How long before you were breaking even?

alfonso · Sep 1, 2003

Quote from learninglisted:

Since "profitable" means different things to different people, I thought I'd simplify things by asking the very unambiguous question of how long it took you to break even.

Hi LL.

Umm, actually, that question isn't as unambiguous as you think.

Not to me, anyway.

I think there's two kinds of "breakeven", and I'm not sure which you're talking about.

Let me explain.

Firstly, let's accept that a new trader will lose money on beginning trading. So, "breakeven" could simply mean the point at which he is back where he started from; "even".

Secondly, "breakeven" could refer to a trader who, let's assume again that had been losing money, is now at a stage where his trading has improved to the point where he is "breaking even" (over days or weeks or months).

I'm guessing that you were referring to the second type, but maybe you just clarify a little more anyway.

It's my opinion that if a trader -- even a daytrader, who makes a lot of trades -- thinks he has reached the second type of "breakeven", ie, became a "breakeven trader", in less than 6 months of performance, or has been a "breakeven trader" for less than at least one month (ie, he has been breaking even over that month), then it's simply too soon to judge; he may or not be at that "level", could just be a "flukey" period.

"Easy answers" to trading questions are few and far between. Supposedly "profitable" traders turn unprofitable all the time; is it just a (expected) "drawdown", or has this trader's number been called? Very uncertain; always is.

candletrader · Sep 1, 2003

Quote from alfonso:

Hi LL.
Umm, actually, that question isn't as unambiguous as you think.

Not to me, anyway.

I think there's two kinds of "breakeven", and I'm not sure which you're talking about.

Let me explain.

Firstly, let's accept that a new trader will lose money on beginning trading. So, "breakeven" could simply mean the point at which he is back where he started from; "even".

Secondly, "breakeven" could refer to a trader who, let's assume again that had been losing money, is now at a stage where his trading has improved to the point where he is "breaking even" (over days or weeks or months).

I'm guessing that you were referring to the second type, but maybe you just clarify a little more anyway.

It's my opinion that if a trader -- even a daytrader, who makes a lot of trades -- thinks he has reached the second type of "breakeven", ie, became a "breakeven trader", in less than 6 months of performance, or has been a "breakeven trader" for less than at least one month (ie, he has been breaking even over that month), then it's simply too soon to judge; he may or not be at that "level", could just be a "flukey" period.

"Easy answers" to trading questions are few and far between. Supposedly "profitable" traders turn unprofitable all the time; is it just a (expected) "drawdown", or has this trader's number been called? Very uncertain; always is.

Very good post...

Lobster · Sep 1, 2003

Quote from candletrader:

Very good post...

I agree. Maybe my situation is more typical than I thought: I stopped losing money after a couple of months, but I didn't start making money for more than a year after that.

AAAintheBeltway · Sep 1, 2003

good points alfonso. I believe Mark Douglas has a useful formulation. He puts traders into three classifications. First, you develop the ability to spot trading opportunities. Second, you are able to execute trades to take advantage of those opportunities. Finally, you are able to build account equity. I would say you should be able to accomplish stage two after a year. The problem with stage three is it takes a few years to be able to say you didn't blow up, even though you made money from time to time.

learninglisted · Sep 1, 2003

Quote from alfonso:

Hi LL.
Umm, actually, that question isn't as unambiguous as you think.

Alfonso,

Great post. I was indeed thinking about the second type.

Your insight and experience continue to enhance my learning.

Thank you!

---------------------------

At this point 5 people have stated they were profitable since day 1. Candle alone has explained his situation. What about the other 4?

If they were indeed profitable since day 1 we'd all like to hear their stories.

learninglisted · Sep 1, 2003

Quote from AAAintheBeltway:

good points alfonso. I believe Mark Douglas has a useful formulation. He puts traders into three classifications. First, you develop the ability to spot trading opportunities. Second, you are able to execute trades to take advantage of those opportunities. Finally, you are able to build account equity. I would say you should be able to accomplish stage two after a year. The problem with stage three is it takes a few years to be able to say you didn't blow up, even though you made money from time to time.

I'm reading Douglas' Trading in the Zone now and love it. Once I'm through, I'm going to read it again. And again.

sptrading · Sep 1, 2003

Took me 5 years not to break even but to begin make money.

I never really lost money during my first years. But to break even during a few years is also very difficult mentally.

You develop a 1st system, make a bit of money, then the market changes and you lose what you have won.

You develop a 2nd system...

You develop a 3rd system...

You develop a 4th system...

...

At the end, even if you break even, you begin to doubt your abilities to ever make money, develop more systems (better than the ones you first developed) but you, the trader, have become weaker mentally. So the system is better but to pull the trigger has become more difficult than when you began trading and had a lot of self confidence.

It's not easy to escape such a vicious circle.

illiquid · Sep 1, 2003

Quote from learninglisted:

That is why I stipulated "those who don't blow out."

I think you'd be hard pressed to find a successful trader who hasn't blown out at least once on his or her road to success -- why make such a stipulation?

learninglisted · Sep 1, 2003

Quote from illiquid:

I think you'd be hard pressed to find a successful trader who hasn't blown out at least once on his or her road to success -- why make such a stipulation?

My ignorance, perhaps.

This would be a good thread topic - I think I'll do it.

learninglisted · Sep 1, 2003

Profitable since Day 1 pollsters please chime in with your stories.

Or are you being funny?

I only ask because the consensus seems to be that trading is definitely not one of those careers most people start out being very good at, let alone profitable.