College grad w/ job offer and questions

I love this "99% of people fail at day trading" stat. Why does everyone think thats accurate?? Anyways, I work at a trading firm and have seen maybe 10 people come and go in the 2 yrs there but have also seen the same 50 or so guys day in and day out and i know when checks are handed out, most of us have 5 figures for the month (before the decimal point) consistently....even in this tough market. One of my buddy's had a 6 figure month in December even. So there are people out there succeeding.
The problem is, most people are enamored with the possibility of striking it rich in the markets, but fail to realize just how fricking hard it is to do.

 

There is no stat that is accurate I believe. However, I know that a majority fail. You happen to be in an environment where the majority in that shop are doing well. You have to realize that there are a huge number of traders out there and the ones with the best chance are in a corporate environment (prop shops, banks, arcades, etc.). The stat for numbers failing is as accurate as a saying that 1135 is the perfect price for the ES day in and day out. It doesn't work that way. I don't believe in throwing a number out, but I do believe that it is about a majority that loses to a minority and the exchanges are still able to pluck a few from the buyers and sellers. Do you disagree?

 

I definitely agree that most fail in this business, but some people's posts make it seem as if it's not possible to make money day trading at all. If most people succeeded in this business, it would be even that much harder to make good money. For instance, futures are a zero sum game, for every winner, there is a loser. Thats the nature of that beast. I understand that stock trading is different in that just because you gained on the trade doesnt necessarily means that the person on the other end lost. Either way though, the markets are set up to confuse/scare/deceive the average person and only those who learn situational trading can really take advantage. And because it takes so much effort and time and practice to get to a level where you can be consitantly profitable, most people either give up because its a lot harder than they thought, or they dont respect the fact that they dont know anything and end up blowing out their cap before they've had enough time to properly learn what to do and what not to do. Regardless though, I do agree most fail but certainly not 99%

 

"most people either give up because its a lot harder than they thought, or they dont respect the fact that they dont know anything and end up blowing out their cap before they've had enough time to properly learn what to do and what not to do. "


100 % agree, If someone offers you a job that may earn zero income for at least 6 months and may even cost you money each month, How inclined will the average person be willing to take it ?
Going back to Maslow's hierarchy of needs, most people never make it as traders because they are programmed to seek safety and stability with their jobs. Trading can offer this but only after you have paid your dues to the market. No one likes to lose and I think this is the biggest reasons that so many people fail at trading. They can not take a small loss and admit they were wrong and the market was right, so they hang on, and a day trade becomes an overnighter, and then that becomes a swing trade, and then it turns into a long term investment that eventually blows them out. WHY ? Because they do not know how to LOSE gracefully and take a small loss in the beginning.



On a side note, How will it look if this guy goes into his field for a few years, and then quits to try trading ? What if he fails ? How will he explain it to the man when he comes begging for his job back ? I still say try trading when you are young, open minded and have few responsibilities to add to your stress level.

 

These are valid points, volente. If he plans to get married and have kids in 3 years, it would make sense to get the trading bug out now. However, if he takes the engineering job and then fails at trading after leaving that job, then he has the skill from his first job and the humbling experience of trading to fall back on. He doesn't have to ask for the same job back. There will be better opportunities. There always are. They require more risk, time and effort to find.

His chance of being able to save money (with no family to finance and living modestly, he can save as much as 50% of his paycheck) is much better with the engineering job. There will be better structure for him to focus on personal and professional development. With trading as a first job, it is almost impossible to learn anything more than just being able to extract money out of the market. A prop shop will not teach him how to present himself, his ideas, how to interact with others or in a team, how to put together a proposal, how to write or dissect a contract, how to manage others (thereby learning to manage himself), how to plan 5 yrs ahead and project the outcome, etc etc.

Now, I'm saying this because my business plan is centered on hiring guys out of college. What I'm sharing here is something that is thoroughly discussed during the selection process with the candidates. However, I strongly doubt that any prop firm is able to train and stand behind any individual trader as I do. As my handle says, I'm almost 34 yrs old and I can tell you that I would never have reached my level of general business competence and critical business thinking had I not started my career out in a corporate environment. I was one of 2 youngest managers of my age at my level of responsibility in a national firm with over 4,500 professional employees. Please don't take this as me tooting my own horn. I'm trying to put my comments into perspective for the OP. I believe the trading skills can be learned at any time and the learning curve will be shorter for someone who has experienced some obstacles or failures in his career.

