Hi, My name is Marksman, and I was wondering if anyone who had experience of trading for a living can give me professional advices on how I can get myself going. I'm sorry for the long post, but it is to give you a general background of my nature. Just a little background, I am a recent graduate with an economics degree. I am an introvert so I feel I am getting the end of the short stick when it comes to networking into a decent job or relationship building. I don't come from a wealthy family and I'm not the best student out there, and I don't stand-out as much as I could. After graduation, I went on to work in the corporate world in a couple of back-office roles as an entry level financial operations analyst, solving people's problem and letting the upper management get all the credit. I am a very passionate and helpful person and I love to help people anyway I would, but when I feel in a job where strong office politics and credit stealing runs wild, I've no longer had the compassion to continue. Long story short, after the stint they pulled off letting me go after all the contribution I've put in and receiving no recognition. I felt I've have no place in office job where I can work myself up the corporate ladder. I've gave myself time to figure out what I wanted to do with the remainder of my youth. Thinking back, I felt that going to college was a waste of my 4 year of college, but it didn't go to waste, during my last year, I've encounter a beginners course in options and futures. By no means, I've never thought I would want to become a full-time options derivatives trader and dream of becoming the very best. A while back during my first job, I've remember the first time I've ever opened an account with a brokerage and traded my first share of Google, but it didn't really excited me. On my mobile phone in the ThinkorSwim, there was a button for options. Thinking back, being the naive overconfident idiot not knowing what I was doing and I put in a trade $2000 long calls worth on a Google stock that was already peaking at 600 range at the top, saw it from from $400 unrealized profit down to -$2000 market value in matter of an hour. A strange feeling came across me, yes I did felt sick and was ready to vomit losing almost a month's pay in matter of minutes, but I also felt I've discovered and learned something from a different perspective, being humble about it and know that if I could lose that as fast and that would mean it is possible to make it that fast also. From then on, I've made a promise to learn and become a options trader. It sounds bizarre, I've never had any interested in trading stocks in whole my life my life before but when I started I've immediately became hooked with option trading. Keep in mind, this was trying to trade options while working a full time job and that was a big No-No, especially a suicidal attempt at the market. This went on for a while, to be honest, I had no real market analysis experience or trading experience, I kept losing money. I've probably lost 10k in total over a period of couple of small losing trades. Fast forward, to my last job as an entry level financial operations analyst, I was paid okay salary for a freelancer, but I realized I won't make it big time, after losing my motivation and feeling depressed. I've changed my outlook and seek to move towards what drives me. I would never expected it to be trading, but specifically options trading. In my last two month, I've never had such intense desire, motivation, and perseverance to really wanted to do this full time. Everyday after work, I would come home, make dinner and watch/ read about trading from any reasonable source of information. The biggest turning point was knowing that I made my 8 hour shifts pay in matter of minutes, I no longer felt motivated and the situation was compounded with the boss who takes all the credit for my work. I don't want to say I am in trading for the money, I feel that the market challenges me in a way no other job could. I have the freedom to create my own approach, my own rules and try to make something out it in the market. I feel if I can master trading, the money will come, until then I will have to stay humble and keep learning and think of new ways to improve my odds in the market. But from Hindsight, I knew that if I ever wanted to become successful in anything or at least a path to success, I would need to put in 100% dedication. Starting from scratch with all the losses and experience that came with it, I went on to read and understand how options works. In my last two month of trading options and messing and tweaking around with the black-scholes model in excel, I can say from experience, I am getting to understand the nature of how options values shifts from the underlying movement. Fast forward to my current situation now, I've recently ended my corporate job and I've saved up about 10k for options trading, and a 6 month living expense. I know my probability of success is slim, but I feel I want to give this a shot as I am still young, I want to know that my life didn't go to waste at least I tried to go after something I felt passionate about. I didn't come from a traditional finance background, and I know I still lack in market analysis, emotional trading, risk management, but I am putting a lot of my effort as I would do in a regular job to see myself trying to make it in this business. I am reaching out to you for advices from your personal experience or professional experience you had trading/ options trading in general. I'm a very fond learner of people's life experience, I would love to hear your thoughts and recommendations.
To be honest, I view trading as a business. Going into any business under funded sets you up for failure. I don't think it's a good idea to go down this path with only $10K. Good luck...Bob
Best of Luck Mate! Keep a trade journal here and I will follow. The only advice I can give you for now is that with such low capital that you are going to have to trade on SPAN margin. Feel free to send me a PM and we can chat. I can point out some other websites to you that helped me.
