Great post. Knowing how hard its been would I do it again? Maybe. The problem with trading is there is no real mentorship. I was mentored by top salespeople which was critical. There are a boatload of educators that teach over the net and make no money, 95% or higher. Teaching over the net ain't the same sorry. Being there in the moment, seeing how ppl respond to situations.
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Trading is not like business!
- Thread starter Cache Landing
- Start date
Quote from Butterball:
Anyone who thinks raking in $500,000 a year is a piece of cake be it in trading or running a medium-sized company is deluding himself. It is hard work and you have to have capital at risk in order to have a chance at earning a profit. That includes the risk of a (part) loss.
I said it in another thread: the top two reasons for failure both in start-up brick and mortar businesses and in trading IMO are
a) lack of sufficient capital
b) unrealistic profit/earnings expectations
I'm not talking about a company making $500K annual. I'm talking about simply turning a profit high enough to live on. National median I believe is something like $30K annual. With an equivalent initial investment, the trading approach will take far longer to reach that milestone. And in fact, it might not even be possible with the same initial investment.
Quote from dandxg:
Great post. Knowing how hard its been would I do it again? Maybe. The problem with trading is there is no real mentorship. I was mentored by top salespeople which was critical. There are a boatload of educators that teach over the net and make no money, 95% or higher. Teaching over the net ain't the same sorry. Being there in the moment, seeing how ppl respond to situations.
Knowing where I am now, I would certainly do it again. But I'm positive that the same talents and effort would've gotten me to the same point had I gone through traditional entrepreneurial channels.
That is the whole thing.
In college I took a class on new business ventures and the entrepreneur. The first day of class I discovered that while my professor had successfully started several companies, none of them provided even middle class income. So he went back to school to get a Phd and become a professor.
Ironic? Absolutely... but that is exactly the path of the young trader. With very few exceptions, those teaching the skill of trading are not wildly successful traders, but rather those who experienced only short spurts of mild success.
Imagine of you were to go to a local businessman who was highly successful in finding undervalued mom-and-pops and flipping them for a profit. You then go to him and ask him to walk you through how to find them and do the same. Oh and btw, will you tell me about the next couple that come along so that I can jump in on them? The idea is laughable, but that is what the young traders expect.
There is almost no legitimate material out there on how to truly make a business out of trading. I mean a business that generates enough return that it rivals conventional start-ups.
If you compare trading with being in business or being an employee, it is much more similar to the first than the second.
In trading having the mindset of an entrepreneur is much more helpful than having the mindset of an employee.
In trading having the mindset of an entrepreneur is much more helpful than having the mindset of an employee.
Quote from Cache Landing:
The idea that high frequency trading is a business just like any other, and will be successful if standard business acumen is applied, is a false notion.
Trading is unlike any other type of startup venture.
Two comments:
(1) No one says you have to be a HFT. A trading venture can be solely a day trader, a hybrid day trader/swing trader, etc.
(2) Yes, trading is unlike any business -- no employees, no inventory, no brick & mortar, no fixed hours of operation. You can "open" and "close" whenever you desire. You're not dependent on the economy. You don't need to generates sales to be profitable. So trading is actually a very easy "business" to embark on, if properly capitalized.
My 2 cents based on 15 years of full time trading. And when I decided to pursue trading I developed a business plan, so IMO trading is very much a business.
You're comparing a self-employed entrepreneur making $15.50 an hour (which basically puts him in the group of a median worker with the additional risk of being self-employed) to a under-capitalized wanna-be trader trying to make a 100% return year in year out.
The entrepreneur's business in your example doesn't survive an opportunity cost analysis and the trader's business doesn't survive a feasibility test.
Is it easier to survive paycheck to paycheck running some random business which fails a profitability-test using an opportunity cost analysis than trade for a living with a hopelessly underfunded trading account? Sure is. But that doesn't prove your point. With $30k in capital one should neither run a one-man company nor should you trade full-time. That's just my personal opinion.
The entrepreneur's business in your example doesn't survive an opportunity cost analysis and the trader's business doesn't survive a feasibility test.
Is it easier to survive paycheck to paycheck running some random business which fails a profitability-test using an opportunity cost analysis than trade for a living with a hopelessly underfunded trading account? Sure is. But that doesn't prove your point. With $30k in capital one should neither run a one-man company nor should you trade full-time. That's just my personal opinion.
Quote from DHOHHI:
(2) Yes, trading is unlike any business -- no employees, no inventory, no brick & mortar, no fixed hours of operation. You can "open" and "close" whenever you desire.
We do have inventory, at least for the time we hold a position.
Also my operating hours are fixed by the hours the markets are most active (when my customers want to do business with me!).