Becoming A Trader

G

Gabbana25

Hi Everyone,

I suppose I am writing because I didn't know if anybody else pursued a similar career path to becoming a trader as I. Anyhow, I am 26 y/o, with little capital saved up towards trading and I have been following the markets for a few years now, struggling to trade profitably. In the past I got beaten down due to my lack of discipline and also lack of true capital (usually only having a couple thousand to trade with) (not a typo, as in $2k, not $20k or $200k. Pathetic? Yes.) Even though I have a laughable amount in my brokerage account, and I will most likely not become the next John Paulson anytime soon, I still don't want to throw in the towel. I know there is still a long way to go until I get enough to either have enough to pay a deposit and trade at a prop firm or have the $25k to retail trade, but my question is, has anyone out there ever over time built up a similar piddly(expletive) amount into something respectable or is it smarter to stay in cash until down the road when I can save up enough and just study the markets in the mean time? I know to make big returns one must take bigger risks, but it seems with what I have financially if I take those bigger risks I can get wiped out and be back at square one. Also, if I stick with more conservative choices, my gains aren't that significant
Also, I don't want too be some putz who saves up enough to trade then only fail soon thereafter (while it may be debatable if I am/am not a putz in general, that is for another forum :-) ). All in all, any advice would be helpful, such as is my best hope to go to school and excel and get a job with a firm or is it best to just stay the course and not take failure as an option? Whenever I'm down, I tell myself "Winners never quit, Quitters never win" (Heartwarming, I know, but nonetheless, that's how I stay motivated). Thanks again!
 
Quote from Gabbana25:

Hi Everyone,

I suppose I am writing because I didn't know if anybody else pursued a similar career path to becoming a trader as I. Anyhow, I am 26 y/o, with little capital saved up towards trading and I have been following the markets for a few years now, struggling to trade profitably. In the past I got beaten down due to my lack of discipline and also lack of true capital (usually only having a couple thousand to trade with) (not a typo, as in $2k, not $20k or $200k. Pathetic? Yes.) Even though I have a laughable amount in my brokerage account, and I will most likely not become the next John Paulson anytime soon, I still don't want to throw in the towel. I know there is still a long way to go until I get enough to either have enough to pay a deposit and trade at a prop firm or have the $25k to retail trade, but my question is, has anyone out there ever over time built up a similar piddly(expletive) amount into something respectable or is it smarter to stay in cash until down the road when I can save up enough and just study the markets in the mean time? I know to make big returns one must take bigger risks, but it seems with what I have financially if I take those bigger risks I can get wiped out and be back at square one. Also, if I stick with more conservative choices, my gains aren't that significant
Also, I don't want too be some putz who saves up enough to trade then only fail soon thereafter (while it may be debatable if I am/am not a putz in general, that is for another forum :-) ). All in all, any advice would be helpful, such as is my best hope to go to school and excel and get a job with a firm or is it best to just stay the course and not take failure as an option? Whenever I'm down, I tell myself "Winners never quit, Quitters never win" (Heartwarming, I know, but nonetheless, that's how I stay motivated). Thanks again!
More...

Unfortunately, time is against you. Trading actively with $2K will move many traders to gamble as you look to gain trading assets. My advise is to find a paying job next to an active trader. Not easy to find. But you'll need a mentor willing to help you. Hopefully down the line, you'll either save money from a salary, or find a backer when you learn more from that position.

In my opinion, no one should be "trading" with only $2k in savings. Your setting yourself up to fail, when you might have what it takes to make a career out of it.

Good luck.....Bob
 
to the OP, i strongly suggest you disregard everything the previous poster said. maybe in his world you shouldn't even attempt to trade unless you have $38 billion like paulson.

i've been in the EXACT same position you described and i've been able to continually improve as a trader and make money from a small initial amount. yes this means taking on more risk but you already knew this. you could trade in options (long only) if you have a strategy w/ an edge? this means you need to put the hours in the chair studying the market, testing hypotheses, etc. remember don't take really risky trades just to get a bigger account balance. the power of compounding is a powerful thing.

the most important thing is to NEVER GIVE UP. if anyone tells you you won't make it or worse that you shouldn't even try STOP listening to that person immediately and never listen to them again. they will only distract you from your goal.

OP, if you have any questions you can PM me or post general ones on the board. good luck.
 
Also, that's what I figured, well, never to give up, but also, if I could get a job in the trading field, I would have a chance to make a good salary and not fiddle around with measly amounts, but get in with a decent sized company and have access to greater capital than I could have on my own.
 
