I started trading my own futures account in 1993, and started taking training clients on a part-time basis in 2008. In the past five years, a significant portion of my client work has been with full time professionals in a career path outside trading, who traded actively in the past, and who wanted to make a serious push towards actively trading once again whilst keeping their present jobs. Many of these clients also harbor ambitions towards someday trading full time. Seems to be a common goal for more than a few ET Members. In fact, I did it myself. I originally moved to Chicago straight out of University in the late 1980's to take a job as a nuclear engineer at the biggest nuclear utility in the U.S., and several years later I found myself trading primarily US Treasury futures - this was not an original life plan. I thought I would start a thread where I archive some thoughts and ideas about how this might be realized, and communicate some of my own thoughts and client experiences on this idea of making a career transition into serious part-time or even full time trading. It happens, and it is imminently possible - especially thanks to modern screen accessible markets.
Thank you for the missive. As you say, you have taken your own experience and applied it to a client base which has traded in the past, and would like "to try it again", as it were. The main question here is...Why is full-time trading such a difficult field to break into? It is not physically-demanding, only mentally. I think I know the answer, but would like to read your take on that bit.
And my predictable response would be that gross trading strategy knowledge deficits, tradecraft deficits, emotional hurdles and the like are far more difficult and testing than any physical demands. There is also the common challenge of a client whose capitalization is such that there is precious small room for error - he HAS to be functioning at a very high level in terms of his application of a thoroughly vetted and robust trading system before he risks live capital. Each client presents a thoroughly unique challenge in many respects - no mystery there. Everybody's different. My approach is to first define the desired end state with the client - and subsequently work backwards from there with that client on an individual basis. Namely, I for one would like that client so thoroughly versed and competent with the trading system to the point that his own confidence demands that he risks live capital. My apologies for being brief and for the lack of specifics - I'll have more to say about this once I return to the office and pick up working with clients again. I am literally messing about on my iPad whilst watching football this instant. January and February are always really good in terms of fresh trade signals. I have endeavored wholeheartedly to streamline and refine my trading system over the years. Working with clients has foisted that upon me, and that's a good thing. I aspire to eliminate variables and discretion. But there are serious and worthwhile considerations that really need to be resolved on a case-by-case basis.
Instead of transitioning from a full time and developed career, folks should try to get a subscription to some good newletters like Motley Fool, Zacks and throw them to their brokers or spouse or children to pull the trades as the signals come through. 14-15% average return a year would be beating 95% of fund managers hands down. 10% would beat 90% of wall street Ivy League top guns. The real money is made mostly in catching the major trends i.e. economic sectors in the markets. Like Internet in the 90s, Energy in last 15 years OR locking into a real success story IPOs like Facebook, Chiptole, Google etc. and holding on for 5-10 years or longer. Trading is probably the hardest profession out there. 80-95% failure rates are a true real world number. If trading was that easy then everyone would be doing that........full time!!
on average, how long you vetted individuals to run their own trading system? how many of them at the end trade similarly to yours? thanks
That was going to be similar to my question. Do you teach them all your process and strategy or do you examine what they do and help them excel, so they all do different trading? How do you charge for your service?
The reason so many people fail as traders is because there are no barriers to entry except the ability to fund an account. This leads to the vast majority of people that attempt to trade not being prepared. Either they don't have a strategy, are underfunded, or just don't have the proper mentality. It's the central theme of my book "Failed Traders" and one that people fail to consider. Jeff
I believe the "golden age" of home-trading is about to be over with hedge funds and big proprietary trading firms investing heavily in artificial intelligence and big data.
"The key to the game is your capital reserves" - Gordon Gekko I would recommend 10x yearly living costs if trading is going to your main source of income. So if you need $50K to pay the bills, i would recommend $500K in capital reserves, if you want to transition to full time trader. Then if you have a bad start to your career, your living costs won't make a huge dent in your capital. Nothing worse than a drawdown where you lost say $30K to the market but also $50K paying the bills. You are down 80K which will take you out the game if you only had $100K to start with. It goes without saying the trader always needs an edge, discipline etc which most starting traders don't have.