Trading Is The Slowest Route To Victory

[stockstalkerv3]

Quote from Metamorphosis:

This is a pointless comparison. You can cherry pick whatever story you want to tell. What are the odds of founding a company like Amazon? What are the odds of being a successful doctor? An independent trader? A hedge fund manager? A principal at a prop firm? This is stupid.

There's only one you (the actor). You can start 20 businesses, each for $1k (think ebay, elitetrader, etc. I'm sure their starting cost was around this range). 19 of them will fail. One will succeed. The one that succeeds wil make you millions.

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| Want to be a winner in life? |
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Start a business. Strive to make that your primary income.
Trade on the side (swing trade). Aim to make it your secondary income.

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| What would Baron have done back in the early days? |
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Trade 9am-4pm. Code ET after market.

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| The road to great wealth is not getting something for nothing |
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"The way of the sluggard [easy money seekers] is blocked with thorns, but the path of the upright [value creators] is a highway." (Proverbs 15:19)

 

[nLepwa]

Just treat trading like a business...

Hire managers to do the work. Delegate. Leverage (human resources).

That way you combine the benefits of trading and owning a business.

Ninna

 

[Metamorphosis]

Quote from stockstalkerv3:

There's only one you (the actor). You can start 20 businesses, each for $1k (think ebay, elitetrader, etc. I'm sure their starting cost was around this range). 19 of them will fail. One will succeed. The one that succeeds wil make you millions.

Definitely, bro... except you're forgetting that running a business requires time in addition to money. See how well you can run multiple business simultaneously. If you half-ass everything, 20 out of 20 will fail. And you will have wasted years of your life. Nothing is guaranteed in life.

 

[Lucias]

The real money and probability is not in coming a doctor or trading or starting a business. The real money with probability is corporate america!

If you go to school (4 years) and get a job at most companies, you can make 60k to 90k with a high probability. I estimate about 60% to 70%. This is not a guarantee obviously, heck not much better then chance. But it is way better then trading or starting a business!

Most people have what 2k savings or less. 70k = 35x return on capital for every single year.

Imagine, you save up 100k to trade, the guy making 70k in just 2 years will have had more money go through his hands then you have in savings.

Okay, the point is.. you make 55k or 60k starting. But, if you do well then you make more.. eventually you might make 100-120k per year

At 120k per year then in just 3 years you have 360k go through your hands.

A trader with 360k returning 30% per year is only making 108k!

Wow you now the best hedge funds have trouble doing that consistently.. And more over, you still have more bonus, more raises, etc in store.

The truth is and I'm here to tell you that trading is not for the individual. Truth is that trading book shouldn't sell many copies because the information is only really relevant to those with lots of capital and a strong desire and a strong capability to trade. That is a very small portion of the population.

And I hate to say that given I was good friends with one of the best trading book authors.

 

[Lucias]

Really stupid.. comparing trading for most individuals to running a business isn't even applicable.

Quote from nLepwa:

Just treat trading like a business...

Hire managers to do the work. Delegate. Leverage (human resources).

That way you combine the benefits of trading and owning a business.

Ninna

 

[the1]

You bring up a pretty interesting point. I trade full time and I own a business that manages futures for clients (trading) and does taxes and I can easily say that the return on invested capital for the business is far and away much higher than the return on pure trading.

When you trade money for other people you can increase your profits 10- or 100-fold, depending on how many clients you have. Then there's the tax business. People think taxes is a seasonal job. It ain't. There's IRS audits and tax planning. Both yield more than preparing returns. When people are under review by the IRS they are desperate for help and they will gladly pay for it. Tax planning is consulting and commands anywhere from $300 to $700 per hour. Putting together different types of entities and moving debt and derivatives around can produce some incredible tax savings -- legal savings, but you have to know how to do it to command a top salary.

Aside from this point, how many restaurants fail? How many websites fail? If you want to start a business that has a high likelihood of being successful work in an area that is certain to produce clients like death and taxes or sell a product that has some sort of addictive drug in it like Nicotine, Alcohol, or Sugar. Sugar is definitely the easiest. The profit margins on ice cream shops is incredible.

