Trader Career Transition

[bone]

I believe the "golden age" of home-trading is about to be over with hedge funds and big proprietary trading firms investing heavily in artificial intelligence and big data.

I don't quite agree - individual speculators have the luxury of choosing time frames. It's just about all we have left in terms of differentiation but it remains a powerful tool. That's why I personally migrated from day trading to swing trading in the mid 2000's. It resolves some vexing issues.

HFT and Algos create turbulence (any scalper or day trader would attest) - longer trade holding time frames and modeling time frames basically move you away from that.

Yes, HF's and private equity firms can be very sophisticated in terms of how they approach the market. But if they reveal any consensus in terms of price discovery - that unanimity shows up in your modeling as an emergent trend development.

As always, these are my opinion and reflections designed to stimulate discussion.

 

[Jones75]

I believe the "golden age" of home-trading is about to be over

I think it's in its infancy…just like any profession, the top of the class will always figure out a way to succeed, especially if you have the "passion".
It does take time, patience, real comprehension and open minded study…but very achievable…and one can start with less than $100,000 and live in sweats Monday to Friday.

 

[bone]

on average, how long you vetted individuals to run their own trading system?
how many of them at the end trade similarly to yours?

thanks

I'm going to take a stab at the first question - my fault for not being able to understand...

Paper trading and then meeting with me individually to review and discuss (go-to-meeting) is where the fast progress gets made. Clients who take the paper trading very seriously will usually have very good performance metrics in several months time - sometimes longer if they are slower to identify trade entries. Point being, I distribute to clients a very large amount of reference materials and recorded webinars - but not until that client moves into making trading decisions for himself and then reviewing them with me do things REALLY take off.

I haven't always felt this way, but I'd say in the past six years or so I have really come to see the benefit of accountable paper trading.

I've seen clients make subtle changes to the trading system, and I've seen plenty of experienced profitable clients turn to use the trading system for outright positions and not just spreads. As long as a change is repeatable and not discretionary, I'm typically all for it.

 

[bone]

By all means, if a trader wants to share his story about making a career transition into trading - by all means please post here !

There is no one way to trade, and there isn't a singular best way to transition into trading.

 

[sle]

By all means, if a trader wants to share his story about making a career transition into trading - by all means please post here !

A rich scoundrel seduced and betrayed me!

 

[MoneyMatthew]

"The key to the game is your capital reserves" - Gordon Gekko

I would recommend 10x yearly living costs if trading is going to your main source of income.

So if you need $50K to pay the bills, i would recommend $500K in capital reserves, if you want to transition to full time trader.

Then if you have a bad start to your career, your living costs won't make a huge dent in your capital.

Nothing worse than a drawdown where you lost say $30K to the market but also $50K paying the bills.
You are down 80K which will take you out the game if you only had $100K to start with.

It goes without saying the trader always needs an edge, discipline etc which most starting traders don't have.

This is the reality of being a self-funded trader for a living. Many of the newbie dreamers on this site don't want to hear about things like this. They think starting with a few grand will do it lol...

You need a LOT of money if your plan is to make even just a modest amount of money. You really must be well funded. Even if your cost of living is low you will still have many periods of time where you must take a "draw" and loan yourself money.

This is actually the nature of many small business owners. They have losing months and the winning months are greater than the losing months. Some of these small business owners take loans against cash flow or factorized receivables. Many retail stores lose money or break even for months at a time until a major holiday comes around.

The mindset and life of an independent retail trader is far different from a fund manager. We could care less about beating the S&P 500. The outsized gains and losses are purely from leverage. The main concerns are "can I pay my bills?" and if you have a great month the next question is "can I pay myself back for past draws/loans?" and then finally "am I up or down for the year?".

The low-bankroll/delusional traders on this site never had these concerns because they never survived long enough.

There is another group of retail traders out there that rarely get talked about. These people are actually "over funded" and lie to themselves about being profitable traders. They have enough money to keep loaning themselves money to stay in the game. I have noticed that this crowd is mainly retired people who are just killing time pretending to be traders. They are in a "trader fantasy camp" until they die. They collect a social security check and have a house already paid for.

 

[bone]

I get it about the bankroll. Personally, I kept my full time day job as an Engineer for a couple years and leased a seat at the CBOT. I traded the evening Treasury Bond pit session and the afternoon / overnight Project A and Globex screen sessions. My initial stake was $10K. Honestly - if I started out with $300K, quit my job, and tried it balls deep all in full time I might not have made it.

Nothing good ever happens when you are put in a situation of forcing trades. Anything you can do to survive while you are learning is Golden.

I have gotten PM's and heard from guys pissing away really serious money screwing around with one-lot futures - and aside from reading a few books, watching some You-Tube and attending some seminars that was the extent of their trading acumen.

 

[MoneyMatthew]

I get it about the bankroll. Personally, I kept my full time day job as an Engineer for a couple years and leased a seat at the CBOT. I traded the evening Treasury Bond pit session and the afternoon / overnight Project A and Globex screen sessions. My initial stake was $10K. Honestly - if I started out with $300K, quit my job, and tried it balls deep all in full time I might not have made it.

Nothing good ever happens when you are put in a situation of forcing trades. Anything you can do to survive while you are learning is Golden.

I have gotten PM's and heard from guys pissing away really serious money screwing around with one-lot futures - and aside from reading a few books, watching some You-Tube and attending some seminars that was the extent of their trading acumen.

Thanks for being honest about your background and how you got started. You started in the pre-internet era when just about everything sounded harder and more expensive back then.

Can I ask why you skipped trading at the MidAM and went right to the CBOT? Was it because of the evening session? Were the fills that bad at the MidAM? All of this is before my time, I am just curious from a historical perspective, I don't mean to side track your original thread here.

I tried to read about the MidAM online and it is as if that place never existed. I can hardly find any info on it. Was it hard to get a good broker to place an order there? Did the fills really suck? I know the appeal was the low margins. Just curious, again I am sorry to side track things here.

 

[bone]

Thanks for being honest about your background and how you got started. You started in the pre-internet era when just about everything sounded harder and more expensive back then.

Can I ask why you skipped trading at the MidAM and went right to the CBOT? Was it because of the evening session? Were the fills that bad at the MidAM? All of this is before my time, I am just curious from a historical perspective, I don't mean to side track your original thread here.

I tried to read about the MidAM online and it is as if that place never existed. I can hardly find any info on it. Was it hard to get a good broker to place an order there? Did the fills really suck? I know the appeal was the low margins. Just curious, again I am sorry to side track things here.

Mid Am just sucked. The contract specs were different as well. I had a great deal more flexibility and was able to trade more products leasing the evening Full membership. Plus, the evening pit session started at 6:00 pm, which was perfect for keeping my day Engineering job.

Project A, which was the first CBOT electronic market, was a game changer for me. I could get more fills and make more money on the screen than in the pit.

 

[MoneyMatthew]

Mid Am just sucked.

Lol that might explain why there is only one photo of the place to be found online. Maybe hardly anyone remembers that place fondly lol. I know it is where "trading minis" started. It was the only exchange where a low-bankroll trader could trade futures.