Home > General Topics > Trading > making a living v. getting rich

making a living v. getting rich

  1. we all know about money management and grinding out profits day in and day out--- you will make a good living at this game with skill BUT one will never get rich without taking extraordinary risk. this is ofcourse if you are not already wealthy when you started. any thoughts ??

    best,

    surfer:)
     
  2. I hate to point out the obvious .... but "rich" is subjective. Can you be more specific on

    (1) your point of reference for "rich"
    (2) the time limit to achieve that level of wealth?
    (3) the starting point to achieve that level of wealth?
     
  3. With enough sawdust, you can build a mansion...
     

  4. Or marry a rich girl?
     
  5. Yup, a rich bitch is another option...
     
  6. The rich guys get the rich girls.
     

  7. LOL candle that's a weird analogy - Can I see that mansion? :D


    RE Whether you have to take extraordinary risks to get rich
    -Bullshit!

    The more risk you take, the more likely it is that an unfavorable excursion (which will eventually come) sends you down the abyss.

    In the long run, risk (probability of adversion) becomes more likely - Meaning, the longer you trade, the more likely it is (theoretically) that you have a large loss / large series of losses.

    Never forget that. Never rest on your systems - Constantly re-evaluate / improve to counteract that probability!

    It's like gambling systems - In the long run the casino will (theoretically) win - However, if you keep at it with wise money management, you can build up a considerable stash and defy this relative fact.

    Basically, the less risk you take, the faster you will in fact get rich! Why? Because if your system/strategy has low risk/drawdowns, you can leverage more! That's the way to go.

    So the way to go is to work on better and better (lower risk) trading systems while increasing your leverage.

    See, if your max dd risk is 0.2%, then 10X leverage is OK! Anybody disagree?
    Of course you have to be either short-term trading or heavily diversifying in order to do this.

    Besides, I actually wonder why people are so impatient about getting "rich"... What's so cool about being rich? American dream, huh? Fast cars & beach houses? Jesus. Doesn't make you happy!

    Doing what you love doing and being with who you love being with makes you happy.

    Besides, if you're a reasonably good sort of trader, you should be able to make >5% per month, which will turn $100k into $1 million in a little less than 4 years... Is that too slow?
    Can't help you man.

    I'm happy being a trader, I have a life, a great sportscar, a great beachhouse ("Riverside", with the river on one side and the beach on the other - rented btw), great friends and I'm worth a coupla hundred K (now). - Particularly if you add my gemstone collection - I'm a Jewellery Designer as well - To diversify business risk and get a break from trading :D
    Seeing that a few years ago I had nothing, that's OK by me. I'm only 22 after all! :)

    I was planning to be financially free by the time I'm 25. I'm pretty confident I'll make it, too....


    Have fun and Good Luck!
    ~Scientist


    P.S: If you really want to get rich - Stop trading and sell trading knowledge, "how to trade" ebooks etc - Rather boring, but will make you rich a lot faster :p

    P.P.S: Find a picture of one of my cars below - with a certain girl modelling my jewellery So you know I'm not b-shiting ya :cool:
     
  8. As a daytrader?

    My opinion is "forget it". Unless you stack on some pretty thick size while the going is good -- ie, while your method is showing positive results -- you're not gonna get rich running this fool's errand.

    Now, whether you call that "extraordinary" risk is debatable. Couldn't you come up with more concise language than "rich" and "extraordinary"?

    Edit.
    My own personal view is that, paradoxically, if your only purpose in trading is to get rich then you probably won't. Trade with an eye to trading better, and you probably will.

     

  9. 1. whatever it means to you--- i chose this word since it is not absolute and i am interested in your opinions not my definition.

    2. you will be young enough to still enjoy it totally

    3. dependent on your answer to #1

    allow me to rephrase--- can one reach their definition of "rich" monetarily by trading without taking extraordinary risks ?

    best,

    surfer
     
  10. Anything wrong with being a day trader??
    True, it's all a matter of perception.
    Personally, to me "extraordinary" risk means 2% of equity at stake.
    Being "rich", by definition of "Forbes Magazine" would mean having a net worth of >US$10 mio and a net income of >US$1mio per annum.
    Absolutely agree. Doesn't only apply for trading. Applies for any job....

