Care to share your perspective and your own experiences? There is a broad spectrum of backgrounds from those who become career traders that risk their own capital in the market to survive. In this context, I don't mean professional traders who are working for a firm and receive a salary/bonus (e.g. prop traders or bank traders, etc). I'm referring to those that risk their own net worth on the markets to make a living, even if you're still considered 'retail' by the mainstream. These traders may have had a job in the past, they may have been an entrepreneur, or they be completely green straight out of uni/college/high school without prior job experiences. One of the advantage of having a job is salary. Its seen as safe (in the short term anyways). More often than not, with a job you put in time and exchange it with a salary. Often jobs comes with perk such as job security, i.e. union protection or long term contracts, which help to guarantee one's employment and hence one's paycheck to live on. Another perk is if you are laid off, you can often get government assistance to help you live for a while. Contrast this with a professional trader. As the saying goes, "a trader eats what they hunt". So like a lion in the sub saharan dessert, you're constantly on the look out for your next prey. Your very survival in this world relies entirely on your ability to score a hunt. You don't have job security enjoyed by others. But in exchange you may get freedom. You do what you want in your own time. You answer to no one. But every day, you risk your capital to make capital. Not only can you simply not earn a profit, you can even sustain substantial losses that can put you in a worse position. Darwinian survival of the fittest probably plays out much faster in the trading world than the job world, where only truly the strongest can survive and the weakest will perish. In many ways, a professional trader is like an entrepreneur of whom also rely on themselves and their abilities to live. The only differences are only in the nature of their business (i.e. trader vs market; entrepreneur vs customers). Both risk their own capital to make something of their lives and hopefully a living. So, as someone who may be a career trader, how do you view the "salaried job vs trader vs entrepreneur" situation? One thing I always look at the situation is, first of all, any and all profits ever earned to date from the market, I don't consider it realized even if they are in accounting contexts. What I mean is, you may have made money today or in the past, but you are constantly putting that money back into the market to bet again risking substantial losses. The market really can take it away from you the next day. I find some traders are too confident in themselves thinking they have a 'fool proof strategy'. Everyone trader who has made money in the long term likely has a working trading plan. But not everyone should be so confident that their plan means they can never give money back. E.g. Karen supertrader once commented she 'never gives back' the premium she earns from the market selling OTM options -- I laugh at this philosophy ("honey, the market will take it back when it takes it back."). Also, very often I hear people make a huge win (maybe a lucky preearnings play and a gap move), and then they immediately splurge on the winnings. I think this is a rookie mistake. I learned very early on that the market can take everything back and even realized gains are only temporary on the longer term time scale. Overall, I live very frugally with my wins, as if I have no profit at all because the way I see it is, as long as I am still in the market, I am exposing myself to losses.I long for the day when financial independence is reached because the only time I will really spend and relax, is the day I retire and no longer betting on the market. Whats your attitude to trading profits? EDIT: You can get a pretty good perspective from in the documentary "Floored: Into the Pit" which showcased some successful and some failed traders. Some of these guys could be betting houses worth of capital on every trade. Some have made and/or continue to make a lot of money. Some have lost everything (after perhaps having made a lot of money at one point in their career). Keeps your grounded.
Another thing that is often a touching issue here is how the public perceives traders. First things first. You should probably not care what others think, but public opinions are public opinions, biased or not. Often times, people may view a job as productive to society. Not just the top echelon jobs like being a surgeon. Even jobs like taking out the trash, washing dishes or flipping burgers. People view jobs are providing a useful service to society. In this context, they judge traders. They, perhaps a family member or a friend, may have an opinion that a trader doesn't add anything to society. In other words, useless or pointless. Do you ever you get judged like this? Obviously though, that is just ignorance on their part. A trader, by the very fact they are performing transactions in the market, _IS_ playing a major role in helping the financial market place (lets ignore the fact most trading volume is done by a few large firms but traders do play a role however small). Their trades make possible price discovery. Their trades make possible improved liquidity in the markets. All of this helps create a more efficient capital market place, and improve the price discovery process. This in turn helps run the economic engine people take for granted, and the importance of financial capital markets to begin with in terms of raising capital and preserving wealth of everyone else who has any stake in the markets (retirement accounts etc). So traders do in fact provide benefit to the community, but in a subtle way that requires knowledge of the capital markets and an open mind to realize. Someone who is white/blue collar or uneducated (at least in this field) may think a trader is just a couch potato that just sits at home flipping buys and sells, contrasted with someone with a job who they think is helping out a community even if its just taking out the trash or washing dishes. But in reality, the contribution of a trader is much more far reaching than most jobs, as they play an intimate role in making financial markets more efficient with their trading volume, which perhaps goes a longer way than even most people's 9-5 job. Or perhaps, its just another case of someone being ignorant and judging something they are unfamiliar with or know little about, e.g. the case with racism most of the time.
butterfacetrader: So, as someone who may be a career trader, how do you view the "salaried job vs trader vs entrepreneur" situation? Everyne chooses what he likes. For fulltime trader without salaray (from my point of view) it is important to have money for at least! 2 to 3 years of his expenses outside of trading accounts. This reserve (at least for me) is making me focus on long term results instead of results which "has to be achieved this month". butterfacetrader: ...trader doesn't add anything to society. In other words, useless or pointless. Do you ever you get judged like this? No, people are interested and asking if I can help them with their money.
