What are the most valuable lessons you have learned?

[Laissez Faire]

The cold hard facts is, a trader can work extremely hard and still not reach trading success or make any money worth while in the next X-XX years and have to be +60 years old living with the fact, they just ruined their life trying to be a successful trader. Not to mention all the money they lost.

I never seen a thread on ET forum about how much money traders have lost during their time of trading. I personally know someone who recently told me he lost -$650,000 of his family money trying to be a successful trader. It was painful even just typing that. This person has been trading for about 12 years he told me. 12 years of losing. He caution me well about the pitfalls of trading and how it can ruin a trader life.

We all talk about the trading theory and what it takes to win. We never talk about the losses of money and time spent losing the money.

These are the facts.

Thank you for stating them.

Correct.

There appears to be a hierarchy in trading just like everything else in life. In trading, short-term trading with leverage is the top tier and a winner takes all market.

Becoming a consistent net winner as a day trader is most certainly possible, so I'm not claiming otherwise. It's just extremely unlikely that your average starry eyed retail trader entering this field will ever achieve it. And for the few who do it will likely take years of very hard work and focused effort.

The only ones who will tell you differently are the snake oil sellers, vendors and false gurus on ET (of which there are many) who get off by 'preaching and teaching' their own ignorance.

Now, it may not be easy to become consistently profitable as a swing trader either, but I'd say the chances of some kind of consistency is far higher than with day trading. Next up is investing. You may not become rich in a few years, but it should be fairly easy to get some return on your money and grow it consistently with low drawdowns from year to year.

Losing money in the market is a choice, so it's entirely up to each individual.

 

[Magnolia York]

The most crucial lesson I've learned is to keep a trading journal.

 

[Sergio123]

On a change of note, here is another lesson learned: Buy hand over fist during a crisis.

I don't care what the crisis is. Just buy: housing/real estate crash of 2008, crypto crash of 2022, stock market crashes 2008 and 2020, oil going negative 2020, regional banking collapse 2023, etc. etc.

3-6 months down the road you will be happy that you bought during the crisis.

 

[newwurldmn]

The richest guys on ET are all vol traders.

and the richest traders in the world are market makers with the second being macro traders.

Short term (day traders) are at the bottom.

Correct.

There appears to be a hierarchy in trading just like everything else in life. In trading, short-term trading with leverage is the top tier and a winner takes all market.

Becoming a consistent net winner as a day trader is most certainly possible, so I'm not claiming otherwise. It's just extremely unlikely that your average starry eyed retail trader entering this field will ever achieve it. And for the few who do it will likely take years of very hard work and focused effort.

The only ones who will tell you differently are the snake oil sellers, vendors and false gurus on ET (of which there are many) who get off by 'preaching and teaching' their own ignorance.

Now, it may not be easy to become consistently profitable as a swing trader either, but I'd say the chances of some kind of consistency is far higher than with day trading. Next up is investing. You may not become rich in a few years, but it should be fairly easy to get some return on your money and grow it consistently with low drawdowns from year to year.

Losing money in the market is a choice, so it's entirely up to each individual.

 

[Laissez Faire]

The richest guys on ET are all vol traders.

and the richest traders in the world are market makers with the second being macro traders.

Short term (day traders) are at the bottom.

To clarify, my comment was geared towards the amateur retail trader entering this business with no professional background or access. I'm sure that excludes both market making and macro trading.

When I said hierarchy, I was mostly referring to difficulty, although of course day trading can be very profitable for the select few who can pull it off.

 

[Sergio123]

and the richest traders in the world are market makers with the second being macro traders.

I don't see why it shouldn't be software developers and mathematicians.

 

[ironchef]

To clarify, my comment was geared towards the amateur retail trader entering this business with no professional background or access. I'm sure that excludes both market making and macro trading.

When I said hierarchy, I was mostly referring to difficulty, although of course day trading can be very profitable for the select few who can pull it off.

It is very intimidating reading post after post from the professionals on ET discussing option strategy, pricing, skew.... Early on I tried to understand how @destriero, @taowave, @TheBigShort... trade options, studying furiously how options are priced, studying butterflies, IV, skew, sticky delta, sticky gamma... to no avail.

After a series of discussions on butterfly with @destriero, it dawned on me I should not try to be who I am not. I do not have a formal business training, no professional finance training, nor the IQ, the math skills... to compete.

So I dumbed things down and simplified option to my level: It is a trading tool, no more, no less. When conditions are right, I trade options instead of the underlying.

 

[ironchef]

On a change of note, here is another lesson learned: Buy hand over fist during a crisis.

I don't care what the crisis is. Just buy: housing/real estate crash of 2008, crypto crash of 2022, stock market crashes 2008 and 2020, oil going negative 2020, regional banking collapse 2023, etc. etc.

3-6 months down the road you will be happy that you bought during the crisis.

What if you are already fully invested at that point and have no more funds to buy?

 

[Sergio123]

What if you are already fully invested at that point and have no more funds to buy?

If you don't have any dry powder, then you may want to consider taking some profits of your holdings to get into something with more potential upside...Or don't do anything. You have to pick and choose and manage risks. That's what this game is all about.

Another lesson is that everything will eventually have its day in the sun, and everything will eventually have it's day in the shitter.

 

[ironchef]

If you don't have any dry powder, then you may want to consider taking some profits of your holdings to get into something with more potential upside...Or don't do anything. You have to pick and choose and manage risks. That's what this game is all about.

Another lesson is that everything will eventually have its day in the sun, and everything will eventually have it's day in the shitter.

Easier said than done sir.

I have been around the blocks a few time, 2000, 2009, 2020, 2022.... Trying to guess the bottom and switch is a fool's game.