Engineer looking to make a career change into trading (PART II)

Quote from fframe38:

This is pretty ironic actually. When you read Market Wizards you will read stories of people that took the last $2K they had and went for it (Richard Dennis), people that blew $500K and borrowed from their friends and family and finally made it, people that wondered if they could feed their family some months but still persisted, etc.

I don't remember any stories about people quietly saving up $6.7 million and then barely tiptoeing into the market at 60 years old earning 10% over 5 years.

Not saying it is for everyone, but let's be real here. Practically every story I have seen about these famous traders starts with the guy (or girl) on a near shoestring, busting ass and taking names and making money through blood, sweat and tears, often blowing out a few times on the way. You aren't gonna make it trading for a career just dabbling around on your spare time. Full immersion is required, and full commitment. Either you have the stones and the commitment to succeed, or you don't.
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I noticed that too. A lot of them went or nearly went bankrupt. But they all got back up, dusted themselves off, learned a lesson and tried again.

They probably have a personality disorder that makes them not worry about financial failure.

It's like entreprenuers. Many fail and fail until they find the one company that makes them successful (if they ever are).
 
Quote from Maverick74:

This is your big mistake. To make it in this business, you need to be passionate about trading, not about making money. Big big difference. You lost the battle before it even began.
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Mav is right.

More than 90% of small traders lose! THEY JUST LOSE!!
 
thats 95% and its within the 1st year,....over a trading lifetime,it's probably 99.999% go broke at least twice,probably 3 times
 
Quote from sneakoner:


Correct me if I'm wrong, but I probably don't need software if I'm simply backtesting manually and using discretionary measures.

I want trading to be my new career and I want to be good at it.
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Well you can manually paper trade dozens of potential trades or in the same time with a good backtester you can test hundreds to thousands of potential trades. I test trades by the thousands and I'll tell you that something that works in a sample of 1,000, or 10,000 across market cycles is more likely to work going forward than something that worked in a sample of 10 or 100 across a very limited scope of time. Either approach can lead you to success or failure but I think the more trades you can analyze the quicker you will find strategies that work. Having the evidence behind my trading strategies is what finally gave me the confidence to put real money (for me) into my trading several years ago.

And keep in mind that trading has to adapt to changes in the markets. So whatever your approach you will likely need to adjust it as time goes on. When I want to adjust my strategy I simply test a variation to see how it works. Often the idea was based on an observation that looked promising, and more often than not in the long run it simply doesn't work.
 
Sneakoner,

Some comments on your plan:

- Continue to read as many books and threads as I can

Focus on quality, not quantity. I read close to 100 books during my initiation phase, but I truly regret spending that much time wading through garbage. That said, there are a few great books that are worth your time and will help you build a good foundation for your market understanding.

Ammo recommended Market Profile and I agree 100%. Even if you don`t use the profile, it`s an excellent framework to understand how the market works. The books by Jim Dalton are great.

- Familiarize myself with a number of indicators to use

Yes, you should familiarize yourself with a number of indicators and understand how they are computed and how they work. Then you will realize that most of them are worthless and you will throw them away and instead focus on reading price action.

Newbies are attracted to indicators because they look very impressive and advanced. High tech and with a 100% win guarantee :) What a joke :D

- Paper trade until I feel comfortable going live

I agree with this, but actually I would recommend you to start by backtesting charts by hand instead. Start on the left edge of the chart and move forward bar by bar. Take your time.

Then trade in the simulator when you feel you understand something.

- Go live with a small account to gain a feel for the psychology of trading that everybody seems to be talking about

Yes, make sure you don`t put all your money in your account at first. Believe me, the psychology of trading that everybody seems to be talking about will mess you up.

Finally, I would just say that you should lower your expectations with regards to how long this will take you. Rushing things and working hard so that you can quit your day job will be the slow route to success. Taking your time and learning slowly and steadily is the FAST way.

Personally, I`ve tried day trading in combination with a full-time job, and it`s just not possible for me in the long-term, especially since I miss trading the open.

For you, the best bet when you start risking money is probably to swing trade, since that can easily be combined with a full-time job.

Good luck,

LF
 
Quote from Maverick74:

Great video! I absolutely agree. Money always makes us do the wrong things. This is why most traders lose.
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Interesting presentation.

Regarding the speaker's point that the best motivators are Autonomy, Mastery and Purpose, trading certainly provides the first two.

But Purpose...outside one's own small world...is sadly lacking for the private trader.
 
Quote from fframe38:

This is pretty ironic actually. When you read Market Wizards you will read stories of people that took the last $2K they had and went for it (Richard Dennis), people that blew $500K and borrowed from their friends and family and finally made it, people that wondered if they could feed their family some months but still persisted, etc.
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What Market Wizards don`t tell us is the story of the thousands upon thousands traders who ended up as great failures, many of them even committing suicide in the end.

There is no doubt that a lot of the market wizards simply were lucky at the start of their career and a few of them even admitted that. Obviously, those who survived over the years had a skill and some probably developed it eventually, but the reason they made it may have started with nothing but pure luck.

As for saving up money that is exactly what many of them had to to before they started, saved those who funded an account with a credit card and got lucky or traded for an institution.

Marty Schwartz lost money for 10 years in the market before he turned things around and it all started with a plan. Part of the plan was to build a grubstake and for him it had to be earned from the market as to prove himself worthy of live trading.

So yes, I agree with your post. Swing trading is probably the best bet for the OP, but definitely take a shot at trading. Saving up money and preparing simply increases the chances of success (and survival), IMO.
 
Quote from ammo:

thats 95% and its within the 1st year,....over a trading lifetime,it's probably 99.999% go broke at least twice,probably 3 times
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So you're saying most of the people here on ET aren't even making a profit?

How do I know who's profitable and who to listen to?

I don't have a mentor so this place is the second best thing I could think of.
 
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