    Happy Wealth-building
    ~Scientist
     

  11. day trading with strict money management is certainly not extraordinary risk. i define extraordinary risk by having the potential to 'blow out" your account .

    surf
     
  12. This might touch on a subject that would make for a good separate thread...I would argue that it's not the initial account equity at risk that is the real source of debate...After all, I think its commonly accepted that you should really not stick around in losing positions for too long...But its the drawdown or "giveback" of open equity that is the more interesting topic of debate...If you read some of the famous interviews that is always the 64,000 question, and it is especially pertinent in runaway trending markets...So, basically what I am saying is, the guys who are going for the big kill are willing to giveback alot more of their open equity in return for being positioned for alot of potential favorable with trend account volatility...(I think the Surf report demonstrated that pretty well from april 8-june 2, btw)...
     
  13. Rich girls are a pain in the rear. Most of them are spoilt brats.

    Trust me. I know, 'cause where I live there are hardly any poor girls around (in this particular suburb, anyway)...

    Besides they think they don't need to work so they don't need to think. Might as well get an inflatable :D


    Have a nice girl.
    ~Scientist
     
  14. /



    well said, vulture. thank you for the accolade.

    :) :) :)
     

  15. Nothing "wrong" with it. But we're talking about getting rich without extraordinary risk. In day trading, I would assume that to mean multiple, multi thousand share positions. That's pretty big risk, if you ask me. Show me a daytrader that got rich without doing it. (And it might not get you on one day, but day after day it's a big drain. Look at that Silk guy, couple million last year, essentially trading in this manner, losing his ass this year.)

    Now 'surf has defined extaordinary risk as having a position on so big that it could blow you out, which is totally different, leveraged to the hilt. In that case, I would disagree that you require this much risk to "get rich".
     
  16. How about just one position and VERY tight stop-losses? Ever heard of scalping? Momentum trading? I often don't allow for more than 5-25 cents stop on a medium-sized share.

    Put all your eggs in one basket and then watch that basket really closely...

    ~Scientist
     
  17. i need to get fucking rich
     
  18. No risk required: trade off of inside info. George Soros' big trade was made on inside info, and my mentor (an ex-CME floor trader) witnessed several things that could only be explained by insider info. When the whole world is short, and then one lone guy, the head of a huge firm, walks out on the floor himself and starts going long, well, what would you think.

    Reread the Market Wizards carefully, there are several stories that suggest insider trading made, or at least saved, tons of money.

    You may think he's just another educational crook, but a quote I love regardless from Charles Givens is: All trading is insider trading. He was, of course, referring to big money.

    It may be illegal, but it happens all the time.
     
  19. if you try to get rich quick, you will have a lucky streak that will end or you will just flop right off the bat.

    the middle road is the steady road, and its not necessary to flop.
     
  20. Sure, if you can make that work, go for it. And if you can get "rich" doing it -- I use the word to mean millions of dollars, at least 3 -- then all the more power to you.

    Personally, I have pretty big doubts that it can be done, or that even trying is a good use of my time. But that's just me talking; one opinion among the thousands you will hear. All the best to you.
     
  21. Just because you are not doing it doesn't mean it isnt being done... for an experienced scalper, several hundred thou a year is not beyond the realms of expectation :) ... and over the years, it adds up, assuming you don't spend too much... I do agree with your penultimate sentence... moreover, it also boils down to what "rich" means you to... for me, "rich" simply means "freedom"... for others, it means a certain minimum amount of $ in the bank... another thing: I prefer year long consistency as opposed to taking massive risks for massive gains, with the potential of massive downside...
     
  22. You can pay the bills through daytrading, but you can change your lifestyle through swingtrading...

    Unless someone off the floor atually has a 80-90% system, 1:1 risk/reward that generates 10 trades per day .. then, you outperform everything and everyone.
     
  23. It might be worth doing a financial analysis of your views. Also you might want to read Gary Smith's book.

    You are speaking about a nonlinear process. The implication s of what you say are that people screw up more and more as they go along.
     
  24. I disagree... you can change your lifestyle through either (for better or for worse :D )...
     
  25. You speak my language candleman :D

    Comparing scalpers with position traders, for example, is like comparing an F-16 pilot with a farmer.

    It's possible to make money scalping - However, I think it's the most difficult form of trading (from my own experience). I scalp (or let's rather say momentum trade - not exactly the 'scalping' we talked about in the age of fractions pre '99) myself, it's sort of my main trading style. I got good at it eventually. And I'm saying eventually. It's best to learn on longer timeframes and then reduce the timeframe gradually. That's how I look at it, anyway.

    I guess it's because I'm paranoid about losses. I just don't like seeing a position lose anymore than 5-20c per share, when trading stocks for example. I close out straight away and look for the next run, never looking at my P/L stats. At the end of the day, I will have made money. So, this is what I see as an advantage of scalping - Not many losing days (unless I really get like 20 trades wrong), which looks a lot smoother on my equity curve.
    Besides, my exposure to possible market events is much lower. I simply like to be able to sleep at night.

