Giving up on my dream of trading for a living

[taowave]

No chance GoldDigger is a female...

That would be one helluva train wreck if so...

Best of luck SteveM. Remember, you developed other skills while Trading, that make you employable, just got to figure it all out.

Didn't know Golddigger was a female. Shes showing classic signs of a personality disorder - lacking Empathy. For a female that's BAD if she has kids. They'll grow up to be such problems for society and others. Hope they developed dispite of her obvious flaws.

 

[taowave]

Steve,don't be too hard on yourself...This is a new beginning, and IMHO you will be a far happier person pursuing something you enjoy as opposed to obsessed with..

The good news is trading will always be there ,and you may find
yourself a far superior trader/ investor with a steady paycheck coming in along with benefits...

The book isn't finished,it's a new chapter

 

[KCalhoun]

Excellent thread, kudos for trying hard and working at it. Super insights from many here.

 

[M.W.]

150,000 is by far not enough to make money as a full time investor/trader to feed a family and save money. Unless of course you are a former professional trader and have a track record of many years of profits and can replicate what you have done before. Needless to say this would put you into tur 0.1% bucket of society.

No matter what all the knownothings have to say that even 10k is enough, 150k is not sufficient to survive times of very low volatility or adverse market regimes where you might still be able to keep a cool head just shifting into tbills.

I appreciate your thoughtful writeup and wish you the best for your next career decisions.

This is a difficult thread for me to write, but I am hoping that writing it may have some therapeutic effect for me, and may potentially help others on their own trading journeys. I apologize if sections of this thread come across as cynical/self-pitying/depressive, it is not my intent.


Summary: I have tried to support myself financially from trading for the last 7 years, and have finally accepted that I will not be able to make enough money from this endeavor to support myself financially, and that I need to re-enter the workforce and give up on this dream. Needless to say this is very humbling. I will not be leaving the financial markets altogether, but will no longer be attempting to rely on them as my sole source of income.

Q: "What made you think that you could possibly be successful day trading in the first place?"

A: I became obsessed with the financial markets during my college years (which coincided with the global financial crisis). I entered the corporate workforce in finance-type roles, but not on Wall Street. My initial forays into investing was basically a Benjamin Graham style of looking for quantitatively cheap stocks (which were plentiful during the 2009 crisis)...I really didn't make any money at this time as those stocks seemed to just drift sideways, and left me very frustrated because the markets in general were moving higher....While working in 2010/2011, I abandoned this approach and just started buying breakout stocks. I would be sitting in my cubicle and would run pre-market scans for stocks up the most in premarket. I would simply buy these stocks and ride them for a couple of days. Or I would wait until the market had been open for 15 minutes, and buy a stock that had gained the most during the first 15 minutes of trading (as long as there was positive headline news accompanying the move).

After 6 months of doing this, I had turned a $14,000 account into around $45,000....I couldn't freaking believe it. During this time I started to think that perhaps my job was interfering with my trading...I mean, if I could turn $14K into $45K in my cubicle, why couldn't I turn $45K to $450K if I had more free time and didn't have to sneak around at my job? What I didn't realize then was that this type of strategy works **much** better in the in early years of a bull market, and performance fizzles out once the market cycle matures and/or a bear market starts.

Another powerful experience I had was in 2014 (while still living cubicle life)...I had loaded up on 3X Chinese etfs in both my own personal account and my family accounts...my reasoning was that the valuation of Chinese stocks relative to US stocks was at a historic extreme undervaluation. Well a few months later the market validated my opinion, and between my own account and my family's account, I made $75,000 in about 2 weeks....this again had a profound experience on me. It’s funny how this type of gain can change your perception – It’s amazing how quickly making this kind of money can turn someone from being a people-pleasing coworker to completely not giving a shit about anyones opinion of them, lol.

Q: "Okay so when did you decide to take the plunge into full-time trading?"

