Ok will do
Tell me why I can't grow my account to $1M in 12 years
- Thread starter jeffbader
- Start date
Ok will do
Which would also make him one of the most valuable traders in world. Then his goals cold grow a tad.
This is the most important statement you made.
I'm a firm believer that anyone can do anything they put their mind to. You are completely capable of making terrific living from trading. Why not?
The key is understanding what you have to give to get. Most people see trading as an easy button and expect to get rich.
You can make unlimited amounts of money trading, look at wall street. Thus, it is also the most competitive industry too. You'll have to realize you will have to master your trade, just like any other.
Your trading plan and goals are key. I'm going to post my trading plan here shortly. It might help.
Be sure in your determination and goals. Don't let anyone sway your dreams. They are yours.
In these types of discussion, people generally leave out leverage and hence discuss oranges to pears. 60% p.a. with leverage isn't too unachievable from what I've gathered. Not blowing up one year is the hard part.
Go to Vegas and apply your prudent risk management at the roulette table and we will see how it does.
Setting money goals or profit goals is a mistake because trading more does not necessarily equate to more profit. I suggest you set "behavior" goals instead. If you do the right behaviors, you'll make profits over time, but the profits will vary. Monitoring your profit to determine if you are trading well, is like watching your gas gauge to figure out how fast you are going.
Ha! I love the gas gauge analogy! Steve, I totally agree. The account balance will not provide the information necessary to transform a failing trader into a successful one. For example, my account balance will not tell me that the cause of my failure are my emotions, poor entries, poor exits, or all three. Neither will it tell me if I am executing optimally. However, my account balance will tell me whether I am entirely succeeding or failing at trading as a whole. So I think that this sentiment extends only so far. If the only goal for a trader is to make money, then the account balance is the only metric of success / failure. For me, I am hoping to succeed for a variety of reasons, where money is only part of the appeal of trading.
I also love your advice on behavior goals. I track some aspects of my behaviors in my trade log, but I haven't really thought of setting / documenting tangible goals related to behavior. What are your thoughts on these example behavior goals:
- Trade only my most comfortable setup for an entire month. For a whole month, enter no trades that do not provide this one specific setup that I'm looking for. (The rationale here is that I routinely catch myself trying out setups that I'm really not all that familiar with, which isn't much better than me just deciding that I think the stock will go one way or another.)
- Execute no more than two trades per day for an entire month. (The rationale here is to develop the discipline to resist over-trading. It also will make the data more consistent in order to possibly gain more insight from analyzing the resulting month of trade data)
Can you share any other "behavior goals" that have helped you? Thanks again.
For successful day traders who trade styles very similar to yours, I'd suggest the following "realistic"/"typical"/"median" characteristics:
Gross annual income from daytrading: $150,000 - $250,000
Risk: R ~ $500 - $1,000
Monthly profits: ~ +20 - 30R
No. of trades per day: 2 - 4
Win rate: 55 - 65%
Time to become consistently profitable: 3 - 5 years (the low side generally were in structured educational programs with hands-on mentoring)
Years trading professionally to date: min. 8 - 12 years
Current average age: 30 - 40 yrs old
Age when began trading: 25 - 30 yrs old
Other random, but "typical" characteristics:
- Virtually all also have swing/long-term "investment" accounts, and rely on those for varying degrees of additional income
- Many have other sources of income (including, yes, running "trading education" services), unrelated businesses ("entrepreneurial spirit")
- College education, slightly "above average" intelligence but not "super intelligent"
- Additional intrinsic motivations, such as feeling the need to prove themselves (to themselves and/or to others), competitiveness, insecurity/ego, etc.
- Live "good" but prudent lifestyles, within their means
- At this point in their trading careers, they appear to typically spend ~2-4 hours actually trading (primarily morning session) per day, plus maybe 1 hr of pre-market prep.... maybe 0 - 1 hr post-market. Some are showing some subtle signs of burnout or boredom -- unsurprisingly, those tend to spend the least time trading.
- All have well-defined edges and methods that they stick to very strictly, albeit with occasional lapses in judgement, emotion, etc. Most essentially trade only 1-2 setups -- slight flexibility in terms of timeframe, entry setup, management. Very little deviation as to approach overall -- typically only occasional subtle, long-term tweaks in management in response to their own results, trading environment. But essentially, they are very disciplined, and do the same thing every day, over and over.
