No, I'm playing YOU
OK, so now that you know what to look for, here's the fun part: Learning how to play THEM.
Put the ball in their court. If they give you a bad report or misleading information, give them an opportunity to correct the mistake, maybe even smile a bit. If they don't — that's telling. Behavior is consistent over time. It's better to find out what kind of person you are dealing with early in the relationship.
Read MoreThese big hedge-funders are also losing big
Give him enough rope to hang himself with. If you suspect someone is stealing from you or acting shady then put them to the test. Leave a $100 bill on your desk and go for a walk. Say to a trader, "In your hands; do your best." Almost beg them to steal from you, dangle future business in front of him or her. Make sure they know the cost of stealing $25,000 and the effect of the future. It's not worth it. He or she won't know what to do, they'll start to stutter, twitch and sweat.
Hide in the weeds. If revenge is your cup of tea, don't try to get even right away, it'll never work. Be patient — and don't get angry. No one remembers stealing from you, but they remember making you angry. Stay cool. Watch and observe. Then, you'll know the best way to seek retribution.
Keep a mental list. You should have a list of good guys and bad guys. It will come in handy down the road.
If you do this over time, two things will happen: You'll know who NOT to do business with and you'll increase the number of mutually beneficial relationships you have. Some people actually do much better when you say, "In your hands; do your best." And these are the people you want to keep close.
Read MoreHow a trader knows when to strike: Turney Duff
It was the last trading day of 2002. I gave one of my sales traders 10 buy orders to be executed in the last 10 minutes of the trading year. It's a common trick to mark up a portfolio at year end to increase your returns by getting paid more on the inflated performance. I gave her my orders with about 30 minutes left in the trading day but with specific instructions to not start buying until the last 10 minutes. I wanted to juice the price of some of the stocks we already owned. But a few minutes after I gave her the orders, I noticed they all started to move up. ALL TEN. I knew that she had leaked my orders to another one of her clients. If someone bought the stocks in front of me, they could reap the benefit of me moving the stocks higher and then turn around and sell them to me on the closing bell with no time to push the stocks as high as I wanted them to go.
I was livid.
But I didn't say anything. Nor did I accuse her of leaking my orders. I just said "thank you," and told her to have a wonderful New Year's.
For the whole next year, I kept her on a tight leash. I never fully trusted her again and probably did about half the amount of commissions as I'd done the year before.
So on the last trading day of 2003, I gave her 10 orders — all shorts. There were 30 minutes left in the day and I gave her instructions to not execute until 10 minutes before the close. "I mean it!," I said. "Do not start until 3:50pm."
"I got it," she said.
As I'm watching the stocks, they all start to trade lower. I know she leaked my orders AGAIN. As soon as the clock struck 3:49pm, I called her and canceled all of my orders — they were fake. I could hear her choking.
Then, I got on the phone and called another broker and gave him my real orders — same ten stocks, but they were actually BUYS. The stocks ripped higher and higher.She leaked the wrong orders. Her client was losing lots of money. I was giggling.
Think you're going to play me? I'll play you — HARDER.