You aren't ready to go live until you can take money out of the market 12 out of 15 days. When you reach that point then the starting capital isn't really an issue. I would suggest futures, with at least 25k risk $125 a trade. Daily loss limit of 500 bucks. Means .5% per trade or 2% daily loss limit.

Your most important goal at this point is developing a reliable methodology to take money out of the market. If you never give up , your success will come. Don't blow your money if you don't have that methodology figured out though.
 
I have segued into options trading, since it can give you leverage and a few month time frame for the options to get in-the-money, or appreciate more if they are already in the money. With futures, can you trade the futures like an option chain, where you don't have to exercise it, but can sell the future contract to someone down the road? I agree too that unless I have a system which can successfully make money, I should learn more until I can. (I know it won't come overnight, but hell, if I give up it's a certainty I'll never succeed).
 
Finally an encouraging thread. Let me jump on the encouragement bandwagon. You can do it!
I began trading with $600 trading small options ($100 per contract at the money). The next two years led to a washout of that ammount on 6 separate occasions. Each one took longer than the previous one and I learned more with each loss and each win. Three years after I started (and after a 9 month break from trading), I began again, also with $600. It is now $3700. When I began I didn't know what I needed to be successful. So hopefully you'll find this helpful.

See if your trading system can answer these questions:
1. Once you know the direction (up or down) how do you know when to get in?
2. When you get in, at what point do you know that you're wrong? How much loss does that allow?
3. When you are right, how do you know when the movement is done or at what point do you close?

If this was a casino, it would be easy. Definite losses when you lose, definite gains when you win. But with trading, your plan has to define loss size or else random chance will define it for you.

If I had it to do over again, I would stick to research and virtual trading until my system had real answers to these three questions.
 
Quote from J.Joseph:

Finally an encouraging thread. Let me jump on the encouragement bandwagon. You can do it!
I began trading with $600 trading small options ($100 per contract at the money). The next two years led to a washout of that ammount on 6 separate occasions. Each one took longer than the previous one and I learned more with each loss and each win. Three years after I started (and after a 9 month break from trading), I began again, also with $600. It is now $3700. When I began I didn't know what I needed to be successful. So hopefully you'll find this helpful.

See if your trading system can answer these questions:
1. Once you know the direction (up or down) how do you know when to get in?
2. When you get in, at what point do you know that you're wrong? How much loss does that allow?
3. When you are right, how do you know when the movement is done or at what point do you close?

If this was a casino, it would be easy. Definite losses when you lose, definite gains when you win. But with trading, your plan has to define loss size or else random chance will define it for you.

If I had it to do over again, I would stick to research and virtual trading until my system had real answers to these three questions.
More...

+1. This is like me typing my own experiences. An encouraging note - I can think of more successful traders that lost all their money and recovered by not quitting and learning than those who never blew up.

another tip: aim for singles and doubles not home runs. the former really adds up esp when you're turning your port over a lot swing trading (2-5 days) as opposed to just waiting for that one huge trade that's going to be the answer to your prayers.
 
Quote from Gabbana25:

Hi Everyone,

Even though I have a laughable amount in my brokerage account, and I will most likely not become the next John Paulson anytime soon, I still don't want to throw in the towel. I know there is still a long way to go until I get enough to either have enough to pay a deposit and trade at a prop firm or have the $25k to retail trade, but my question is, has anyone out there ever over time built up a similar piddly(expletive) amount into something respectable or is it smarter to stay in cash until down the road when I can save up enough and just study the markets in the mean time?
More...

If you are not currently married, this may be the best time you have to take this shot at getting skilled at trading before other risk factors and obligations set in. That would argue in favor of trading now, accepting the probable risks of one or more small wipeouts along the way.

It is not a good idea to just save up $25K and think that once you have that money ready you will know what you are doing because you have saved it up. You will still likely have many learning issues and a still large risk of blowing out the account, except it will be much more painful to blow $25K and have to resave another $25K versus blowing $2K and saving that back up again. Besides you really need about $30K or more to make sure you don't drop under $25K and trigger all the nasty day trading rules.

Your challenge is to treat the small amount of money seriously and learn real trading discipline. I suggest using NADEX (http://www.nadex.com) to get started - you can trade easily using $100 per position (or even less at times), not be hampered by day trading rules and get the whole experience of going through the trading process, still have a chance at making money and develop discipline and trading skills.

Do not expect to get rich quickly, but focus on developing risk control, positive expected value, disciplined setups, controlled exits etc. Once you have proven yourself over time and gotten to about $5K or so, then you can think about next steps to take. Expect the learning process to take 2-3 years most likely and involve 1 or 2 wipeouts before you reach that point.
 
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