A: My wife (then girlfriend) got a good job opportunity on the other side of the country, which would have required me to leave my job if I wanted to go with her. I decided that it would be an opportune time to see if I really had what it took to be a full-time trader for myself. I figured if it didn’t work out I could always return to cubicle life. So, I took the plunge.

Q: "How much money did you start with? What trading approach did you use?"

A: I started with $150,000 which was my life savings. I started with the breakout trading strategy that I mentioned earlier. But by that time (2016), the bull market had matured and these breakouts did not experience good follow-through and I was losing money. After about 6 months of this I decided to abandon that strategy.

Q: "Did you learn anything from this ‘breakout trading’ initial experience? What did you do next?"

A: Yes. I learned that markets change, and I also learned that it was actually much more difficult to make money (make good trading decisions) when looking at the screen all day rather having a job to keep you busy. I also learned you feel far less mental pressure when you have a paycheck coming in compared to when you are depending entirely on the financial markets to feed and house yourself.

I realized that I needed some way to structure my decision-making. I needed to eliminate big losses. I needed more of a red light/green light system to make decisions….with this in mind, I stumbled across “price action trading”…..ahh-hah, now here was the answer.

If I could just learn how read what was happening on the bars in front of me, it would allow me to add the structure needed in my trading, and then I would become profitable.

I studied and studied, read price action books, watched videos, joined trading rooms, journaled, etc….Well I tried this for a few years, and to my surprise….I was still not making money.

Q: "Why weren’t you successful with a price action strategy?"

A: It’s hard to say…one problem was big losers. I would have two weeks where things were going fairly well, and then one bad day would wipe things out. The price action gurus would say that you can scale into losing positions and breakeven, but when I attempted to do this myself, I found that while it often worked and helped my performance, I would eventually get caught on the wrong side of a big trend day and get crushed, wiping out 2 weeks of profits.

Also, I think there is often some hindsight bias with price action. You can pull up the chart at the end of the day/week, and all the trading setups look very obvious and clear. But when you are trying to do this in real-time, things are not nearly as easy and clear.

Q: "So then what did you do next?"

A: Well, I moved to price action because I realized I needed structure, this failed because I realized that even with structure it didn’t matter if I was still entering bad trades….with this realization I decided to go fully systematic.

I remembered that 5 years earlier I had backtested a lot of different things, and some showed promise and generated good returns. So figured, I have proven that I do not have what it takes to make good discretionary trading decisions, maybe if I can go systematic I will finally start making some consistent money.

So I started systematic trading with one goal in mind – just to follow my system religiously, take every single trade, and not fiddle with it….and that is exactly what I have done. To make things easier on my psychologically, I no longer look at charts during the trading day, I just follow my system.

Q: “Has systematic trading been profitable for you?”

A: It has…but…there are periods of drawdowns….losing weeks, losing months. I do believe that I can make money (over the long term) using a trading system, but I no longer have enough money in my account to rely on systematic trading as my sole source of income. Over the last 7 years, my initial $150K has fallen to $75K, and I believe it is foolish at this point for me not to be looking for other sources of income (traditional job).

Q: "You mean to tell us that in 7 years you weren't able to figure out some way to consistently pull money out of the markets? Did you try other things like options, spread-trading, seasonals, etc?"

A: Yes, this is what I am telling you. I know it sounds shocking. It is embarrassing for me to admit. Ed Seykota once famously said “win or lose, everyone gets what they want out of the markets.” I no longer believe this quote to be true…I really wanted to win in the financial markets, I just was not able to find a way to do so in a way that I could support myself relative to my dwindling bankroll. Even after become profitable trading systematically, my bankroll is not large enough relative to the cost of living. Yes, at various points I have attempted to trade options, seasonals, spreads, etc.

Q: "How has this experience over the last 7 years affected you?”

