To me going into the business of trading for yourself is virtually no different than going into business for yourself period. Most people that open a business don't make it, for those that do the pay out is worth the risk and hard work. People that open a restaurant don't expect to make a killing their first year. For some reason traders do and when they don't they quit. I forgot what trader i was reading about the other day that it took him 10 years of trading to become profitable. During that time he worked odd jobs, night watchmen or whatnot. Now he's a multi millionaire. Thats pretty much my career plan at this point. If it takes me blowing up 5k accounts at a time over 10 years while working odd non market hour jobs to learn this business, well then thats what it takes.
To add to the above, almost everyone who goes in to business fro themselves, be it trading or any other business, is going to suffer drawdowns and cash outflows as it takes time to get a business up and running and adjusting to all the time and demands starting one's own business requires. Most people overlook that start-up phase.
Good point OC. Nobody starting a restaurant or fast food outlet would expect to be profitable from day one. Yet, it seems many people starting to trade expect to make money right away, lots of money. And when they don't, then it's rigged, a zero-sum game etc. Let's say probably half of the restaurants ever started get closed in the first 5 years due to various reasons. Is that business also rigged? A zero-sum game etc? Or just the Darwinistic effect of people making it and those not making it.
You make some good points about when a trading career makes sense, versus when it is more problematic. But one overriding theme on this ET site that keeps coming through is "Don't try to make it trading full-time - stay safe in a 9-5 job, etc." It seems like people on this site are either gung-ho traders, or think it's a stupid risk - what ever happened to the middle ground - position trade for wealth building while maintaining a job, or other activities, then take a shot? I don't get why people think this is so dangerous - limit your risk, take your shot, and see what happens. At least your life is in your own hands that way. The "safe" alternative has risks like your job disappearing overnight through layoffs, outsourcing, corporate takeovers, adverse management changes, technical skills becoming obsolete, divorce (see wives and wealth thread), etc. Trading is good to develop boldness, independent thought, seeking opportunity, etc. I don't see the harm in it, as long as you are not using trading as an excuse to avoid working, and have delusional beliefs about your results, just to maintain the excuse. I also see where a lot of people think trading is always about day-trading, or prop firms, or tick-chasing the programs, but I seem to notice more longevity in swing trading and position trading. The biggest challenge with those approaches is staying busy enough with other activities that you don't screw up your trading by becoming over-active (forcing trades), or hyper-managing positions due to boredom. Just my take on it.
great post gnome.......as well as OC,TG & Maverick..........very easy to tell whom actually trades here & whom the investors are by reading quality posts like these.
really? i must have avoided the threads where that comes up (granted, i don't read most threads). i thought what most people have said, and what i agree with, is: don't jump headfirst into it - trade on the side from your day job, build up a nest egg, etc. be careful if you make the jump, it's not easy, 90-95% of traders fail, lose your ego at the door (and don't think you're smarter than the market) and all that stuff. what gnome said is pretty much how i trade, and what i've learned. i was teaching someone new recently, and they were throwing all these oscillators out at me (which i'm familiar with), and i kept going back to price, volume, and the right side of the moving averages. because for most people, who aren't 'making' the markets, those oscillators really aren't good, only at extremes which are visible on a chart through price and volume. (EDIT: fframe, i'm a daytrader. i'm not good at swing trading, though i AM good at teaching it and helping others with flaws in those timeframes. go figure.) i agree with maverick - straight up and straight down i can't deal with, and no vol i can't deal with. but give me some vol, and some up / down movement, and i'm a happy trader. and if things are real nice, i can take time off with my family, play basketball, go to the city and see friends, and all sorts of things i couldn't do otherwise. it's funny that someone who isn't trading for a career and continually posts how smart they are is lecturing everyone else on how they should be living their life. i learned early on that people have different goals and ideas of success.
I was trading with a slide rule. In fact, when I started programming computers only had ones. Zeros were a luxury. nitro
michaelscott I do not wish to get into a pissing match with you, but..... Your OP sounds as if you do not understand how to trade. Im sure other traders must have explained this in this thread, but successful traders thrive on market volatility. Good traders can read what the market is telling them and reverse long or short positions on the drop of a dime. People who buy low, buy high, and buy on the way down are investors, not traders. I cant wait for the next correction in the market. I will make money on the way down. If this bull market continues I will make money on the way up. If the conflict in the Middle East gets much worse I will make money going long crude. My point is, if you cant make money in any condition the market gives you, you should not be trading for a career.
Hee hee, I've got no choice... got out of work, too old to get a real job ever again, burned through the savings developing trading methods, no choice to trade from now on out and guess what? I'm very happy I went all in like that. It is all I wanted to do for years so I did it, it's working out fine. I don't have the concern about falling volatility... if volatility falls, you can lengthen the bar intervals you use and probably be profitable, maybe a little less but the correlation between price moves and bar interval is not linear. If you quadruple your bar interval to get your strategy up out of the noise your gain per time should go exactly to half, all other things being equal. I suppose that if I find myself trading an instrument with falling volatility I can lengthen the bar interval on the scheme and go searching for an instrument with volatility, there always seem to be some, we have the whole world's markets to choose from.