As I look at my trading P&L for the month, I am down. Actually, my trading equity hit its peak in June, so from that perspective I have been losing money for 3 months now. Imagine working for 3 months and having your boss tell you that you owe them money for your shoddy work, and they debited your bank account. I changed my mindset rather early in my trading career about making money every day. I don't try to do it. If I see a good opportunity, I will trade it. If not, I am going to do nothing. It is nice to make money everyday, but it doesn't drive me. I am looking for the big score. Isn't this the real reason why most people trade? The last thing I want to do is turn trading into a chore, a job where I must do this, must do that. If the opportunities are not that good, I rather do nothing than try to force the issue so I can try to make money that day. You can beat a horse race, but not the horse races. I don't need to make money every day, or every month. Or even this year. It would be horrible if I didn't make money over a year, but it is not a need. I have money set aside for living expenses. If you need trading to pay your day to day expenses, you are in the wrong line of work. Trading is not a business where you decide success on a day to day basis. Or even a month to month basis. You decide it over a lifetime. I have a bit of a gambler's mentality when it comes to trading. What I mean by this is that when I have a losing day, or losing month, I want to make back those losses quickly. Yes, it is that dreaded psychology of wanting to get back to even, on the day, on the week, on the month, on the year, etc. It makes me want to put on positions impulsively even though they are not that good an opportunity just to try to make back my losses quickly. It has cost me money in the past, and it is something that I try to control at all times. That is the mental game in trading. Overcoming those human urges to trade to try to get your money back. I am a discretionary trader, so I have to control these human urges. I don't believe in system trading, although one of the system trading benefits is the elimination of much, but not all of human emotion. Behind every system is a human manning the controls. A trader is a bit like a poker player who sits down at a casino and plays, waiting for a bunch of fish (bad players) to come into the game so he can make money. While he is waiting for the fish to come, he plays in a mediocre game where he makes a little, or maybe just breaks even. But he stays in that game to stay sharp, and also because he wants to have a seat when the fish come in. In 1999 and 2000, there were a lot of fish at the trading casino. In 2007 and 2008, there were a lot of fish at the trading casino. In 2014, there aren't so many trading fish. But the fish will come back again. I have a strong feeling that there are enough excesses building up that 2015 should be a whopper for the bears. That is when I will try to make a big score. In the meantime, I want to preserve my capital, play short term, small ball, and stay sharp. http://marketowl.blogspot.com/2014/09/trading-is-long-term-business.html
I stopped reading sorry firstly imho trading is a not a business secondly, if we talking about trading for a living using your own money (that what I call trading) you have to be efficient, very efficient... you have to feed your-self if you lost a week it's not a trading... yes its a game, but you do not wait for fish to come you not a fisheman , opportunities are omnipresent... every day , every hour, every minute sorry again
and one more thing i forgot regarding longtermnesness in reality trading should be very short-term in terms of horizons of the trade and expectations of the profitability what is long term is the perspective to actually becoming a trader for most of the people the combination of talent, money, luck and therefore time to become a trader is so demanding that most (99.999%) will die before reaching satisfactory results... but again its not being a trader its becoming a trader... sorry again
Trading can both be short and long term. I've always made a lot more money from my longer term trading positions than short term trades. I make short term trades because I want to try to make money more often, but I don't think it really adds much to my bottom line at the end of the year. Most of the money I make is from taking positions and letting them mature into fruition, or take the loss if the move doesn't play out like I expect.
IMHO, if you separate out a particular trade ( or trader's ) holding time frame for a position, then the original premise of trading as a long term business makes complete sense. Whether you hold a position for ten seconds or ten months, at least in my personal opinion you are going to have to continuously adapt your trading style and psychological approach as market cycles change and volatility fluctuates. The traders I know who have been trading the longest have reinvented themselves at least a few times. The only constant with the markets is that the price action behaviors never stay the same for a period of time long enough for someone to not change and say they have had a career trading. There are some exceptions, of course, but they would be extremely rare. Just my 2 cents FWIW.
Trading is more of a trade/skill/profession, but certainly not a business, IMO. I say that as a business owner. When you don't have customers, employees, etc it's really more of a trade or skill. You can be a successful trader, and have horrible people skills for instance. I would more compare trading to becoming a doctor, as an example. You can be a highly successful doctor, and be a total jerk to those that you interact with. That generally doesn't apply to most businesses.
I think that you are 100 % spot with respect to an independent trader. You are correct in saying that is would be more of a "profession" semantically. If you hired traders under you, then obviously there is a "business" aspect to it. I've hired traders before, and had to go out and get a Federal Employer ID number and hire a payroll accountant and pay state and federal taxes like SS, unemployment insurance, stuff like that. Pain in the ass. But you are correct - people skills not really required and most traders are quite rough around the edges.
Yes, markets change along with the business cycles and investor sentiment, but they also repeat. There are many repetitive patterns in trading, both intraday and over longer term periods. For example, what we are seeing now reminds me a bit of 2007, a bit of 2011. After a huge bull run, when the market tops out, you get these kind of volatile up and down patterns that we are seeing now. It is extremely bearish over the next year...