A: Pretty profoundly. I feel regret and shame. Along the way I have developed an anxiety disorder, become cynical, isolated and have a lot more gray hairs. The worst part for me is the realization that if I had bought a lawn mower and pickup truck 7 years ago and just started mowing lawns, there is a very likely chance that I would have made much more money doing that than I have in this trading endeavor. I have a huge hole in my resume, which I have no idea how I will explain my way out of for future employers.

Also, probably the worst part of this experience is that you are always “waiting for life to begin”….you lost $5,000 on Friday, so you decide to abandon plans to go out with your wife and friends on the Friday night…..you had a rough September, so you can’t wait for October to end so hopefully you can look back and see that October was an improvement which will make you feel better. You can’t spend any excess money because the last 6 months haven’t been so great….if the next 6 months are better, then you will spend that money on that thing….well very slowly over time, this is your life dripping away, because you can’t wait to “skip forward” a few months to see your trading results. This is no way to live.

Q: "Has this 7 year experience taught you anything that you wish to share with new traders?”

A: Yes. Here is a list of things I’d like to share with new traders:

1. I do believe there are some retail traders who make lots of money trading their own personal accounts, but I believe that number of people is much smaller than one may imagine. I am not saying those people are not out there, just that I am not one of those people.

2. If you are thinking about trying to trade for a living, think about the returns you realistically need to generate to to support yourself. Remember that the government taxes at the end of the year will be taking anywhere between 15-40% of your trading profits in excess of $12,000. Then you have bills to pay, inflation eating away at your nest egg, health insurance to buy, and eventually you are going to want to put away some money for retirement. Then you have the fact that you will be pulling money out of your trading account every month to pay your bills and feed yourself. It’s a relentless drain on your account balance, that you need very good returns to overcome.

3. If you are paying any money to a trading educator (books, chat rooms, mentoring, conferences, etc), you must assume that the educator needs that money because they do not make enough money from their own trading activities to support their lifestyle. I don’t care if the educator once was featured in a market wizard book. I don’t care if the educator once won the Robbins World Cup of trading. I don’t care if the educator used to be a brain surgeon….if you are giving them money, assume they need your money. The only exception I would make to this rule, is an educator that was willing to provide an audited brokerage statement showing the last 60 months of their trading results for their own personal accounts….also, some of these people might be profitable traders **only** because they have subs paying them $100K+ a year which allows them to trade in a very relaxed/care-free manner, unlike you who needs trading profits to survive.

4. You must learn to think about trading results as a distribution…start judging your trading performance based on rolling 4 week results, rather than day-to-day fluctuations in your account. It will help you to remain objective.

5. If you are thinking about leaving your job to trade full-time, prove it first. Can you make money every month for a year straight? Test yourself by trading forex for a couple hours every night for a year straight if you have to. This will be an informative experience. If you are successful doing this, maybe then you think about taking the plunge.

6. The pain of losing in financial markets feels about 2x as intense as the pleasure from winning. As a result there are more negative feelings than positive feelings, even over the course of a 6 month period where your account is growing.

7. Stop losses. Every time, every trade, without exception.

8. Markets change…a strategy that worked for the last 6 months may not work a year from now.

9. Be honest with yourself.

Conclusion: If you have made it this far, thanks for reading. I hope I haven’t poisoned the well for anyone. That was really wasn’t my intent. They say the majority of retail traders lose, and we don’t really hear from those who lose, only winners get attention. So I felt it might be helpful to some newcomers here if a “losing trader” shared their experience with newcomers to the financial markets.

There is a lot more experience I could have shared here on topics like backtesting, systematic trading and money management, but just don’t have the time at the moment, but anyone can DM me if they would like to talk about those things further, or can DM me if they would like to just talk about trading/life in general.

Thanks for reading.

 

[TheDawn]

That's fine. There is no "humbling" in returning to the corporate world to make a living. Money is money; no matter how you make it (as long as you are not harming others and doing something illegal) is all good. Trading, no matter how you trade or how much time you spend trading, is still trading. We all had to do that from time to time. I lost count of how many times I went back and forth between working a day job and quitting to trade full-time and then having to return to a day job again and then quitting to try again. If you are able to do the following while you are working in a corporate job full-time, you can do it again.

