I was just wondering here if anyone became a career trader more by accident than by plan? The reason I am asking is that I have been trading for about 6 years.... I started out as the result of a very bad mistake, now I would like to do it full time as a career. Here's my story for what it's worth: My first experience with trading came when I took all the money I had saved for a downpayment on a house, and moved it from a money market account into the stock market to see if I could beat the paltry 4% MM interest I was making. I really had no clue how the market worked, all I knew is that everyone I knew was making money in the market and I finally decided to take the plunge and make it work for me too. So, on March 10, 2000 I opened an Ameritrade account, got approved for margin, and I proceeded to buy a total of 3 tech stocks using all my captial and 50% of my margin. Yes it was a horror story in the making, I made every mistake in the book at exactly the wrong time. And, since March 10 was about a week before the market reached it's final failed attempt to rally beyond the dot com bubble high, I am one of those few unfortunate fools who can claim to have quite literally "bought the top", of the tech bubble. Needless to say, after 3 months of agonizing stress, 2 margin calls, and losing 80% of my house downpayment money I finally gave up and called it quits. It was time to finally just admit I f-ed up and get on with my life. The next 2 years as the market continued to slide I really didn't trade at all, other than some occassional "gambling" type trades I did with the money I had left (I kept my Ameritrade account open and left my remaining money there). But clearly I still had no clue what I was doing. However, maybe I am a glutton for punishment..... I decided that year I was going to refund my account and try to make back at least some of the money I lost. It took me about 9 months this time, but as before I eventually lost most of my money again. So I refunded my account again. And lost most of it again in about 12 months. At this point I decided I was going to refund my account one last time, and if I couldn't make any money I was prepared to finally admit this game wasn't for me, and I would be out for good. Well maybe 3 is a charm, because it was like something finally clicked, and all the mistakes I made over all those years, and all experience I had accumulated during that time finally came together and I started making money. Lots of money. This brings me to where I am now. Within 2 years not only had I made back all the money I had lost in the previous 4 (including my house downpayment), but I am up way beyond that since I am now consistently making money. In fact for the past 2 years I have been making more than I make at my full time day job. Which is why I am now considering doing this full time. I know for many people the preference would be to keep the full time job and keep trading on the side. But part of the reason I want to trade as a career is I love it. And I hate my current profession, which is a consultant in the tech field. The only thing that is preventing me at this point is fear. I lost money in the market for so long that I keep thinking this is just a fluke and at any minute I am going to lose all my money. But on the other hand, I don't trade anything like I did before..... I look back at my some of my trades over the years and I am apalled at some of the ghastly mistakes I made. Does anyone have any stories similar to this? I really want to trade as a career but how does one know if they are competent/qualified, especially if they ended up in it by accident? My batting average is about 50% winners/losers, and I let my winners ride to maximize gains and quickly dump the losers to minimize losses (I avg about 30% gains on winners vs 3% losses on losers). P.S. I'll add my disclaimer that I am not selling anything. I still have my same old boring original Ameritrade account and although I guess I take a somewhat systematic approach to finding my trades, other than just very general guidelines I don't really have any hard or fast rules when it comes to the trades themselves. Since each trade is unique I do a quick and dirty risk/reward assessment in the back of my mind and I come up with a unique trading plan each time on the fly, tailored to the fit the relative risk/reward I feel is inherent for that particular trade. I guess I just do my best to adapt to an ever changing market and manage risk accordingly....
That's impressive if you're story is true. What was the turning point for you to becoming profitable? Are you a systematic trader or discretionary? Do you daytrade or swing trade or something else? Thanks!
wow that 30% figure on un winners is pretty impressive..what kinda stocks did u trade that got that high[or low]?
Yes my story is true, for better or for worse As for the turning point, it's really hard to say what the change was. I think to a large degree it was due to taking as much emotion as possible out of my decisioning process and sticking to facts. The market doesn't care about my feelings (or anyone elses for that matter) and so whatever I feel is irrelevant. As for the types of trading I do, I pretty much stick with NAS and AMEX small to midcap stocks for long positions, and largecap NYSE and NAS stocks for short positions. I trade fundamentals, technicals and news, and will day trade, swing trade and position trade, either alone or in various combinations thereof. I guess most important though is I don't trade unless I think I have what is a good trading opportunity. Sometimes 4 weeks will go by and I won't find any trades I like so my money sits in cash. Other times I find three or four good trades in a week and will make 5 round trip trades during that period. Having said that, defining a "good trading opportunity" I think is subjective. What is a good trade for one person may not be a good trade for another person, because of their individual trading styles and their experience. My most profitable trade this year on a % basis and actual dollars is IIP.... in at .68, out at 1.35....
