Becoming an independent trader

[crazyAtrader]

I tell you what works for me, perhaps it works for you.

Study charts, all kinds of charts, static, moving, old, does not matter but mostly naked charts. Don't let crap distract you, I won't define what crap is, to avoid the crap defenders

Try to notice the following:

A pattern that usually works, requiring a small risk to attempt it, and with a potential reward that's at least 3x the required risk.

If you got that, see if the same holds true for multiple timeframes, if that holds, now you got one master pattern, one tool in your toolset.

Begin searching for this pattern in all reasonable instruments. First manually, in the future, if possible, mechanically.

Once you find it, trade it with minimum cash.

Make sure you stick to the risk/reward principles of what you original found, if there is no discipline, eventually there will be no trader.

Now you can start working on your execution skills.

Once that is out of the way, keep scanning and trading your one master pattern but at the same time begin searching for a second one to add to your toolset.

Ask yourself if you are sticking to the basic rules of discipline, minimum sizing, only trading the master pattern(s), etc. Until you got all green lights, you cannot proceed to the next phase.

Once it's evident that you have positive expectancy and solid discipline begin using your hard earned capital and your leverage, first slowly, as things go very well, proceed to move aggressively.

Repeat the process of finding new patterns and don't forget to stay sharp, plan the trade, trade the plan.

Your line of work will be, scanning for your master patterns, scanning for new undiscovered patterns, and executing everything to the best of your abilities.

The rest, the rest is bullshit.

Crazy A

 

[Lucias]

Quote from Zen Student:

If it is true that you have $300k, firstly do not pay any of it to anyone for services. You can't buy access to useful knowledge in this industry. Knowledge which enables profitable trading is closely guarded by those who hold it and used by them to make money.

Really genius? So, let me get this straight, all useful information is closely guarded but yet free information is somehow worthwhile?

 

[bone]

Quote from sdd80:

In about 10 yrs time I'd like to be making $1million/year as an independent trader.

Experienced traders know that you simply cannot have monetary goals, and then tailor your strategy and sizing / risk accordingly. Sounds reasonable to many in theory, but in practice it leads to forcing trades which is never a good thing.

The correct "mindset" is to look for consistency with small size, and then to quantify / define that consistency into a long term reproducible business plan. At that point, you lever the piss out of it and any thoughts about "achieving certain income levels" becomes a non-issue.

My 2 cents born of experience.

 

[hitnrun]

the 10year/1 million per year is a high expectation for anyone

If you had a million dollars in capital to risk then maybe that would be realisitic goal for the top 2 % of traders

it's not how much you can make but it's how much you keep that is important

 

[SkepticTrader]

You have completely unrealistic expectations and that alone sinks most newbie traders. You don't even know if you have the mindset of a real money trader. Over the past 20 years hedge funds have averaged 12% annually on a compounded basis. The best and brightest compound at a rate of 25% to 35% over time. I would pay no heed to those in this thread unless they can back themselves up with some type of documentation. Never but never believe anything you read on a trading forum when it comes to claims unless it can be validated over a period of years and with real money trading statements. And NEVER believe the stories of "I have a friend" or "I know someone" who has made vast riches in the markets. Your best bet is to find a mentor or the very least someone who has actually achieved what you are seeking and who has the goods to back up their claims. Good luck with that.

 

[miketrent]

The notion that you will make $1 million a year with this account size is completely absurd, even in ten years. If you had over $5 million maybe you could achieve that, and even that is a reach. You say that you are single with no kids. At age 33 surely you don't intend to stay that way do you? Having a nice house, wife, & kids requires lots of $$...trust me. If you are genuinely on a path to make seven figures in the consulting industry I would definitely stick with that!!! With that level of income you could always manage a nice size portfolio on your own to fulfill your passion in the market. And don't forget the importance of group health insurance, 401k, and the other great things you would be giving up.

 

[Zen Student]

Quote from SkepticTrader:
You have completely unrealistic expectations and that alone sinks most newbie traders.

He has set a goal for himself. Whether this goal was unrealistic or not will be proven in time according to his own effort and abilities, not Internet blowhards who claim it cannot be done.

Quote from SkepticTrader:Over the past 20 years hedge funds have averaged 12% annually on a compounded basis. The best and brightest compound at a rate of 25% to 35% over time

Is the OP a hedge fund? Not relevant. Might as well quote bond coupons or the historical results of the S&P. What does this have to do with a small independent trader trying to make a small amount of money in the futures markets?