Starting a business. Not necessarily a +1
Trading 0
Doctor: easily a +1 even though there is a lot of debt to be worked off. People get sick. Sick people need doctors. Nuff said.

 

[the1]

LOL. You definitely got a point here. Some are easy to work with but most are a royal PITA.

Quote from dcvtss:

Not dealing with customers: priceless

 

[the1]

Man BB. Just went to your Blog and I think you should change the word "bet." Trading isn't gambling unless you don't know what you're doing. Change "Bet Size" to "Position Size." I still think you need more time before you start mentoring but I wish you luck nonetheless.

Quote from BlackBison:

Probably a fair point, but not the best examples.

 

[1prometheus]

-most people working at corporations do not make as much as you think.
-regardless, if 60-90K is your income goal you have no reason to trade or start a business (unless its a "passion" creative business).
-Working for a large corporation usually sucks monkey balls.

I see it this way:

The key for a private trader starting small is compound equity growth. Any plan that has you eating most the seed corn is pure folly.

Getting in position to succeed in trading is hard, the game is not so easy that any person with a dream and 15k can succeed.

For example I have known people who got started trading/investing while relying on income from a side job or business. If this seems to difficult to secure, well, trading is tough too. Creative, market oriented, savvy people are the ones who succeed. People who can get a side gig going to make some coin to pay the bills are the kind of people who succeed at trading.

If you do not have a goal to make seven figures trading and at the minimum building a mid seven figure net worth, there is no reason to do this. Ideally you should want to get good enough to start a fund and make 8, 9... as many figures as you can.

Stop kicking yourself for not being able to consistently make 100k "income" with 25k (eating the seed corn) and instead get a real plan. If you have a limited ambition or appetite for success (You think 100k is an awesome living). Why bother? If your approach is going to limit you to being a trading peon even if you succeed i don't see how it is worth it.

Quote from Lucias:

The real money and probability is not in coming a doctor or trading or starting a business. The real money with probability is corporate america!

If you go to school (4 years) and get a job at most companies, you can make 60k to 90k with a high probability. I estimate about 60% to 70%. This is not a guarantee obviously, heck not much better then chance. But it is way better then trading or starting a business!

Most people have what 2k savings or less. 70k = 35x return on capital for every single year.

Imagine, you save up 100k to trade, the guy making 70k in just 2 years will have had more money go through his hands then you have in savings.

Okay, the point is.. you make 55k or 60k starting. But, if you do well then you make more.. eventually you might make 100-120k per year

At 120k per year then in just 3 years you have 360k go through your hands.

A trader with 360k returning 30% per year is only making 108k!

Wow you now the best hedge funds have trouble doing that consistently.. And more over, you still have more bonus, more raises, etc in store.

The truth is and I'm here to tell you that trading is not for the individual. Truth is that trading book shouldn't sell many copies because the information is only really relevant to those with lots of capital and a strong desire and a strong capability to trade. That is a very small portion of the population.

And I hate to say that given I was good friends with one of the best trading book authors.

 

[TD80]

The day trading becomes more profitable than running a private enterprise in a fairly uncompetitive sector, is the day everything is going to hell. That scenario is simply not sustainable on a broad scale.

What we do (excluding arbs/hfts) in so many words is price risk. So the day you look around and it is 2008 and you are AIG, you are in deep sh**.

Our specialty should remain just that, a specialty, with a skilled trade sort of background, and very little transparency to keep the competition out and the margins up.

Feed off the big droppings of bigger players than you and be happy, and never, ever get yourself into a position where you become the market on something.

The other thing people come to realize very late in the game (even though many a wise trader tells you ahead of time), is that you need a (relatively speaking for most beginners) lot of capital. If you're not working with mid 6 figures (and this assumes a fairly cheap lifestyle), your odds aren't great for this being a sole profession.