Quote from Occam:
There's some truth to this, but it's a pretty misleading comparison. Wannabe lawyers/doctors fail in a way that's very obvious and predictable. Wannabe doctors who have made it into any US med school very seldom "fail"; and wannabe lawyers in top-10 law school programs tend to do pretty well, even if they don't make partner at their first firm. (Of course, there's also trail law and low end law schools, etc., but that's a different story.) Furthermore, one's chances of being admitted to either med school or a top law school are very easy to predict based on grades + MCAT's or LSAT's; and these could be pretty reliably predicted at the age of 18 or even earlier, when backed up by a hard work over subsequent years.
In trading, on the other hand, you could have a Nobel lauriate who fails miserably (several have, famously and at great cost to those who backed them). Worse still is the case of traders who have no success at all, or occasional lucky strikes punctuating overall failure, still feeling that they're close to "making it" in trading.
It's certainly possible to succeed in trading, but it's also good to go in with a certain amount of skepticism and willingness to get out if things don't go well.
Trading is a skill and you have to want to develop it. It'snot about your charts or your quantitative strategy. Your success depends upon you following that strategy. The reason why most traders and even gamblers fail is they fail to follow the rules that save them from making fatal account draining errors. Evern if you lose an account, you can start again, and you will continue to lose accounts until you change your thinking.
If you get a good degree and get into a top trading firm, that success you might have is more relevant to the training you get at the top firm than your prior degree. Those degrees generally get you in, more powerfully if you are from and IVY where the firm is made up of mostly IVY alums in the infamous old boy network. That's one method. This is the one most people associate with the best odds of success.
However, the traits of successful trading have been summarized to infinity many times. We all know what works. The challenge is in changing your thinking to forgetting that you can predict anything that will happen in the markets. You can win not knowing what is going to happen, when you follow your rules. This is the key element of success for any probabilistic endeavor (which probably all things in life truly are not just trading or gambling).
Most traders want certainty that they will win along with a little thrill of anything happening in the middle. These traders ultimately lose, no matter how much they make or don't make along the way.
The most successful traders and those that are getting it understand that the need for that certainty is the thinking one has to change. You have to learn that you don't need to know what is going to happen next in order to make money. You apply your edge again and again, lose and win in the face of that uncertainty, and you manage your trades.
The trading houses train this the best. And if you are working there and they believe in your ability, they let you play through your mistakes. That's how you learn.
When you are independent, typically you don't know yet how to properly limit your mistakes (like risking 1% per trade, or maybe 2%) and you bust before you can play through any mistakes using the corrected thinking.
When you are trading independently, you have greater freedom, and you have greater tasks to set up the training structure on your own, monitor yourself, review your actions yourself and take corrective action yourself. You may have less capital too. But the plus is you can work wherever you choose, especially nice if the city isn't a place you like, and you like to ski a lot or play tennis or raise a family on a ranch somewhere like that (personal plug sorry).
When you trade independently, you are not immediately legitimized by anyone who needs those large firm affiliations to feel accomplished or respected. When you trade with a firm like First new York, or the like, people get you before they have to know how much you make or your lifestyle.
At a large firm, you may get a TARP bailout that allows you to buy all the world's assets at fire sale prices in 2009 (like Goldman Sachs did) so you can benefit from huge events unlike independent traders, unless you as an independent trader recognize the trends and participate (hint, hint, there is the same advantage in being independent and GOOD, just different perks, cause you will be perceiving opportunity by not losing when it changes, then you can take advantage of the good opportunities in the same way).
So...the difference probably is personal choice and circumstance. If you didn't go to an IVY, odds are you will not be trading at the most successful firms. If you want to trade but you are not in the old boys club , you will truly be an independent businessperson who trades, with all of the freedoms and responsibility that entails. There seem to be a lot less mid-level firms ( I was independent, then worked for a LA based hedge fund, then worked for ETG, then after that became independent again) than when I was looking for them. They are all focused on the east coast which for a lifestyle, to me at least, if fairly limited because of the weather.
My main point is that the degrees help, mostly if they are from IVY schools, but it won't stop you if you don't have one and feel the call to trade successfully. The other caveat is that those degrees offer you some lattitude in knowing you can get a job in another area. If this takes pressure off trading, then it's also a plus to that trader with the degree.
If you want to trade, trade. One of my mentors still says,"good traders trade." You gotta find a way to stay in it when all hell is breaking loose, and then keep learning. I don't think everyone has the constitution for trading to do this, but everyone has something they would do this for, so the most important thing is to get a feel for what that is, and if it's not trading, then go do that. If it is trading, the degree is not the thing that will get between you and your success.
By the way, since you can tell i was on both sides of the fence at least for a while, successful traders at firms do the same things that successful independent traders do at their home or office. The failing traders in both places also pretty much do the same things. The difference is the large firms don't tend to keep the ones that keep failing and are given opportunity, the failing traders at home tend to keep trying without changing. If you failed and want to succeed, you have to change your thinking about what you are doing, this option is the most challenging.
