Told My Friend About Trading. How To Teach Him Being Realistic?

Quote from volente_00:

When I first started out, one of the most relevant sayings I heard about being a trader was


Build a fire

Now stand over that fire and start dropping $100 bills into it

If you can do that without any emotions going through your mind then you are psychologically ready to be a trader.
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I did it with 500 EUR bills every night for 3 months. No emotions, nothing, a robot. If that's not a good trader, I don't know what it is.
 
Quote from risky63:

tell him to try forex in a demo account (scalping)
if he can make a profit after a month, go micro.
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he tried stocks intraday and was not able to do it. multi-day swings have worked so far.
 
Quote from shortie:

I mentioned to a friend of mine that I trade so he got all excited, has read a couple of books and has done sim trading for 3 months. After 25 trades he is +50% and even more excited now.

I am telling him that this type of return is totally unsustainable and if he ever trades for real, it will be more like 30%/year if things go his way. If things don't go his way he will blow up like thousands before him. I am not sure he really listens to what I am saying.

My worry is that he has no money and if he finds the money to trade he will blow up and will end up in the bigger shithole than he is in already.

He is trying out various methods that generally include support-resistance and a couple of indicators from what I saw. He holds maybe 1-10 days. Whatever he tried has worked for him so far. I attribute this to the beginner's luck for the most part.

I told him that he needs more trades that will cover bear and bull markets and that he needs to pay attention to the unrealized drawdowns. I also told him to look at extreme cases where stocks/markets drop or go up 10-20%/day to get a feel about what may happen when he applies the trading methods he is learning.

What else should I suggest?
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LOL, I have seen this hundreds of times with new traders, as they DO NOT take into consideration Price Action on monthly bars going back ten years. 25 trades is nothing, it is a burp, test a method having 3000 sample size and discover drawdown, MAE, breakeven stops, chop and a host of other price action when to get out early. Past year has been incredible trends for stocks, a blind monkey would have been able to make money since early last year.

Plus papertrading has zero stress, it is a tool to duplicate your rules over and over and over again till you don't have to look at your rules any more. When you buy your first 100 shares or first contract in futures, that is when the stress starts in a big way real time and you can't add 1+1 without a calculator, LOL.

I have often told my friends not to start at certain times of market cycles, but they never learn till they are out of money.

Tell him to test his methods on bear cycles.
 
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