Obviously all of the above is *anecdotal*, limited sample size, various/limited degrees of “evidence” to back the “data” up, etc., etc. -- so no way could I somehow "prove" much of the above, especially from a valid statistical standpoint. (Note, however -- the traders I'm referring to have also been in a position to personally witness the paths of hundreds/thousands of other traders... so some of the numbers above that came from them are based on a pretty high level of experience.)
One intangible that I suspect could actually make a huge difference in your journey -- you stated that you view the stock market as "simply a means to an end." In contrast, these traders were extremely passionate about trading, lived and breathed it, and were willing to put everything they had into becoming better traders.
Gross annual income from daytrading: $150,000 - $250,000
Risk: R ~ $500 - $1,000
Monthly profits: ~ +20 - 30R
No. of trades per day: 2 - 4
Win rate: 55 - 65%
Time to become consistently profitable: 3 - 5 years (the low side generally were in structured educational programs with hands-on mentoring)
Years trading professionally to date: min. 8 - 12 years
Current average age: 30 - 40 yrs old
Age when began trading: 25 - 30 yrs old
Other random, but "typical" characteristics:
- Virtually all also have swing/long-term "investment" accounts, and rely on those for varying degrees of additional income
- Many have other sources of income (including, yes, running "trading education" services), unrelated businesses ("entrepreneurial spirit")
- College education, slightly "above average" intelligence but not "super intelligent"
- Additional intrinsic motivations, such as feeling the need to prove themselves (to themselves and/or to others), competitiveness, insecurity/ego, etc.
- Live "good" but prudent lifestyles, within their means
- At this point in their trading careers, they appear to typically spend ~2-4 hours actually trading (primarily morning session) per day, plus maybe 1 hr of pre-market prep.... maybe 0 - 1 hr post-market. Some are showing some subtle signs of burnout or boredom -- unsurprisingly, those tend to spend the least time trading.
- All have well-defined edges and methods that they stick to very strictly, albeit with occasional lapses in judgement, emotion, etc. Most essentially trade only 1-2 setups -- slight flexibility in terms of timeframe, entry setup, management. Very little deviation as to approach overall -- typically only occasional subtle, long-term tweaks in management in response to their own results, trading environment. But essentially, they are very disciplined, and do the same thing every day, over and over.
Obviously all of the above is *anecdotal*, limited sample size, various/limited degrees of “evidence” to back the “data” up, etc., etc. -- so no way could I somehow "prove" much of the above, especially from a valid statistical standpoint. (Note, however -- the traders I'm referring to have also been in a position to personally witness the paths of hundreds/thousands of other traders... so some of the numbers above that came from them are based on a pretty high level of experience.)
One intangible that I suspect could actually make a huge difference in your journey -- you stated that you view the stock market as "simply a means to an end." In contrast, these traders were extremely passionate about trading, lived and breathed it, and were willing to put everything they had into becoming better traders.
From someone 5yrs+ into this endeavor, bruised, smarter, much-improved, and very confident of success:
=> Assimilate as much edu as possible, but don't apply it verbatim -- make it your own
Backtest everything and funnel new knowledge into your own insights and combinations of ideas. Remember everything you learn, and think about how different ideas/insights might recombine. Try to identify basic elements and mechanisms of price behavior. Among other things, you may be surprised to see how much difference a single tick can make. Maintain written documentation to keep track of all this.
I have a software and database analysis/programming background, and this is exactly what I do there. This assimilation is really just an application of the scientific method that so many traders already use in their professional lives. Odd that new traders with this background so often forget the scientific method when first approaching trading, and instead take the published strategies on faith.
In 100+ sources I've reviewed, there's a couple of basic and rarely mentioned ideas that have become core to my approach, after much elaboration. My hunch is that the educators who have dropped these ideas, typically undeveloped in their presentations, almost as asides, are aware of the potential application but choose not to talk about it -- like a physics teacher who doesn't mention a key derivation on the premise that the better students will figure it out, and that those are the ones who merit success in the competition. The "take it on faithers" will get weeded out.
Pay attention to everything that is said -- you may find a potential diamond in the rough, and it may be the application of your own diligently acquired knowledge that transforms a nice stone into that diamond.
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