A trader's biggest foe is longevity. I say this often and I believe it is true. I think that the biggest reason for failing in trading is not allowing the time or capital needed for one to overcome his demons. The bigger the demons, the more time, pain, patience and money it takes. I believe in the Richard Dennis school (or was it the other guy) of thought that almost anyone can be molded into a great trader. Most prop firms give you the opportunity but not the tools needed to go with it. Believe it or not, most firms operate in the hope that 3 out of 20 traders will hit it big and keep them alive. Success breeds success. When one person sees that another is trading the same product and is making money while they lose every day, they will scramble to do the same. The ones that fail and keep trying are likely to make it. Prop firms don't allow that luxury.

It is long-winded, but I hope it makes sense.

 

You have valid points. The OP makes no mention of his financial stability at the moment. I would like to know more about his prop offer in general and his current living standards and responsibilities.



"Now, I'm saying this because my business plan is centered on hiring guys out of college. "


And why is this ? Why would you not target an engineer who has been in the workforce 10 years ?

 

And FT, we are only talking about 1 year of opportunity cost, Hell I know people that took almost that long to land a job right out of college.

 

"I believe the trading skills can be learned at any time and the learning curve will be shorter for someone who has experienced some obstacles or failures in his career."

100% disagee, it really matters not what you have done in any other arena, i dont care if you are the CEO of GE. It WILL NOT help you to learn how to trade any faster or better. Your learning curve will not improve because you have had other experiences. Actually, they say the higher up you are in your job and the more successful you are in your area of expertise, the harder it will actually be to become successful as a trader. This is because many of these people have had so much success so far that when they start to trade for the first time, they have a very hard time accepting the fact that they arent doing well right off the bat. They dont understand how someone who has exceled as much as they have isnt killing it in the markets. Ego gets in the way, frustration sets in etc. If you think you are smarter than everyone else and that you will "get it" faster than everyone else, you are most likely doomed.

Besides the fact that trading offers umlimited earning potential, there are many other benefits to your life as well (time, freedom, no boss! to name a few). Corporate america, imho, is a dead end. It used to be that your parents would say "get a good job with a good company" and you'll be fine. Well thats good and fine for most people but if you are a true entrepenuer, with the true spirit to think outside the box, you really have to take risks. I am sure Bill Gates's parents disapproved of him dropping out of college but he took a shot and it served him very well (rare case, but still). Look at most historical figures who made vast fortunes over time and I guarentee they didnt get there by working 9-5 for 40 years with the same company. My point is, throughout my rambling, is that everyone will say that trading is "too risky" and to find "stability", but non risky and stable jobs do not earn you the big bucks. If you want to get to the top, you must take risks.
Risk=rewards

 

I worked for Silicon Valley companies for many years in Engineering, and trading always looked the holy grail to get out of the jobs/politics/layoffs rat race. When I got laid off, I thought it was a God given opportunity to fulfill my lifetime desire to be a full time trader. So I didn't bother to look for a job.

By the time I had realized that it would take more than 2 years to be consistently profitable, the job market had started a deep slump, losing 200,000 tech jobs. Unless one is a tech "rock star", you have to compete with 1000 other applicants for desirable engineering jobs right now.

If I had to do it over again (assuming I had found another job after the original layoff), I would have traded part time while keeping my job until I was consistently profitable.

Good luck in your decision.

 

I left my office sweat shop job recently because the politics over there was just unbearable. No regrets though, from realizing what I don’t want to do I realize what I do want to do.
I’m going to be day trading full time now.
Yeah dumb move financially, if you consider that I’m giving up a 100% chance of making a decent middle class salary for a 10% change of making a decent middle class salary.
But people don’t realize illusion of stability that having a corporate job provides. College degrees are a dime a dozen now. Graduate degrees are soon to be dime a dozen. Business trends indicate that almost every job other than prostitution (the oldest and noblest profession) can be outsourced.
And don’t forget age-discrimination. You think someone’s going to hire you at age 45 when they can get someone 20 years younger at ½ the cost or someone overseas for ¼ the cost. You think you’ll be able to handle the daily grind at that age?
The only guys I know that are truly happy and financially secure are successful businessmen.
I would take the engineering job. In fact, if I had a good job that allowed me to have a life outside work I’d still be working until I make more from trading than from working. Trading full-time is a prudent thing to do only after you demonstrate that you can trade with consistent profitably. But once you double or triple your account with minimal drawdown then you’re ready to be a trader and it’s just silly to delay your dream.