Did you read the second post in this thread, I have been arguing it the whole thread That is exactly what I have been arguing.... fact is....... Trading without a backup plan is stupid, you have to plan for what could happen. You are exactly right, you have to plan for failure, because over 90% of the people fail in this game, so to come in here without a backup plan, is stupid. I think a few of us have argued this
Ah I wasn't very clear. I meant I hadn't seen anyone argue, "If you plan for failure in trading as a career, you should not be trading" I've just heard people say that before, in more subtle ways like, "maybe this isn't the business for you" But its good we're on the same page.
Having a backup plan is definitely essential ... but I suspect most people do not really appreciate (1) how likely they will fall on their backup plan, (2) how realistic their backup plan will be at that time both in terms of executability and emotional acceptance of being a failed trader, and of the backup plan itself. Behavioral research shows that people on whole are overly optimistic both in terms of their current plans, as well as future future plans. There's a lot of disappointment in the future ... people just haven't realized it yet.
can you give an example of an "unrealistic" backup plan? (person has xyz background, makes up ___ backup plan) I can think of a hypothetical situation that is unrealistic (failed trader has a backup plan of becoming...an American Idol) However, it seems like most people on ET are aware of the potential problems trading may create for a "backup plan" Nobody on ET is saying, "yeah, i'll give it a shot. If it doesn't work, I'll just hop over to GS's HR and ask for an i-banking spot. (for example, I got my idea about fin math from..well, a person who actually did it. I saw this guys resume/profile in the NYU fin math program prospective employer guide. (the guy was some dude from E-trade's Prop division and was apparently the "head trader' there.
Yup, some people go so far as to say that having a back-up plan is a true way to cause your own failure... I say they are idiots. There is nothing wrong for planning for anything. Never let anyone tell you different. The whole "If you think you will fail, you are already done thing" is stupid, you should definately believe you have the possibility that you will fail, and plan accordingly. I just don't want anyone to ruin their lives trying to trade. I love trading... there is nothing else I can see myself doing now that I'd truely love to do. Music production, I wouldn't mind, but beyond my love for music, my love for trading is all I have. I've grown so attached to trading over the past year, that even if I did need to admit to fail in the markets in the future, I'd still participate no matter what. Even if it meant position trading, i'd do it. That is how much I love the markets, and I finally know what I'm doing in my life. I think my father would be proud considering he was a tax return specialist before he passed away. I never imagined myself having a job with anything having to do with money itself. I guess it all works out in the end. But I tell you what, I'm strongly convinced that AT LEAST 50% fo the people that come into this game are in it for the money. I talked to someone last night who asked me all these questions about trading, and I helped him out, and then after I explained the basics, he went on to tell me how he was hoping to make 10k in the next 3 months, and how he was hoping to make a million in 2 years. It's absolutely amazing how many people get into this game for the wrong reason. I just really believe that if people played the game for a different reason, for actually the love of trading, because they know it is something they would enjoy. Maybe 50% of the traders that fail wouldn't be here, and the failure rate may be a little along the lines of 75% failure rate or something. Of course all I'm saying is possible to prove, but I really think that so many people just come into the game for the wrong reasons... to make a quick chunk of change... or to perhaps make all their money from trading with high expectations, and fail. Considering this will probably always be the case, they fund the pro's.... but they need to have a backup plan for when they blow it. I only wish there was a way to really know why everyone is here. I bet if we all got honest answers, majority would be for the possibility of making money without having to deal with a boss. I will take a guess that most of those people probably do feel that way, and don't really care about what they are getting themselves into, and only a few from that group actually succeed, but some must because it's probably the biggest group here. I still am not trading for the money, as hard as that is to believe. A 19 year old that isn't particularly well funded, and has struggled for the past year... it's not for the money. It's because I love what I do, and even if I did fail, I know I'd be back in this game within the next year or so, because all this is just learning, none of this is about making money. From a year ago, this has always been about gaining experience,a nd this I have done. I'm now at a prop firm to try and make money, and guess what, all that hard work is starting to pay off. It might not be great compared to other successful traders, but to know all my hard work is starting to show... all the different markets I have tried, all the different types of trading, all the way from playing the scams with OTC stocks, to forex, to fast futures, and now equities. I'm living proof that with hard work and determination you can be a trader. But, I really don't believe the majority of traders on ET are here for the same reason I am. The successful guys that are here on ET, will tell you they can't see themselves doing anything else. In other certain cases. Coolweb for example, he has other businesses set-up but he says he is still active, but he has backup plans. I'm not claiming, and never have claimed to be a great trader, and I always state that, but I know I have learned so much within this year, that so many others will not experience because they are in this game for the wrong reasons. So, just my story. I think WHY you trade, can be a very important factor in your success or failure. I have to be honest with myself. I do expect the money to come later on, but for the past year, it's been nothing about money, it's about experience, and I survived with less than 5k in a whole year, trying multiple markets, and multiple methods of trading. Where'as others will blow 100k accounts in a few months. It's just amazing how I've come this long. Just some advice for the struggling traders.... look deep inside yourself and ask yourself honestly why you are trading? You don't even have to explain it to me, but lying to yourself will not help you. I know my reasons, and I have my plans. But do all you newbies that are here, I think you should ask yourself why you are here, and if you even think about wanting to make money, or being here for making money without hard work, then trust me, history