Hi, guys. Iâm a newbie, and this is my first post here. Iâve just been given an offer from a large prop firm, and Iâm seriously considering it. I would be trading equities intraday, and Iâm told that some experienced guys will be showing me the ropes. I have a fairly small bankroll, but the firm is offering heavy leverage. But the thing is, I donât have any real experience with the stock market, other than long-term investing (which is very different from day trading). I recently read an article in the September 2007 issue of Trader Monthly Magazine about the Top-30-Under-30 Traders, and I noticed that I have very little in common with these professionals. Most of them come from elite educational institutions, but I do not. Most of them seem to have serious quant backgrounds â there are a lot of math and physics and technology whizzes among them. I, on the other hand, have almost no understanding of physics or mathematical models. I took basic college-level math. I can use a computer for only basic consumer applications, like the average young person. I also notice that some of these traders have a background in team sports, which I also donât really have. Iâm not sure what the correlation between team sports and successful trading is, but it seems to exist nonetheless. In addition, some posters on this board have said that it takes an âedgeâ to be successful at trading. I can honestly say that I donât know what an âedgeâ is in this game, so I doubt that I have one. Many of the guys on this board talk about losing money for years and years, before finally becoming consistently profitable. This is one thing I know for certain: I do not want to invest many years to a losing enterprise. I can understand giving it a try for a year, or a year-and-a-half. But some guys here are talking about having lost money for more than five straight years before they started taking money out of the market regularly. I just canât do that. I guess Iâm asking if I should bother pursuing this at all? Given my lack of a quantitative (or sports?) background, my lack of an âedge,â and my small bankroll, am I just wasting my time and money? Donât get me wrong: I donât want to sell myself completely short. I can muster about $25,000, but it would suck to lose my entire savings over the course of a few months, so Iâm only committing a small amount at first. Also, I wonât be trading with money that I need for bills or living expenses. Iâll be living with my family unless and until my trading career takes off, so I wonât have to worry about food, shelter, or utilities. Still, it seems that Iâm starting from behind the 8-ball in a business that has a very high failure rate to begin with. Does anyone have any thoughts? BTW, Iâm going to post this message on more than one board, so donât be surprised if it comes up on another part of this site. Iâm not spamming, I just want to get the most responses possible in the hopes of potentially heading off a big mistake. Thanks in advance for your help.
Well you seem to have an honest assessment of your prospects, which is a good start. It is likely you will lose most or all of what you can afford to lose (somehow it just works out that way) on your way to learning, that is the general rule. So if you want advice about keeping your savings, then yes, your instincts are correct that your endeavors will likely result in a loss of your money. But it all comes down to how much you want it in determining whether the loss was a waste or just your first deposit on a career tuition.
You seem to have a pretty good idea of what you are getting into, but it also sounds like you aren't confident that you will do well. It's one thing to come into your first trading job and be cocky, thinking you are going to take down the house from the start, but at the same time its always good to have a little confidence in yourself. From what I've read it seems like you aren't really sure if you are cut out for this line of work (no "edge"). I'd start by asking yourself how well you can handle the risk, the up and down swings, etc that come along with trading. Being able to keep a cool head and deal with these things is a big part of your success.
Thanks for the replies. I think I can handle the risk inherent to this game, but I would like to know if the deck is stacked against me, so to speak. There is a vast difference between gambling and guessing. If a hot-shot, Princeton-educated engineer who builds computer models in his or her sleep has 10-15% odds of success, then what odds do I have? 1%? I mean, 15% is a rational gamble; 1% is a guess. Would you risk everything you have on a game with 1% odds of winning? I don't mean to be pedantic, I'm just trying to illustrate a point. I guess what I'm asking is whether an "ordinary" guy should even bother to attempt to trade for a living. Are most successful traders quantitative wunderkinds or engineers or computer programmers? Or, conversely, are any successful traders, let's say, liberal-arts majors? Or former blue-collar guys? Or community college graduates, etc.?
You'll miss 100% of the shots you don't take. Lets say you take the shot. What's the worst case scenario? You burn through 25K over the next several months. Nothing to show for your efforts but a story to tell your friends down at the local gin mill. Can you handle that financially? Can you handle that emotionally? If yes, it's worth the stretch. If not, move along. Good luck either way.
You gotta love it. And give it more than a year or two. Read this thread for some interesting points of view of the subject: http://www.elitetrader.com/vb/showthread.php?s=&threadid=98172&perpage=6&pagenumber=1
That trader monthly article is kinda funny. They cherry pick these star quarterback, valedictorian type ppl who all work at Goldman Sachs... It's really pretty funny.... I know tons of traders who aren't jocks, didn't go to an ivy league school (some didn't go to college/university at all), and don't work for an investment bank. anyways, go for it. and take momo/phox's adivce. - mnx
Who or what you are makes no difference. The only thing that REALLY matters is whether you have an edge. Many people here will tell you that you need to spend your time studying price charts, and learning setups, and how price movements work (without indicators). This is about as good advice as you will get. Some will have you focus on psychology, TA, money management, books, etc. But if you don't have an edge, then none of this stuff will really help you.