    How about you, candletrader, what's your main style? Do you scalp? Are there any nasdaq equity scalpers around here?


    ~Scientist
     
  26. I have a completely different definition of rich. I make less than 2k a month, but I have my own place, my own car, anything I really want, and I don't work. (I run a small biz that is profitable and am just starting to work on my trading). My day consists of working 30mins and then going skiing. I am moving to a ski resort in a few weeks. By your guys definition I am broke-ass poor, but I feel rich.
     
  27. And 10 seconds after you get your shares, the stock is halted,
    and opens 50% lower the next day :D


    peace

    axeman




     
  28. ... Sounds scary axeman... Never looked at it that way...
    Ever happened to you? Ever happened to anybody here?

    What do other scalpers think?

    ~Scientist
     
  29. It has never happened to me, but it's a real risk I consider,
    and I have seen stocks that I scalp being halted on a date
    I was not trading them.


    Tony Oz mentioned in one of his books that because of
    similar isisues (opening 50% lower the next day after horrible
    news for example ), he never uses more than 25% of his capital
    on any one stock, no matter how tight his stop is.

    This makes sense.
    I think the same should be considered even when scalping
    a stock for a few seconds. You could be that one unlucky
    trader that gets caught at just the right time, and you KNOW
    the SPEC isn't gonna let you out of that trade ( for NYSE) when he is
    trying to cover his ass during a mad rush.

    peace

    axeman


     
  30. I am in total agreement with your sentiments on this... although I make more than you, my profits are not how I measure my wealth... I measure my wealth in terms of my freedom from corporate slavery... I am answerable only to myself, and I love it...
     
  31. Absolutely! I didn't know Oz's book, but my rule is 25% of capital as absolute maximum for scalping. Also, with many particular stocks (internet stocks like NTES, SOHU - great for scalping because of less experienced DT's / MM's), I have a limit of $20,000-$50,000 per trade, in order to avoid liquidity issues. If you trade INTC or MSFT, of course it doesn't matter. But who would?

    There's no point in maxing out your account for scalping, anyway - I generally have 5% liquidity, 70% in day trades / swings and 20-25% in scalps, which makes a good balance for me.
    - However, the scalping, although less than 1/4 equity, makes me more money than the day/swing positions many a time!
    It's definitely worth looking at for an experienced trader.
    Maybe it's a specific NYSE problem? I don't actually scalp NYSE - Is it any good for scalping? I mean, you don't get the sort of panic volatility that you would get with nasdaq due to its lightning fast & automatic execution, would you?
    Correct me if I'm wrong.

    ~Scientist
     
  32. DITTO DITTO DITTO


    Preach on brother bagger! :cool:
     
  33. Your words on golden scales. I know a lot more unhappy $-rich people than happy ones.

    What's the point in being loaded if you're not happy?
    What's the point in being loaded anyway?

    ~Scientist
     
  34. Anybody know the feeling of living in a golden cage? That's how i felt in my corporate high-profile job. At a point in time i decided to give it all up. i didn't have any clue what i was going to do for a living back then, but i knew i couldn't take it anymore. When i finally ran into the e-mini's i was as poor as a church rat. i wasn't far from being homeless, so i had no other choice than grind it out. now i can start thinking of becoming rich.
     
  35. In my opinion, one can get monetarily rich (at least $1 million in the bank over and above retirement accounts) without taking extraordinary risks if your living expenses are reasonable and your trading is consistently profitable. I think this can be done with either stocks or futures but given the additional leverage it would be easier to do with futures.
     
  36. Marketsurfer,

    I don't know the answer to your question, but I have heard it said that the FASTEST way to make a small fortune trading is to start with a large fortune.

    Regards,

    Thunderdog
     
  37. My first year I traded to get rich,
    Now that I am smarter, I just try to grind out a living one trade at a time. :(
     
  38. Yep, nothing like eating Ramen for breakfast, lunch and dinner.
     


  39. bingo
     
  40. lol, yes, ramen. oriental flavor is my fave, although once i saw chicken curry and it rocked, but then i never saw it again. recommend adding an egg as you cook it. lovely.
     
  41. Bob is now out on the dock fishing for dinner with a string, a bent paperclip baited with a Lincoln penny.....it is all we had left in today's food budget:(
     
  42. no. chicken vegetable
     
  43. You are truly rich. You spend most of your time as you wish, have a roof over your head, and put food in the mouths of those you care about.

    nitro
     
  44. You are absolutely right, that's my definition of being rich pretty much too. To be free and to have time to pursue things that really appeal to you.

    Good luck.