As a trader you need to manage your cash flow and cash reserves for the lean times. Helps if you are a saver and not a spender! The last person to whom I mentioned i trade for a living from home said, "cool!, thats what everyone wants to do!!". But she is a genuine person. The kind of person you enjoy hanging out with. I would still guess most other people who look down on trading really feel the same way inside, they wish they could do it instead of their daily grind job and asshole boss/customers. Of course they are too afraid to even try.
Good point about having money to live outside of funds in a trading account. But, will you actually leave it segregated outside in a savings account or something, or will you be deploying almost 100% of your capital into your account and draw from it when you need living expenses? Well, if you're trading someone else's capital, you are likely making some kind of fee on the returns or the capital deposited 2-20 style perhaps if you're a hedgie. From that moment on you're not really trading your own capital exclusively, and you fall sort or in the realm of salary earner plus some skin in the game trading your own money too. Yes, hedge fund managers are salary earners so even they don't really count here because basically they earn a salary and are not 100% dependent on market gains although they have skin in the game.
Some people are genuine. Some people are fake. Anyway I think a majority of people probably think traders from home don't contribute much to society like their 9-5 job. They just look down on them. They may hate their job too but they might think its still superior because of a salary and job security vs betting your own bank on making money akin to gambling. Long before I started trading, I had a high school friend who went straight into trading stocks for a living while everyone went to graduate school or got a job. He's kinda born with a silver spoon so I guess he probably doesn't need to work anyway and he would have a lot of funds from parents. Most of the friends kinda saw him as a bit of an unemployed scab when he told us he trades in the stock market during reunions. I know my own parents don't think highly of traders either. So i know that seems to be a common perception. I don't know how well he does in terms of trading performance, but it wasnt until long long after I eventually started trading myself that I became more open minded about a potential to make trading as a career. But its not easy. To be fair trading your own capital is way harder than working for a living in many ways. Your capital is your everything. You need it to make money. The more margin you have, the more opportunities you have to make more bets. If you lose money, you lose ability to help yourself make money. I can foresee situations where people reach a point where they can have a positive feedback that feeds on itself from losses to the point they simply can't reasonably dig out of a hole especially with living expenses. They would need a salary to keep topping up their trading account, otherwise that 'career' as a trader becomes a failed dream at that point.
I've learned nobody really cares. "Oh, what do you do?" "Trade stocks." "Oh, do you make money?" "It's good." end of conversation. or some shallow continuation. Nobody cares what you do. You should, IMO, have good medical insurance, worry about retirement, emergency fund, and after 6 months make sure you are not gambling and losing money for the sake of working. who cares if it doesn't add value. I can say paintings, sports, etc... don't. and i can say they both do add value. that's subjective. you make money, you add value to your life. and others around you. most people are mere cogs in a system and add less value. that stuff is all in your mind.
For sure you should just focus on what makes you happy. But actually I find people have different perspective for a home trader vs a hedge fund or bank trader. If you are working for a hedge fund as a trader, thats viewed upon positively. So if someone thinks when you say "you trade stocks" that you mean in WS, thats looked upon positively. But if its "I trade at home in my PJs with my own money", thats very often viewed upon negatively. Depends if people know what is meant by "i trade stocks". The negative connotation is based on the 'lack of job' aspect, the 'risky' aspect, and the 'likely earns very little' aspect of the @home trade-their-own-money trader. Usually that is true. An @ home trader likely has less capital and their yearly profits are likely not high unless you are a super trader or have large capital to work with. If you are working as a WS bank trader, you'll get all sorts of salary and bonuses so you probably do make more than a home trader.
Judgmentalism is probably part of it. But I think a more important part is that they know most traders lose, and they see people who attempt it as fools or flakes. That makes them feel superior. If they find a trader who is successful, they are envious of the trader's success and resentful of their own timidity.
Yeah I think thats true. I think the general perception, which likely is true anyway, is that most traders lose over the long term. So they see @home traders as a bunch of 'wanabes' who are 'on the edge of losing everything'. Same sort of thing people get when they say they tell people they wana "goto Hollywood" to "be an actress/actor" and people will probably roll eyes. Yeah, its probably just something to make them feel more superior.