will repeat itself as it always does, and chances are greater than ever you will fail. I accept the risk, I accept the fact that tomorrow, on a friday (which statistically has been my worst day in ALL markets), that somehow I could lose it all tomorrow if I got stupid and decided to buy a few hundred shares of GOOG and screwed around. So the line between success and failure is thin, but I'm definately standing on that line, i've been learning the game for the past year and know what it takes to be a great trader. So, i'm done with all that stuff i've typed. Another 30 minutes typing stuff, I'm sure some of the jackasses that have been harassing me lately will pop on here, but owell, as long as I help a few newbies, it's worth it. There are a ton of things every single newbie here could do to increase their chances of success, and there are billions of ways to make money in the markets, but if your in the markets for the wrong reason, chances are you will not be able to capitalize on any method because you are money hungry. I'm sure if took all the successful traders here on ET, and put them in a different market, I am very confident that they would be able to adapt with time and find a way to make money in that market. Not saying EVERYONE would, but I'm sure they have a backup plan if the market they are currently in goes bad. I am currently studying forex and options as a back-up if for some reasons equities doesn't work out for me in the future, so I can always have a backup. Also investing money in other things so I know I will be safe later on down the road, it would be amazing how if people sat down and really thought of ways to prepare for the longer term (like instead of trading for money, trading for experience instead) how much it could help. So, maybe this will help a few newbies realize some things about themselves. I'd challenge all newbies who are struggling to move down to the smallest size possible and trade it for the next 3 to 6 months and not worry about money, but focus on developing a system you like and keep testing it and practice executing it and make sure you can scale it up so when you are ready to take it to the next level, you can add more size and just execute your plan. None of them probably will do it because they need to make cash now, but.... hey, it's your job, you are the only one to blame for your success or failure, I have prepared, have you?
Above stuff continued....... ====================== Also, you need to realize when you are just in a drawdown period, or if your system/strategy/advantage has gone away. You need to be able to change and adapt when that does happen...... because if you don't, your just like someone selling one of those systems on a website advertising it's greatness.... but as everyone knows, no system is good forever, and sooner or later... it's going to stop working, and the more heavily you rely on that system, the better chances are you are going to be feeling more and more comfortable with that system and when things go wrong, your going to be in a lot of trouble. I'm currently scalping, but have taken interest in swing trading on the investopedia.com simulator, and also testing options on the think or swim platform and also trading forex on a demo account with strategybuilderfx and also watch the futures intra-day when I'm done trading equities. I am learning everything that I can now, so that when changes have to come, I will be ready, and although I might not have immediate results if I had to change, I'm at least prepared to do it and such. Some people say learn 1 market and stick with it, I say that is stupid, you should learn all the markets you can. Sure you should probably only trade one actively.... but there is nothing wrong with learning multiple markets in order to protect yourself. Anyone thought about investing in GOOG for longer term investment? Trust me, when I was 17 and was using it every day, I knew this company was going to do great things. Unfortunately when I turned 18, I could not afford to buy the stock, even though I wanted to, but.... I have had other's. FNSR is one I have held since 1.20 that worked out nicely. I day-trade, but I do have backups in place. There are just so many little things that everyone could do to protect themselves, yet they don't do it. I tend to think outside of the box and try to put myself in a position where I try to look at the longer term. I know I can trade, and I'm happy about it and am a happy person because I have set myself up for a long term commitment that I know I can fufill and I love to do it, although the short-term has been very rough, I made the best out of it, and I've been here longer than I imagined, and it is all paying off. So again, I ask all newbies to try and think about things in a longer term. Especially if you THINK you will be trading for a career, because if you think you will do this longer than 2 - 3 years, then you had better take the time today to plan out everything for the next 3 years, the next 5 years, the next 10 years and beyond, because I certainly have and I have about 85 pages of material to review that I have written, and I have about 200 sheets I have printed from ET of information to study threads that offer help and I study the loosers in this game just as much as I do the winners. Good luck to everyone with their trading, although if luck is a major factor in your trading, then.... just count down the days to blowup. Now I'm really shutting up. Good night everyone. EDIT: This is aimed towards the newbies, not the guys that are already successful, and if you disagree.... you are entitled to your opinion, but make sure you believe you are in a position to leave one.
Sure, here's one that a lot of aspiring traders probably have: If my trading doesn't work out in a few years, I'll just go back to my old job. But is this a realistic backup plan? Years later, will you really be able to go back to your old job? Perhaps your industry will have gone down the tubes and just recently laid off tons of workers. Will potential employers simply ignore that you have been doing irrelevant work the past few years? Can you convince them that you can fit into the corporate environment again, after the independence of trading? Are your skills out of date? Will your contacts still be around to help you find a job? Will your relationships with your contacts be strong enough for them to care about helping you out? If you don't believe any of the above is an issue, simply take your own resume, modify it to show that you've been trading the past several years (unsuccessfully of course, otherwise you wouldn't be looking for a job), and see if you can even get a telephone interview with it, let alone a site interview. It will be tough, demoralizing, and frustrating. With high probability, you will take a junior position, with less than expected pay, at a less desirable company and geographic location. Now if any of the above is unacceptable to you, then such a backup plan is unrealistic.
Here's a suggestion: keep on trying until you do succeed. Succeed or die trying. That's my backup plan...