The best and the brightest? This isn't you. What would you know about what the best and brightest can achieve?

 

[Zen Student]

Quote from bone:

Experienced traders know that you simply cannot have monetary goals, and then tailor your strategy and sizing / risk accordingly. Sounds reasonable to many in theory, but in practice it leads to forcing trades which is never a good thing.

The correct "mindset" is to look for consistency with small size, and then to quantify / define that consistency into a long term reproducible business plan. At that point, you lever the piss out of it and any thoughts about "achieving certain income levels" becomes a non-issue.

My 2 cents born of experience.

Yes. Work out first if you can get the points. Then start trading with 1 contract. Use the same pro rata risk and size up in line with account growth. First limitation is liquidity in your chosen market and timeframe.

 

[shopster]

Quote from bone:

Experienced traders know that you simply cannot have monetary goals, and then tailor your strategy and sizing / risk accordingly.

At that point, you lever the piss out of it and any thoughts about "achieving certain income levels" becomes a non-issue.

My 2 cents born of experience.

correct, end of subject.........

it becomes the same trade setup with more zeros, same risk % of trading equity as you ramp up the curve.

from experience.

s

 

[Ghost of Cutten]

These quotes stand out:

"I am drawn to the flexibility of lifestyle, not having a boss, having geographic independence and so on."

That's like saying you want to become a racing driver because of the high salaries, travelling around the world, banging models etc. But to be a good racing driver you need to love racing. Similarly, to be a good trader you need to love markets. Your post doesn't seem to show that passion - and in fact, at age 33 you have never even placed a trade. So, I'd raise serious questions about your motivations - it sounds to me as though you think trading is a holy grail solution for making big money with no boss, getting out of a job you hate etc. I.e. you are looking at trading for the wrong reasons.

"What do you suggest as a next step in my education/path to becoming a trader?"

Start with a 10k account and trade part-time outside your normal working hours. Set maximum drawdown goals - don't lose more than $3k, for example. The point of this is not to make money, but to learn with real-money trading without taking excessive financial risks, and to see how well you can do. If by the end of year 1 you have increased your 10k to 11k or more, without at any point losing 30% of your starting capital, then maybe you have some potential.

"In terms of capital - I have around $300k in savings - yes I can lose all this money without impacting my life. I have read that insufficient capital is a problem for many new traders so am curious whether people think my capital is anywhere near sufficient."

You would be insane to risk $300k when you are a novice. Don't even think of risking anything more than 5% of your savings until you have at least 1 whole year of experience. And really, you should never be risking more than a 20-30% drawdown anyway - which means you should aim for 10-20% drawdowns, since real drawdowns are always bigger than you expect them to be.

"I guess it would be necessary for me to also state my goals, and please feel free to tell me my dreams are crazy or unrealistic if you really believe this.

In about 10 yrs time I'd like to be making $1million/year as an independent trader."

Trading doesn't work like that, it's not a consistent income. If you become that good, you might make 300k 1 year, lose 200k the next, then make 3 million in year 3, for an average of just over 1 mill. Don't expect regular income from trading.

Secondly, it's not a steady progression like most jobs, success (if it comes) is more lumpy and unpredictable, a bit like the career of a good general or entrepreneur. You can have great periods and dead periods, you can have a great method that suddenly stops working after years of success, you can have disasters where you lose a LOT of money.

"To get there, I'd like to gradually transition from my current career into full time trading, without experiencing a significant impact on my annual earnings/lifestyle."

Very unlikely. If you don't work full-time at trading, you are unlikely to make money at it (do you know any successful part-time football players or trial attorneys?). If you work full-time at trading, you won't have any consulting income. Part-time is ok for learning in the first few months or even 1-2 years, but eventually you have to choose - trade full-time, or treat trading as a hobby (which will probably lose money) and do it part-time.

The only way to trade full-time and make money from day 1 is to be employed as a trader, or to be very skilled/lucky - but you want to be independent, and are a late-starting novice. So, my advice is decide if you are willing to go from 200k to 0k for 1-2 years, and if not, then either take a trading job, or give up your trading ambitions.

"However, I absolutely hate what I do and I will not be happy if this continues to be my life."

So, find out what you absolutely love to do, and work out a way to build a productive career out of it. So far I don't see evidence that trading is what you love.