First of all, it is not easy to be profitable. As well, during the time when you are struggling, your friends and family would look down on you during this most vulnerable time of your life because they think trading is gambling and there is no future. One of my friends, who happened to be a high paying financial analyst, has already told me that I am ânot normalâ for doing this. Your lifestyle would be inferiorly different from the average people. If you are a full-time trader (prop or not), you are forgoing the salary you could have made during that time you trade. If you have a full-time job, you are forgoing promotion opportunities as you try to focus on your trading. Your time schedule would be messed up. When your friends are out drinking and partying, you would be either catching up on sleep or working in your part-time job. Stress builds up as your struggle for survival. Your self-esteem would take a hit as you see your friends and old classmates move ahead in life. You try to catch up by learning as much about trading as possible. You read books, you read forums, and you might even fall to the trap of spending thousands of dollars on courses trying to learn trading only to see yourself stuck in time. With limited capital and majority of your funding goes to trading and studying, there is really no social life. No money, no drinking, no partying, no traveling, and no love life. Being a trader consist of a lot of sacrifices. It is difficult and punishing. And you know, they donât call going through a traderâs learning curve a baptism by fire for nothing.
I would like a hybrid in between, although if I only have one choice go for the consistent money. Trading for a fortune, that not for me. I tried and failed a few years back. 65k on one long position trade to -6k approx on the next crash and burn trade. Not fun. I would like to make 2k per day. Heck 500 bucks a day would suit my lifestyle just fine.
It's not a choice per se imo, those that settle will settle, those that don't stop pushing, won't stop pushing. All I know are the following: 1) that if I used a dollar amount as my prescribed "goal", I would have never gotten to where I am now (and "where" has NOTHING to do with dollars), and 2) when things are done right, you can make more than you ever dared to believe possible. And the difference between the two has nothing to do with increasing risk, pain etc -- quite the contrary. My fav Livermore quote:"It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance."
This is the challenge to having a family, i.e. wife&kids. If you have a problem, then it extends to them. I can imagine how it feels to have a setback and then having to account for those setbacks with loved ones. I will be honest, I think if you have a wife&kids then you should probably stick with a paying job and make your trades on the side. The market is making an incredible top that is not usually seen. The following chart illustrates my concern: http://stockcharts.com/h-sc/ui?s=VTI&p=W&b=1&g=0&id=p44483245184 The total market started trading in an upward channel and has been doing so since 50/200 week moving averages crossed in the summer of 2004. Since then, making money has been very easy in the stock market as its been going up-up-up in a predictable formation. You could have used many trading strategies during that time and they would have worked out. A good old fashioned buy-hold strategy would have even worked. Now you can see there is change towards the end of the chart. There was no Sept/Oct pullback. From July to the present time, it has gone up in a diagonal without stopping. A lot of stocks seem to be hitting their highs and the P/Es are getting stretched. Lets look at the same chart a little closer: http://stockcharts.com/h-sc/ui?s=VTI&p=W&b=5&g=0&id=p61899871286 Look at the end of the chart, there is a signal of a possible reversal. A reversal might either lead to a retreat to the 5 week moving average or the 50 week moving average. Now go back to the summertime, remember how bad the market looked? People panicing and running to get shares of PG. The regression slope in the summertime to the blueline looks innocent enough on this chart, but is indeed a very stressful experience if your long and will provide a great opportunity for those in cash or short. Next year is not going to be like the last 2-3 years. There appears to be a 50-50 chance of recession at this point and even the white house has cut its outlook on the economy. Im expecting oil to go higher. http://www.newyorkfed.org/research/current_issues/ci2-7.pdf http://www.federalreserve.gov/pubs/feds/2006/200607/200607pap.pdf http://www.marketwatch.com/News/Sto...CA921}&tool=1&siteid=bigcharts&dist=bigcharts My best educated guess is that the market might pullback 2% in the near-term then continue to trade up the channel or head down to the 50 week for a 8-9% pullback. Its anyones guess if there will be a recession next year, but there are key indicators that are pointing to it. How will stocks trade in this environment wont be favorable if your long. I wouldnt want to be trading stocks during such a year unless I could successfully short or buy puts. My style would be to sit on the sidelines monitoring everything through technical analysis and then when the rubble clears, get in on the bottom. So what I am saying to you is this. Things might be getting a little tougher and its not that far away. The bullishness in the market right now is scary. Having a job may not be a bad thing and that financial analyst friend of yours may not be having a job in the future. Im positive that some guys are pumping the stocks as high as they can right now for year-end bonus purposes. They see the same signs as I am seeing. What awaits on the other side of the new year is anyones best guess and they dont want to be caught without a nice fat bag of bonus money.
Ofcourse you are correct, trading is like any other entrepreneurial venture, very hard work and fraught with risk. The less well capitalized a trader is the harder it is just as with any business. Trading is one of the harder business to be successful at, RE is one of the easiest. Trading neither for a fortune nor for a living. I could retire tomorrow but I love being involved with the markets and love the challenge. The money is good too ;-)
eagle, what the heck are you talking about? if you are a TRADER, why the heck would a pullback, recession, bear market, etc. etc. be any worse than what we have now? for my B&H account, I would agree it would suck. I've had stocks like MO, BA, etc. for years and I am sure they would take a big hit but for TRADING, it's all about the market and playing what it presents you. who cares if it's long or short?
Yep, that is why I am still trading. I know once I figure out a consistence way to make a profit, I could be millionaire in no time. In the mean time, I will continue to pay my dues and just enjoy trading.