After 6 months of doing this, I had turned a $14,000 account into around $45,000....I couldn't freaking believe it. During this time I started to think that perhaps my job was interfering with my trading...I mean, if I could turn $14K into $45K in my cubicle, why couldn't I turn $45K to $450K if I had more free time and didn't have to sneak around at my job? What I didn't realize then was that this type of strategy works **much** better in the in early years of a bull market, and performance fizzles out once the market cycle matures and/or a bear market starts.

Another powerful experience I had was in 2014 (while still living cubicle life)...I had loaded up on 3X Chinese etfs in both my own personal account and my family accounts...my reasoning was that the valuation of Chinese stocks relative to US stocks was at a historic extreme undervaluation. Well a few months later the market validated my opinion, and between my own account and my family's account, I made $75,000 in about 2 weeks....this again had a profound experience on me. It’s funny how this type of gain can change your perception – It’s amazing how quickly making this kind of money can turn someone from being a people-pleasing coworker to completely not giving a shit about anyones opinion of them, lol.

In fact, I think it might be better that you trade part-time while working full-time because if you weren't able to reproduce the outstanding trading performance that you had while trading part-time, then that shows that your trading strategy is perhaps more suited to part-time trading and when you actually engage it on a full-time basis, the result is actually worse due to perhaps overtrading that can arise from trading full-time. Overall, I find working in a corporate job full-time while trading part-time is best in that it provides you a basic level of financial stability that 1) ensures a steady level of trading capital that can give you more flexibility in implementing the different strategies that you may have and 2) takes away a bit of psychological stress and pressure in trading and allows you to be able to better execute your strategy.

So all the success to you in your corporate job and trading endeavour and we will see you on ET still!

 

[cruisecontrol]

Reminds me of myself to some extent. I also could not become profitable until I went fully systematic.

The difference between us might just be that I realized it much faster because I wasn't lucky. The good luck that you had in the beginning unfortunately created an illusion of competence that prevented the realization that you needed to have.

 

[notagain]

A small edge needs to be free of daily expenses in order to compound over time.
Part time trade for your retirement.

 

[Peter8519]

I started in 2008 and my thought of trading that it should be easy and some formula should be able to take care of it and make a decent living. I soon realized that it's a lot harder than earning a salary. I switched on the capital preservation mode and learned to be patient. I began to focus on the method and came across The Winning Methods of the Market Wizards. To each, his or her own. Just like driving, if you were to drive another's car of the same model and make, you will feel somehow, it's slightly different.
1. Document the method used and keep a journal so that all actions can be reviewed. It's like jumping out of the body and look at our actions.
2. Developed a habit and trading will be a lot easier.
3. Have an open mindset because the market is not static.
4. Be patient and watch our capital. Our trading depends on it.
5. A positive trade is better than a negative one.
I can continue to ramble on but it's getting boring.
All the best and be patient with the market because it's testing us constantly.

 

[BlueWaterSailor]

Nah, your online persona I'm sure is far different than what you display in personal life. Online you are a completely abrasive, nicompoopish douchebag...so surely you don't treat strangers in real life like this.

OP made this post to clear his head...he is obviously full of negative emotions. Regret weighs tons upon your soul...loss of money loss of time, FAILURE at something you truly want and believe is possible...that's real pain.

He probably came here because (if he's anything like me) he doesn't know many or any pro traders in person and online communities are about the only place to find understanding.

You are kicking a guy when he's down. Poor character displayed by a poor person.

It's classic dependapotamus behavior; easily recognizable by anyone who's served. Bitter, ugly, jealous, shrewish, and treated as a useless appendage on her husband's ass; the original Karen prototype, in fact.

 

[qlai]

@SteveM, how old are you? I’m sure you still have plenty of time to get back at a time of your life that will allow for less pressure on outcomes.