I'm looking to set up this thread as the only thread and keep a live update on my progress. I know to some this may seem like an social experiment. I've already made up my mind, in the last two-three months I've taken it seriously to become a trader full time. I've forgot to mention, I will only be trading with a cash account, no margins, thus my options are limited to long call, long puts, and straddles. As I'm a firm believer of "less is more, and more is less." These three options strategy should suffice if I play the cards right. I have no interest in writing (shorting) options. I may have losses, and I am down, although it does cause me emotional pain sometimes, but I've continue to hone my skills in controlling my emotions. I feel I have to take trading as a objective approach, no single trade should be a reflection of the last trade. But it is up to me to follow my own strategy, guideline, where I feel if I follow through I can have a greater odd of success, then I know I did something right. I'm at where after many failed attempt, losing with options, I've finally understand how the Greeks works, and actually see how it works in conjunction with price action, influencing the bid-ask spread. I feel no small advice is too small. Everything I've learned about specializing in options trading comes from a collective of individual pieces of knowledge in options trading, but the hard part of segregating what I need to improve my strategy and removing anything else that contributes to the noise. I've traded hand-on with options and with options especially, holding on to a losing trade is like letting yourself set on fire especially with a large contract size, took me a while before I can accept face value of accepting losses and move on, but i feel this is one of the critical and fundamental basics that many new / season trader don't do. Chubbly - good suggestion, I will actually do that this time. I've always told myself to keep a physical copy of my progression, but never did. I will tomorrow go out and keep a record.
My advice? It's neither conventional ("go back to your day job") or what you want to hear, but here goes. If you really don't want to go back to the corporate world, spend the vast majority of your time and $10K on something entrepreneural. Study internet marketing and determine some kind of business or for-profit website that you can build. It could be geared towards trading and the financial markets or something else. Your odds will still be quite slim, but much better than a trader with a basic grasp of the options market. That gives you no edge whatsoever. If you had more capital, I'd recommend managed trading accounts until you had a robust system/strategy of your own. But with $10K, you're limited to forex and maybe a few option sellers. Neither give you realistic odds of staying in the game long enough.
I did something similar to what you are attempting back in 2003 except I had $50,000 and had enough money to cover 18 months of living expenses. My plan was to "figure things out" as I went along. It did not work out for me but I was fortunate not to lose my stake (gained a bit). All that being said, I don't regret for a second going for it. It was a trip staying home and trading, watching Miami vice reruns and watching real time as we (USA) invaded Iraq. Twelve years has past since then and I am no longer day trading and am focusing on more modest returns with a much bigger account balance (thanks to the day job). Good luck! fan27
I think it's great you are giving it a shot. You are young (I assume no wife/children) and probably don't have huge expenses each month. If you are ever going to give this a shot, now is the time. Not when you are 45 with 4 kids, mortgage, and big expenses each month. WORST case scenario is you tried..... doesn't work and you move on. If you don't give it a shot you will probably always be thinking "What if ?". A few things: I am not an options guy, but is 10k enough for you to trade and make enough to at least cover your living expenses? I know with futures if you have a good strategy and good risk management you don't need a crazy amount of money in your account to make a very good living. So maybe 10k is fine. If it's not enough, and things are going well, do you have a game plan to raise more money to get the proper funding so you can earn enough each month? What's your game plan if things aren't going so well lets say after 4 months. Will you be ok 2 months later if you haven't made anything (or worse your trading account has dwindled down to very little) ? If you are not ok then you will be putting a ton of pressure on yourself at that point. I have seen some guys do some real stupid things when cornered. Put on the 4th and long trade. Just air it out. You don't want to be that guy. If you can honestly say you will be ok then I think you'll be fine. Trading is 99% a mental game. You don't need any outside pressures/worries. To be successful you HAVE to take it seriously. Have to put in the time, have a huge amount of discipline, leave your emotions/ego at the door. Have a solid strategy with excellent risk management. If you don't have all of the above then don't even bother. Come up with a strategy they you created. That will work for the long term as you will always be relying on yourself. Stay away from the vendors/gurus who are hawking systems/trading signals/newsletters. They are a waste. If what they had was any good they would be trading on it and not trying to sell their "great" ideas. I've been trading 20+ years for myself,prop desks,and hedge funds. The job really isn't for many. You go through periods where you are hitting on all cylinders and loving it, then all of a sudden you can do no right and want to take the keyboard and plant it in your head. Complete roller coaster. One of the best things about doing this for so damn long is I have seen a lot. Learned probably more from watching what doesn't work and seeing what caused guys to fail/get obliterated. Not fun at all to see, but learned a lot. It's always lack of discipline/poor risk management. In my opinion it's not how smart you are. Some of my good friends over the years were much smarter than me, but had no discipline and eventually blew out and had to leave the biz. Come into each day like yesterday never happened. Forget the bad (don't want to get you down) and the good ( don't want to become overconfident and sloppy). Stay focused and disciplined. Trading isn't meant for action all the time. Sometimes your best trading periods will not have a ton of activity. If you want action go to the casino or track. If you have shit going on outside of trading and it's going to be a distraction then don't trade until you you have it taken care of. Nothing wrong with taking a break. When you go into a draw down period (you will......we all do) cut back size. Playing good defense is more important than offense. The guys who last a long time have this figured out. The guys who don't blow out. Good luck with everything man.
