Some of you need to see the reality of the situation. The reason why you want the lifestyle of a full-time trader is obvious. You can be your own boss, hang out all day making a fortune at a ridiculously easy job. It eliminates the need to go find a "real job", and the gambling thrill is very seductive. Even the weakest and most irresponsible "dreams of glory" are milked by the brokers, firms, and vendors who want to sign you up as a customer, continuously making profits for them while you labor away and never quite make those profits. The reality of the situation is this - real edges are extremely rare, and any that exist are guaranteed to be made extinct at some point (this is the nature of the markets). This is why even some of the "market wizards" went bust eventually. A losing trader wouldn't know a real edge if it was right in front of them, in any case. (They are usually too busy deciphering charts and researching the hundreds of methods out there that do not work) Most traders fail, and this is not an accident or some random phenomenon. Your basic trading odds are 50/50, and this is made worse by human psychology, which works against you. Add into that commissions (the vig), and it is almost laughable that people think they can make a living daytrading. Vic Neiderhoffer observed that if you were to flip a coin, winning a dollar if you guessed right, losing a dollar if you guessed wrong, but had to pay 20 cents on every flip (comms), your odds of coming out ahead after 200 flips is less than 1/100,000. Worth betting your financial future on? You can tell a compulsive gambler pretty easily. They are always "on the verge of success". The problem is always their broker, or the specialist, or the markets aren't what they used to be, or the ECNs are too slow, etc.. etc.. They use others as examples - "well, so and so made $600k last year daytrading - it said so on Elitetrader". Many of these stories are just plain false, or worse - lies. Others that do succeed, sometimes do so only because of luck, and eventually their luck runs out, and they find another line of work. There is a simple way to tell if you are a complusive gambler, and therefore a danger to yourself and people around you, and whether to know if you should quit and quit now - If you are breaking even - are you enjoying it? If so, have at it. If you are making money, you are doing the wise thing by trading. (By "making money", I don't mean profitable SOMETIMES - look at your income tax return for the year - did your trading pay off?) Are you losing money? If you are consistently losing money, and do not take a serious look at stopping the damage now, there is no explanation but you are caught in the delusional state of a compulsive gambler.
so if a person is losing, there is absolutely no other reason for it in the world other than that are "in the delusional state of a compulsive gambler"? yeah,... ok buddy. obviously that argument is not gonna win you any philosophy prizes...
Hmmmm....I really wonder who trades around here? Some of these posts are definatly by outsiders looking in on the trading world.
I guess we must be a pretty interesting bunch of people then if they keep coming around and trying to analyse us Natalie
I think this is a very good summary of trading. I trade full time for a living (for the time being....) and I sure know the climate for (for example) daytrading has changed for the worst the last year. In my 5 year career there are very few left of those I started with (less than 10%)..... Many are successful one year by taking huge risks (for example pair trading) and not recognizing it was simply due to luck. Later they are washed out when the small probability of "abnormal random events" happen. Vic Niederhoffer himself blew out by taking excessive risk. Too bad for him a completely "random event" forced him to close down his fund. This happen to most sooner or later. The thing is to put aside money along the way and recognising the risks.
fl-trader You can not get to the point of consistently winning without going through the beginning process of consistently losing. This does not make you a gambler. If you become consistently break even after having been consistently losing, then you are making progress. Gamblers don't make progress THEY GO BUST. I am enjoying being break even because it shows that I am improving and that I will "soon" be consistently profitable.
Excellent post, fl trader. But what's equally interesting is how many people immediately react to it with an almost reflexive denial. And not only that, you know how to spell "losing"! --Db
I disagree with the above statements. Edges are not rare, they are plentiful, just not applied appropriately. Please name one edge that is now extinct. Looking at charts and reading about trading methods is very good for your trading. Nothing can prepare you better for what you will see, than having looked at a bazillion charts. Reading other methods not only helps to validate your own thinking, but it might spark new ideas for future development. Were it not so, the Keeping It Simple thread would not exist. All of formal education is based on learning first and applying what you have learned to the real world and making necessary adjustments. Or ask any college and pro football player how important watching game film is of other teams. Or talk to the coaches and see if they find it valuable to go to other schools in the summer and see how they do it. That you think it is almost laughable about daytradng for a living tells me that you have not been able to do it. You also might not be able to hit a 92 mph fastball, but there are plenty of people who can. Just tune in to MLB and check it out. And the verge of success idea identifying compulsive gamblers.... fortunately for all of us this concept didn't effect such well know gamblers as Thomas Edison, Alexander Graham Bell, and the multitudes of other great scientists, researchers, and inventors who persisted despite repeated defeat, because they felt they were close.
I agree with InandLong, the market is full of opportunities. All opportunities, however, do not fit every trader, but that's the point, each trader has to find its own trading style with which he or she is most comfortable. Some people are not comfortable with losing money, even the tiniest of amounts, and those people come on ET and tell other fellow traders 'Well this guy said that the market was a 50/50 bet (how far away from the truth is that, anyways...) so you're gonna lose money in the end'. Why is it not a 50/50 process? Simply because everything is not BLACK or WHITE in the market, some can be whiter (nice profit streak), and some can be grey (a bit of a controlled losing streak), and some can be black (or red if you prefer 'cause black usually means positive . It's not HEADS or TAILS. If you believe that, then obviously you shouldn't trade. Trading is not gambling, there is no house (other than the MM's but even them need to find an edge to make money).