Engineer looking to make a career change into trading

Quote from lindq:

You'd be foolish to dump your current career path until you've exhausted all avenues for educating yourself on trading while you're working. You may not like what you're into right now, but even your worst day at present is nothing compared to losing your savings when you enter the market unprepared.

If you do decide to take on trading full time, you want to be as knowledgable as you can before you begin.

Read everything you can, understanding that you will be looking to build a background of knowledge. Don't expect to find 'secrets'. And 90% of what you read will be either repetition or just plan wrong.

Your best investment is a good software package for backtesting, which you can work with on your off-time. It will help build your skills and put you on a firmer track before you place your bets.

And keep in mind that the path to profitability is not days, weeks or months, but often years. If ever. No different than any other business.
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I don't have time to plow through this whole thread, but there have been hundreds of similar ones over the years. The advice by lindq above is spot on and will save you a lot of money and possibly a career. I would say you are totally nuts to quit a good job unless you have saved enough money to be independently wealthy.

Most "prop" shops where you put up your own money are designed to put you on a desk generating commissions for them in the least risky way ("scalping"). The chances of being profitable with a $5k stake and high leverage are very small. As for giving you an edge, if they really had an edge why would they share it with a newbie putting up $5k?

Your best bet is to keep your day job, study the markets, get some backtesting s/w and data and see for yourself what works and what doesn't. You can easily trade futures at night or early morning. The ES, CL, GC, and currencies all have active overnight sessions you can trade. Futures in many ways are a lot easier than stocks and more efficient.
 
I think you are right to plan to trade while keeping your job. I trade based off end of day data and have been doing so successfully for a few years now while I continue working. Rather than supplementing my income I am growing my net worth to significantly move up my retirement date.

There is an overwhelming amount of information about trading and strategies, but much of it is worthless. To trade successfully it is important to find and focus on what matters most. As a former computer programmer I like objective strategies that have very clear rules, and such strategies are testable, so I can backtest my strategies before trading them. It's no guarantee of success because probabilities can change and backtesting has it's own drawbacks but it's an approach that has worked for me. Many books will say that such and such setup is a high probability trade but they don't say what the odds are ... because they don't really know. Often the setups are subjective so it can't even be determined. Many traders will tell you that it takes years of trading experience to become successful - I'm sure this is what it takes to be among the best but it can be a costly approach. My goal is not to be the best, just to make money consistently.

Good luck to you.
 
I want to thank you guys for all your feedback. Although it was more pessimistic than I had first imagined, I realize it is the reality of trading. I guess my initial reasons for wanting to go into trading was my lack of fulfillment in my current career and trading seemed to pique my interest.

Although I'm not 100% discouraged from attempting to trade (I do still plan to try it out) I will approach it much more carefully and risk less capital. I probably won't quit my day job anytime soon.

And to the above poster - yes I do realize it was unrealistic for me to make $100,000 my first year trading...
 
Quote from sneakoner:

1. I have yet to develop a trading strategy, but that is the next step. I was hoping joining a prop firm would help me develop a working strategy faster and help me minimize my mistakes earlier.

2. My plan was to use $5000 to start at the aforementioned prop firm for the first 3 months (the probationary period) simply to learn and to gain experience. Afterwards, I can put in another $45,000 and with a 10:1 leverage I would have a buying power of approximately $500,000. Hopefully I can make $300-$500 a day on average (after commissions). Does that seem reasonable?

3. If my trading strategy fails, I should know within the first 3 months without losing significant capital (before I put in $45k).

I do feel more comfortable with trend following systems. I am methodical and specific like you said but I do understand that the market doesn't always "make sense" the same way an engineering equation does.

Thank you for taking the time to respond to my post.
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Do you give your 5k to T3 as a "training fee" ? Or does the 5k remain yours for your trading and leverage? BIG DIFFERENCE!
 
Quote from hippie:

Do you give your 5k to T3 as a "training fee" ? Or does the 5k remain yours for your trading and leverage? BIG DIFFERENCE!
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it is to be used for my own trading account and leverage

there was a $3000 course but they waive the fee if you become a member of T3 (I think that just means signing up and saying you're going to trade with them)

after talking to the members here I think I'm better off swing trading during afterhours to gain exposure

i don't think i'll be joining T3 anytime soon...

next on the agenda is to develop a trading plan with a statistical edge
 
look i didnt meant to be a dick about it...but i really wanna emphasise that for a first year newbie, you should be aiming to not lose any money. most people who come into this business are overly optimistic and dont think seriously about what could go wrong.
 
I am a degreed engineer who made the change in the early '90's.

I have three clients who are engineers, and a current client who just passed his PE and just went live in the markets after training with me for several months. And he is still a full time engineer.

He went live four weeks ago and he is positive net net.

And I will not let him quit his "day job" until it makes absolutely no sense for him to continue with it.

Engineers make superb traders. Engineer are so much better prepared than your typical MBA type.
 
Quote from feng456:

look i didnt meant to be a dick about it...but i really wanna emphasise that for a first year newbie, you should be aiming to not lose any money. most people who come into this business are overly optimistic and dont think seriously about what could go wrong.
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LOL no I fully understand. It was just that my friend who was a professional trader told me that it was not unreasonable to make $500 a day using $500,000 capital.

Initially my objective my first year was just to break even. I read somewhere that if you lose only 10% of your capital your first year, then you're doing pretty good (Dr. Alexander Elder)

Thanks for your feedback though.
 
Quote from sneakoner:

i understand, i learned never to risk more than 2% of your capital on any one trade and never risk more than 6% per month (courtesy of dr. alexander elder)

2% of 50,000 is $1000 risk per trade

6% is $3000 risk per month
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Do you know why the average Joe failed ? What if out of the 100 trades, 99 trades falls pass their 3 % ? and it falls and falls, and when every trade falls in tandem, you risk hitting your max drawdown.

If this is the real holy grail, brokers software could have implemented this. Why then, people still fail ?

Those who have the answer to overcome this, either by good market analysis or management will emerge, leaving those who don't.

Its almost as simple as asking the average to organize, lead and manage a 200 people 2 day school camp. Some does it so well, naturally, and some can never learn and make it. You don't see lecturers and professors teaching a class of student how to trade like a hedge fund manager, do you ?
 
No no no, don't listen to those guys.

You got your money and your plan, just enter the market with it. Go for it. Don't stop. Be greedy, and please follow all those fancy indicators and break out strategies. I really need fresh blood like you entering the market with fresh cash.

THANKS FOR YOUR MONEY !!!!
 
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