How good of a trader do you need to be to make a living?
- Thread starter peilthetraveler
- Start date
NOONE - except you, obviously - talks about what a great TRADER Buffet is.
He is no trader, he is an investor. He buys companies where he sees value, and holds them while this value realizes. Over years. Sometimes many years.
You must be the only person on the planet thinking this is trading. This is investing - hard and simple.
It's pretty simple :
You either need to be some sort of financial market genius, a wunderkid of trading or you need to have an unfair advantage.
In the past professional traders had an unfair advantage, for ex. they were on the floor and could see order flow or in the daytrading heydays they exploited technology that wasn't yet widely available . Nowaday HF traders do exactly that, exploiting a technological advantage.
To be very succesful starting from a small account you need to have both, a strong advantage and be very talented.
As for returns, I think there are two types of independent traders, those with a longer term horizon and large accounts and the guys trying to hack it as short term (day)traders with 50 K, those need to make a few hundred percent per year. I read Schwartz in Market Wizards did that for years, so some do it but they are like the Michael Jordans of trading.
You either need to be some sort of financial market genius, a wunderkid of trading or you need to have an unfair advantage.
In the past professional traders had an unfair advantage, for ex. they were on the floor and could see order flow or in the daytrading heydays they exploited technology that wasn't yet widely available . Nowaday HF traders do exactly that, exploiting a technological advantage.
To be very succesful starting from a small account you need to have both, a strong advantage and be very talented.
As for returns, I think there are two types of independent traders, those with a longer term horizon and large accounts and the guys trying to hack it as short term (day)traders with 50 K, those need to make a few hundred percent per year. I read Schwartz in Market Wizards did that for years, so some do it but they are like the Michael Jordans of trading.
Anyone trading for a living w/ a $25,000 account shouldn't expect more success than any other business owner trying to make a living with a $25,000 starting investment. When relatives ask me what I think they'd need to start investing full-time I tell them half a million is a good size. Never fails to kill off the silly questions and get them to switch topic.
I guess u didn't pick up on my sarcasm. But seriously, a 30-50k account with 20:1 buying power is definitely enough to make a living scalping intraday. The OP was talking about buffets 22% return, and asking if it was even possible to make a living like that. Quick answer, no. To make a living investing, u probably need 300k, have find your self some solid divy stocks with good yield. Then with a small portion of your cake, find a good covered call strategy with a few stocks. And even then you might be living a lower middle class living, and most often then not, someone who has 300k to invest wot be happy driving a Honda and eating pasta at home on 40k a year
The success rate is much lower than a real business.
A good thread.
To make a decent living with trading, and assume you are good and have "real" edge (20 to 30% return), you still need to have at least a million dollar account. The sad thing is most ET in here not even have 25K account (this is why you heard they are crying for the PDT rule).
One thing to note, this board is sponsor by brookers, and the intention of brookers is to promote people to trade more (for obvious reasons in commisions, day traders are their best friend). I can forsee you will get a lot of resistance and hard hussle in this thread, e.g. some losers in ET will tell you they can make 100% each month (big BS), some will tell you PA work with some BS concept, some come with hidden agenda and etc.
The edge is hard to find, and honestly no one will teach you their edge. PA and TA is not edge.
Buffet is an INVESTOR. Apples to oranges comparison with a TRADER.
Moreover, his fugetaboutit, buy-and-hold-forever methodology is BS for a small INVESTOR with a portfolio of say 20% of net worth. Buffets net worth is 54.9 Billion http://www.forbes.com/sites/erincar...ins-no-3-richest-spot-unseats-amancio-ortega/. A 20% portfolio would be 10.98 Billion. If the entire 20% blew up, disappeared, it would not affect Buffetts lifestyle at all. That's just not true for a small INVESTOR with the same percentage of net worth portfolio. Why people lionize Buffett for recommending this "strategy" to everyone is beyond me.
Maybe the topic should shift altogether. What percentage of your net worth is prudent for an INVESTMENT portfolio? Investment meaning long-term, Buffett-style you expect return of capital + appreciation after taxes and inflation. My guess Wallstreet suggests more than 20%, again more BS for the small INVESTOR to wade through.
Moreover, his fugetaboutit, buy-and-hold-forever methodology is BS for a small INVESTOR with a portfolio of say 20% of net worth. Buffets net worth is 54.9 Billion http://www.forbes.com/sites/erincar...ins-no-3-richest-spot-unseats-amancio-ortega/. A 20% portfolio would be 10.98 Billion. If the entire 20% blew up, disappeared, it would not affect Buffetts lifestyle at all. That's just not true for a small INVESTOR with the same percentage of net worth portfolio. Why people lionize Buffett for recommending this "strategy" to everyone is beyond me.
Maybe the topic should shift altogether. What percentage of your net worth is prudent for an INVESTMENT portfolio? Investment meaning long-term, Buffett-style you expect return of capital + appreciation after taxes and inflation. My guess Wallstreet suggests more than 20%, again more BS for the small INVESTOR to wade through.
