Propretary (directional) trading, from my personal experience, is something you only learn by doing. It's not something you learn on a book, nor is it something you learn by watching or commenting on the markets. It requires you to live & breathe the markets in real time. Even if you are learning from somebody else, the only way to actually learn is to practice and get feedback in real time, in order to learn the nuances of the system or method.
Source: Reuters.com
Bottom line: when I went solo, and attempted to trade for a living, I was nowhere near as prepared as I needed to be. And that's why I'm now passing on my experiences: learn from me, do not commit my same mistakes, and you will save yourself years of mental and physical pain!
So you want to trade for a living
“90% of aspiring traders lose 90% of their capital in 90 days” - Wall Street Saying
Not so fast...count to 100 first...or maybe 1000. Beware. Trading is not a regular “job”, nor is it the only job available in the financial sector. It is probably one of the most difficult professions to master – given that it is very much in conflict with our nature as human beings – and it is also one of the most controversial professions there is. You can go through days (or even weeks) feeling horrible, for no other reason than because the market is not honouring your view or because you're in a draw down. Trading is not for everyone, and it's not a job I would recommend you dive into head first (trust me..that's exactly what I did and it was not fun).
Make sure you know what your objectives are.
Don't end up like this guy. Trading can cost you more than just money...
Source: Innerfx.com
Through personal experience, I'll show you my journey through torture and pain; how I tried to learn from every loss; how I tried too hard; how significant every miniscule detail had become; and finally, how dumb and stubborn I was – and lost track of life for quite a few years. And it's not about losses. Losses are the cost of doing business. There is no way to avoid them, so the best practice is to learn how to manage them early on in your trading career. What I'm going to attempt to transmit is the key importance of understanding whether you really enjoy the game, or whether you enjoy the markets but not the game. Whether you're attracted to trading because it can lead to great riches, or because you generally like the markets and the intellectual stimulus.
Through the years, I have had the privilege to help many aspiring traders and many experienced traders and guide them through the difficulties they were having. How could I possibly do this, without having many years of industry exprience or a degree in psychotherapy? Simple: experience is the best teacher available when it comes down to trading.
Admittedly, I am not passionate about trading tout court. I have always been passionate about the markets; I have always wanted to understand the markets inside out; and with this knowledge, my desire was to help people make better decisions and possibly save them from the “disasters” I saw over the years. However, I confused my desire to learn “how the markets worked” with the desire to “trade the markets”. And although I would not be in the situation I am today without having gone through this qui pro quo, I would strongly suggest that aspiring traders keep this thought firmly in pole position throughout the learning curve.
Learn from me...trading, along with your p/l, is not all there is to life...
Source: the billfold.com
I made almost all the mistakes in the book. When I set out to trade my own account, I diddn't have the experience to make it work. What's worse: after having seen so many clients and professional managers fail, I “felt” I could do better. But based on what facts? God knows my thoughts were only a product of overconfidence and little else.
When I started trading my own account I was undercapitalized, I had the emotional weight of having left a job, and moving back home to mom & pop's place. And the global financial crisis was just starting to hit – so the financial sector (my sector) would be downsized for years to come. Essentially I either learned to trade, or I would have had to find another job outside the financial sector. The odds were against me...and this diddn't scare me. Simply because I did not know how steep the learning curve can be without proper guidance.
I also never actually gave proper thought to the question “is this what I really want to do?”. I diddn't have the time...or stated more clearly: I diddn't give myself the time to think about it. I had dragged myself into a series of forced moves without knowing it. So please learn from me!
If you are not totally honest with yourself, and are ready to admit that trading is not a job that suits you, be prepared for years of stress.
How to know if trading suits you? In order to answer this question, you need to actually go through the process of:
a) learning about the markets (and of course asking yourself whether you're really interested)
b) learning about market dynamics (and of course asking yourself whether you're really interested)
c) learning about market microstructure and macroeconomics (and of course asking yourself whether you're still interested)
d) starting to create scenarios for every week, and eventually every day, based on your understanding if market dynamics, macroeconomics (fundamentals), and and microstructure (the participants and how they will act).
e) keeping a diary of point “d” and attempting to get the bias (direction) of the market correct (on your timeframe of choice, which should first be on the daily, and only when you are consistent, try the smaller time frames) with attempts to “time the market” on a demo platform.
f) if consistently successful, go live with a small account.
g) if demo results are repeated on the live account, gradually increase the account size.
But in order to do all this “properly”, it's important to understand why most aspiring traders fail to reach any degree of success. I'm certain that just about anyone that has a genuine passion for the markets, can understand how they work. But not everyone will want to outright trade for a living, and that's what many aspiring traders just never understand. Why?
When you see announcements like this, think twice.
Source: Reuters.com
It's just too easy to take advantage of human emotion. Having a tough time at work? Google “how to trade” and it will seem that in a matter of days (or even hours!) your problems will be solved. You can become a trader, and open a trading account in minutes. Profits are only a few clicks away...or are they?
One of the main reasons that aspiring traders fail, is that it's too easy to fall for sales pitches.
Source: reuters.com
Why do so many aspiring traders fail?
1. aspiring traders start off from point “e” and gradually work backwards. They get taught that the most important thing is to pull up a chart and learn “technical analysis”. That way, they can enter the market when indicator XYZ turns positive and then exit based on the reverse signal. There are thousands of books on technical analysis, on “how to profit” from the markets...it seems that you only need to pick your favorite style, read the book and start clicking away. Naturally this only leads to frustration and losses.
2. professional traders (either prop or market makers) have a salary regardless of their performance. Stated otherwise: they do not need to generate income from their trading. The psychological issues they face are somewhat easier to overcome relative to someone who is risking his own capital. The common retail trader is more like the hedge fund owner during the startup phase where his own money is at stake. It's important to be in a personal situation that will allow you to actually have a fighting chance. This requires either a day job you can trade around, or a stream of income that equally gives you time to study and trade. A fast track towards trading losses, stress and frustration is leaving a day job to start trading from scratch. Get yourself into a personal situation that can give you a fighting chance.
3. professional traders seek to grow the amount under management, so they can increase their risk exposure when they have a winning streak and reduce their exposure when they lose. This is a fundamental necessity for capital preservation. Match that with the common retail trader mentality of pulling money out of his account every month as a normal paycheck.
4. professional traders have a longer term view of the market and focus on the overall strategy, not the outcome of the single position. Match this to the common retail trader that wants to trade intraday, purely looking for the best timing. His risk is concentrated and totally short term in nature.
The fact that the retail trader typically looks at short time frames, and withdraws money from the account when winning, but adds capital or becomes risk-seeking when losing (because he needs to pay the bills so he keeps on trading) along with the fact that he has larger spreads than professionals, is truely a recipe for capital destruction!
Learn from me and play defence (getting into a good personal situation first) before thinking about offense (how to trade, what to trade, etc.).
Nessun commento:
Posta un commento