes" right away, because you will be negotiating. This will give you a good benchmark against which to compare the offer after you receive it, and will let you know where to focus the negotiation andcan even give you leveragein trading.

During a Offer

Practice your poker face.Typically, the offer is made orally, followed by a more formal letter (usually after terms are negotiated and final). When you get the call with the offer details, stay calm. To hear. Take the information. Express enthusiasm (verbally, without shouting, jumping up and down), but don't comment on the quality of the offering, and pay attention to yournon-verbal behavior. You might say something like, "I'm really glad I got an offer. I'll take some time to digest this. Let me get back to you in the next day or two with any follow-up questions."

Wait to negotiate.As mentioned above,Alwayss negotiate. A client of mine received an offer in which the employer said, “Here is our offer. We don't negotiate." Despite this, he ended up asking for more and getting 50% more capital. Also, there are some roles such as sales, business development or other business-oriented roles such as venture capital or private equity where it isexpectedNegotiate, it's a core part of the job, and you risk losing face if you don't.

After Offer

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Talk to the right person.I love recruiters. They play an important role in the process, but they are not the decision makers. He wants to speak with the hiring manager. This is the person whose job you'll facilitate, who can best understand the value you're adding, and most importantly, who can approve your requests. The recruiter can notify you of the initial offer. If that's the case, you just want to say something like, “Thank you so much for all this information. I will reach out to Jessica with my questions because, as my hiring manager, she will be better able to answer them." However, if the search is done through a third-party executive recruiter, you may need to go through them.

Pay attention to the tone.You want to set a collaborative tone (against the adversary). This is not a zero sum situation. You may receive and offer items of value to the other party in this discussion. You want to convey (1) enthusiasm for the opportunity and (2) that you are a reasonable (rather than authoritative) person who is negotiating in good faith. You can say something like, “I'm really excited about this opportunity. I have a few questions that I'm sure we can address to come up with a solution that works for everyone.”

Depersonalize the process.We tend to be better advocates for others than for ourselves; that isespecially true for women. Negotiation is also not about your worth as a person. It's about the value of your contribution to the organization. One technique I suggest my clients use to help depersonalize the process is to take a step back from the process and pretend they are negotiating on behalf of their best client:themselves!

Start with the most important element.Your trading should be a multivariate trade, so that there are several possible levers that can be tweaked and used to compensate for other less flexible levers. Prioritize your biggest and most important variable, which tends to be base salary, due to the compounding implications highlighted above. A base salary increase is likely to be far more valuable in the long run than just about any one-time bonus you could receive today or a year from now. You might start with “The base salary is a little lower than I expected. What upward flexibility do you have here? Ask the open-ended question first. They might come back with a bigger raise than you expect. Otherwise, you can communicate a target range, with the bottom of the range being a number you would feel good about and the upper bound being the number you would be ecstatic about.

Know when to shut up.It is normal to feel nervous when negotiating your compensation. This can cause some people to become chatty and start talking too much about an issue. Know when to shut up andto hear. Something you are asking for could be very easy for them to give you. Knowing when to stop talking and start listening can help you understand any concerns the hiring manager might have so that you can more effectively address them to find a mutually acceptable solution.

Fullmuch more trading strategieswhich you can use in conjunction with the above. As with other high-stakes conversations, practice is key and working with a coach to role-play and give feedback can be extremely helpful. Finally, look at real trading as a practice, because it is. Regardless of how you go, you'll learn from the experience and get even better for the next trade.

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