u trade otc stuff then, yeah u can make 30% or more on those stocks for sure [u can lose 100% in no time as well tho]..was just thinkin' u were gettin' those kinda results consistently trough mid-large caps stocks. or are u makin' 30% all the time on large caps as well[?] and can u give us a few examples[?] tia
Well no, I don't trade OTC stocks as in pink sheets or BB stocks. I pretty much stick with NAS small and midcap (i.e. up to about 5 billion market cap). And 30% is a ballpark average. My gains on individual trades this year range from fractional to almost 100%. The gains are all over the map, though. Last year I even made 220% on one trade. And I have never lost 100% on a trade, in fact I think someone would have to go way out of their way to lose 100%, like maybe buy a stock that has just announced they might file for BK in the next week and someone makes a huge bet right before a halt and delisting to pink sheets. I guess even then you could still get out with something. I don't have time right now but if I get a chance I will pull some of my trades in the next day or two.
I know exactly how you feel, but I'm just not ready to quit my job yet. For one I love my job, but I would be scared as hell too. I lost about 80% of my account twice, just like you. Probably didn't lose it all because I had margin calls. In the beginning I figured I knew everything because I had a couple good months, over 20% each month, but then I started getting cocky and it all went downhill. I think I've finally got a good thing, returning almost 1% a day on average, but for me it's way too early. I think finally learning money management was the key for me to start trading profitably.
Well I have made money shorting stocks in a bull market then, so at least I have that experience. Does general market direction really even matter? In other words, it seems to me that as long as there are individual stocks moving either up or down there is money to be made no matter what the indexes or general market is doing. Is that fair to say?
My story is similar to yours and I eventually quite a secure job that I liked to trade full time and have been doing so for 5 years now. In 1993 I got hooked on Canadian junior gold and diamond exploration companies. I had moved to a city that was built on gold mining and the North American diamond discovery story was in full bloom and in your face every day. Everyone had a tip or an inside connection to the latest discovery. I didn't know a stock from a hole in the ground, but I borrowed as much money as the bank would lend me ($6,000, I was only 23) and put it all on a 75 cent stock. Long story short, I lost money hand over fist, consistently for seven years. I busted out and refunded numerous accounts, but kept making the same mistakes. I finally gave up on the gold mining stories and decided to join the free money dot com train. I again borrowed as much as I could, put it all into a retirement account and put 100% of it into tech stocks in March 2000 and rode it all down 90%. Obviously I was a sucker for punishment with a high pain threshold and a habit of burying my head in the sand when things went wrong. But I never gave up because <i>I absolutely loved trading</i>. It was in my blood and I wanted to crack this nut more than anything in the world. Eventually I had to fess up and realize that I was a habitual loser and take responsibility for everything. It really was like the 12 step addiction recovery process. I knew that this was what I wanted to do for a living and that I had to make major changes to make it happen. I swallowed all my pride and started from square one with hard work, modest expectations and more determination than anything I'd ever put my mind to. For the first time ever, I was not losing money trading. I wasn't making much, but was treading water and learning, keeping detailed records and a journal of how my emotions affected me in every trade. At the end of 2001 I quite my job, wrote my series 7 and joined a prop firm. I had 18 months of savings set aside. I left my wife and two young kids behind for 3 months and went to the firm's head office to trade and work 15 hours a day and hopefully speed up the learning curve. I lost money for 4 months as I tried various strategies and tweaked things to make them my own, to come up with a method that was mine. By my 6th month I had my account back to even and took my first paycheck in 8 months. At the end of my first year I had made about the same as I had at my old job. In year two I quadrupled that and in year three I paid more in income tax than I had made in my entire 8 year career as a fire fighter. In year five things are still rolling along better than I'd ever imagined. I think the reason I made it is that when I decided to seriously go at it full time I had already made every mistake in the book numerous times. I had experienced every emotion that a trader can face. I had hit rock bottom and faced all those demons and exorcised them. Everything from that point forward I took 100% responsibility for. But I had a passion that ate me up. Trading is the only thing in my life that I truly felt a yearning for. I HAD to do it. The passion is still there, though it doesn't burn with the same intensity. I will pull the occasional 15 hour day when I'm going hard on a new idea, but I'm also plenty happy to work only 4 hours a day and look forward to weekends off. Trading is comfortable now. I do not worry about it just stopping. I know that no matter what, I can always grind out a living. I've learned to swing hard at the right time and to reign things in and play a tight defense when things are tough. If it's in your blood and you approach it the right way, stay humble and you make it over that initial hump (and it's a big, steep one), then I think the odds of you sticking around for a long time are pretty good.