You have the unemployment blues. Your getting ideas that are analogous to a late night infomercial. Your terribly underfunded. Don't do it. In fact, stop trading and focus on the job hunt. Lot's of trading firms out there. The world is your oyster.
I want to thank you for the feedback, the post is waiting for verification so it might take a while. Eprado - I want to thank you for the comments, you are on point and nailed down everything I've experienced and gone through so far. I want to reiterate that I am confidence and willing to take on this decision. I am well aware of the risk, I saved enough for capital and living expenses as a non-materialistic bachelor. My only regret is being too cocky in the beginning and blew 10k which could had been added to my the fund later on, but had I not lost the 10k I wouldn't be able to say for sure that I knew what it meant to manage risk properly and research heavily on psychology of trading. I went through a string of good runs and bad runs myself, when I finally calm myself down and think logically, there was no need to be emotional if I've followed thru with my plan. I've learned in the end it is all mental, even if you are competing with the very best, in the end its about competing against yourself to get the next high score in the game. The only difference is that you do not have a reset button, you can only scale up or down and make up for the losses in the long run. As you mention it is all psychology, I felt even if I knew nothing of the market, I could've placed a correct trade and made money. I had a few time with options, turned 250 dollar into 1 grand intraday. Although rare but that's not the point, my main point is managing risk, knowing when to get out before things get ugly, accept face value that the market revolves around probability. I won't know whether its a winning/ losing trade even if I had a gut feeling, the best I can do is follow my system and manage risk and stomach the loss. I came with an objective for the next 2-5 month to build discipline, study and apply heavily on what I've learn that would further my progress. To other - I've already tried many thing, like starting a small business with friends, I knew it was not my forte, and we've failed horribly, but I've learned a lot of insight and the importance in passion. Even passion and luck alone is not enough, most important thing is generating cash flow, and if there none, it just a business plan without real value. I knew from start I didn't have a passion to start and run a business, but having a driving force to try and succeed will further your progress faster than you normally would. If I am working working blues, I would have taken a month off and looked for another satisfying job and you wouldn't see me in this forum. I know its great to have more money to start with, anyone would had said that, but I felt with 10k, it should be adequate, if it is used to bet smartly and manage trades properly. I've gone through my fair share, so I know. I know that starting with more money only fuels the habit of bad trading, taking larger size bet and justifying it. But my mind set right now is if I can do this right and scale up then what is the different between starting with 10k and 20k, it seems hard to get a couple of more straight wins in a row, but its just scaling up on risk capital as your account grows, base on the outcome. Options already contains the leverage I need, how much more leverage do I need. But the idea does sound amusingly insane, "leveraging options with margins". I am going to treat this option trading business like any other business in terms of managing risk and scaling. My object is to spend the next month honing on studies on options, market analysis, and seek strategy that I can combine with my own and definitely practice paper trading to improving on reading the charts and entries/ exit. Until I gain speed and mental toughness and manage to be profitable, I will start trading with set risk on my 2nd month, until then I will see how it goes. 3rd+ Months is mostly improving on any flaws I may have in my trading or implementing new strategy to improve my odds. My back up plan is if I don't make it within the next 3-4 month, then like any other business, there's no point in continuing and move on to do your next thing, the only thing I would regret is not trying out for something you feel passionate about and end up with the mindset of "what if..?". I have no regrets at this point even if I know to some this may seem illogical or crazy. As I said my goal is to be a successful options trader, if I perform well, the money will come as a reward. I'm not demanding the market to give me money, I'm demanding myself to do the best I can to be obligated to follow a strict physical and mental regime that would give me the edge.
Why options ? How much are your monthly expenses ? Have you considered working another job such as a bartender or night shift so you can take the financial stress off of you of having to be profitable to cover your monthly nut ? I'm not trying to rain on your parade but I have never seen 1 long term profitable options traders. The killer constraint is time and most fail because they try to trade cheap options. The only edge I've ever found was trading itm on boring low beta underlying the week of expiration such as spy or wmt.