PA and TA are foundations/frameworks around which to develop an edge.
To make a living trading your own account, you have to be an elite trader in every respect.
Those who will have the greatest difficulty are those who are perfectionists, those who are thrill-seekers, those who cannot forgive others (hold grudges), those with massive egos who have to win at all costs, those who think everything in the world can be divided into good and bad according to their personal beliefs.
Trading for a living requires a business plan, comfort working in an environment of uncertainty, ease in quickly letting go of the past and moving on, humility, full acceptance that slightly above average is excellent.
To make a living trading your own account, you have to be an elite trader in every respect.
Those who will have the greatest difficulty are those who are perfectionists, those who are thrill-seekers, those who cannot forgive others (hold grudges), those with massive egos who have to win at all costs, those who think everything in the world can be divided into good and bad according to their personal beliefs.
Trading for a living requires a business plan, comfort working in an environment of uncertainty, ease in quickly letting go of the past and moving on, humility, full acceptance that slightly above average is excellent.
the only thing here is: cash flow and its efficency.
to me,$25k is lot of money. why
if you trade 10 times a day, each trade is $2.5k value, your transaction value is $25k already. or in businness wording, your sale is $25k. that is huge. most bussiness can not generate so much sale. like a retail store,maybe just couple of hundreds to thousands a day.
if you trade a week, that is $250k sale. a real estate agent can not do that, can he/she sell a house every week? no!
if you trade a month in this rate, that is $1m sale. man, you are doing multi-million dollar business. if you trade 1yr, that is $10M+ sale!
in this scinrio, you are running a corpartion almost 300~400 employess.
most time, each trade will not just take $2.5k. I do it 1/3 account value. you can easily see.it corresponds to running a corporate which has 3000~4000 employess, sale at $500m.
we small retail trader,need another leverage: frequent trading(that is our fate). though we do not have much capital, but we can enlarge it by frequent trading.
another way is trade option, directly multiply the account into $25k. you may can trade 1000shares of AAPLwith just $2.5k premimum.
frequent trading is very hard work.no one can hit right each time. plus fatigue. emotional barriers.
but to my experience, I can trade 100trades with no problem. just fast in and fast out.
I envoy Warren Buffet. since it is not neccessary for him to do that. he does not need do frequent trading: plumbing dirty job to fullfil his happylife.
when I build up so much wealth, I will do investment like him too. beyond trading, thre is lots of fun in life.actually I shift partof profit into long-term investment. that is safer and almost guranteer to win.
most people are too close-minded. when they fall into a well, they see a rope, they donot see it as anopportunity, but use it for suicide!
I heard Jesus Christ, he preached and led his followers to place there is no food.
his followers said "master, we just have one bread, how can we serve those thounsands to get fed". our master did not see just one bread, ...
donot forget Jesus's story. most people thought it is fraud or miracle. that is not miracle. I belive it totally.
I know even $2.5k is big money and can build a fortune on that.
to me,$25k is lot of money. why
if you trade 10 times a day, each trade is $2.5k value, your transaction value is $25k already. or in businness wording, your sale is $25k. that is huge. most bussiness can not generate so much sale. like a retail store,maybe just couple of hundreds to thousands a day.
if you trade a week, that is $250k sale. a real estate agent can not do that, can he/she sell a house every week? no!
if you trade a month in this rate, that is $1m sale. man, you are doing multi-million dollar business. if you trade 1yr, that is $10M+ sale!
in this scinrio, you are running a corpartion almost 300~400 employess.
most time, each trade will not just take $2.5k. I do it 1/3 account value. you can easily see.it corresponds to running a corporate which has 3000~4000 employess, sale at $500m.
we small retail trader,need another leverage: frequent trading(that is our fate). though we do not have much capital, but we can enlarge it by frequent trading.
another way is trade option, directly multiply the account into $25k. you may can trade 1000shares of AAPLwith just $2.5k premimum.
frequent trading is very hard work.no one can hit right each time. plus fatigue. emotional barriers.
but to my experience, I can trade 100trades with no problem. just fast in and fast out.
I envoy Warren Buffet. since it is not neccessary for him to do that. he does not need do frequent trading: plumbing dirty job to fullfil his happylife.
when I build up so much wealth, I will do investment like him too. beyond trading, thre is lots of fun in life.actually I shift partof profit into long-term investment. that is safer and almost guranteer to win.
most people are too close-minded. when they fall into a well, they see a rope, they donot see it as anopportunity, but use it for suicide!
I heard Jesus Christ, he preached and led his followers to place there is no food.
his followers said "master, we just have one bread, how can we serve those thounsands to get fed". our master did not see just one bread, ...
donot forget Jesus's story. most people thought it is fraud or miracle. that is not miracle. I belive it totally.
I know even $2.5k is big money and can build a fortune on that.