All occupations (jobs) and businesses have their pro's and con's.
Some pro's and con's of trading are:-
Pro's
Before the con's I know a lot of people will read the above and immediately be able to think up counter-arguments but I mean them simply on their face value e.g. the final point, a builder can build a house, but needs other trades to help complete the task e.g. electrician, plumber etc. Whereas a trader can enter and exit a trade on their own, I know they can only do this if there is a counter-party to their trade but assuming a liquid market they can enter and exit alone.
Con's
So, why become a trader?
I'm hoping this will turn into a thread of reflection and learning.
I'll start... *WARNING!* I ramble, so what could be a couple of lines will probably be a story so I'll go back after I've finished and highlight the salient points that answer the original question.
Well, I'm not currently a trader but I have been, but never full-time (at least I never made close to my normal income despite at times spending the time of a full-time job doing it).
The original lure, I'll admit, back in around 2005 when someone suggested it to me and gave me a few links to trading education vendors, was that you could make a lot of money in a short amount of time if you learned the tricks of the trade. Sound familiar?
So my first stint actually began in 2006 when I had some time to start my learning and trading a demo account. I never actually paid for any training but met some helpful people who shared resources they'd paid for with me. I blew up several demo accounts which frustrated me out of trading for a while. I believed part of my repeated failure could be because I wasn't taking demo accounts seriously enough. So I put a small amount of money with a broker that allowed really small lot sizes, looking back I made so many typical mistakes; poor risk/money management, failure to be able to take a loss or let a winner run, ultimately I got bored and gambled my bank away on the hope of hitting a couple of home runs and decided to forget it. I'd at least learned that it was far from easy despite being simple.
Besides, I was doing really well in my day job so there was no sense in spending so much time on losing money.
Then the credit crunch came and so I suddenly wasn't doing so well in my day job, although I was still able to continue and make money it was a lot harder and the fun had gone, I guess I was a little depressed and much less busy, so I returned to my trading education. Wiser.
This time a big reason why was that trading didn't require speaking to anyone. I could hide away, just me, my charts and my trading account and shut out the outside world of doom and gloom crashing down around me.
I learned position sizing and money management, developed a set of rules and stuck to them. There were good trades that made and lost money and far fewer bad trades, in fact the bad trades were mostly ones that started good but I lost my nerve on a big run in my favour and closed too early rather than keep moving my stop up and taking money out of the trade and letting it run its course. Given time hopefully I would have learned to overcome this too, but at least I never moved a stop the wrong way.
I started a journal here in 2010, it only lasted a short while because despite my consistency I never felt comfortable committing enough funds to make usable returns, so I once again chose the day job over trading.
My interest in trading has been piqued again in recent weeks, I'm not sure why this time and maybe it won't last. But it's lasted long enough for me to ask myself (and now you) why I would want to trade at all because not only is my time at risk but so is my capital, whereas in my day job I can spend a lot less than 1% (what I used to risk per trade) for a return of 3-7%
So currently I'm wrestling with that fact and thinking my energy is better spent on my day job, which is replicable, so I could recruit more people to do what I do and multiply the results, whereas trading is a lot harder to teach and still doesn't guarantee positive results. Even if I have a bad month in my day job I still actually make money, just less.
I hope the final part of this post doesn't read like I'm bashing trading as a job, I'm not, I'm hoping there's something I'm missing that will make me realise why I keep coming back to the idea of trading.
As gulam recently said to me on the phone "trading is the hardest way to make an easy living".
Over you you...
Some pro's and con's of trading are:-
Pro's
- Accessibility - You only need some basic equipment and knowledge to physically be able to trade and you can trade from most locations
- Start up costs - If you already have the equipment, then to physically begin trading you just need some capital
- No formal education or qualifications required
- You don't have to rely on anyone else - You're not prevented from trading by not having a multitude of skill-sets
Before the con's I know a lot of people will read the above and immediately be able to think up counter-arguments but I mean them simply on their face value e.g. the final point, a builder can build a house, but needs other trades to help complete the task e.g. electrician, plumber etc. Whereas a trader can enter and exit a trade on their own, I know they can only do this if there is a counter-party to their trade but assuming a liquid market they can enter and exit alone.
Con's
- It's very difficult to become successful long-term and make a living from trading as a retail trader - The often quoted 95% that fail
- It can be very lonely
- It can be very boring
- You could put in a good days/weeks/months work (planning the trade and trading the plan) but still end up with less than you started despite your best efforts - Your time AND your capital are at risk with no guarantee of a return on either
So, why become a trader?
I'm hoping this will turn into a thread of reflection and learning.
I'll start... *WARNING!* I ramble, so what could be a couple of lines will probably be a story so I'll go back after I've finished and highlight the salient points that answer the original question.
Well, I'm not currently a trader but I have been, but never full-time (at least I never made close to my normal income despite at times spending the time of a full-time job doing it).
The original lure, I'll admit, back in around 2005 when someone suggested it to me and gave me a few links to trading education vendors, was that you could make a lot of money in a short amount of time if you learned the tricks of the trade. Sound familiar?
So my first stint actually began in 2006 when I had some time to start my learning and trading a demo account. I never actually paid for any training but met some helpful people who shared resources they'd paid for with me. I blew up several demo accounts which frustrated me out of trading for a while. I believed part of my repeated failure could be because I wasn't taking demo accounts seriously enough. So I put a small amount of money with a broker that allowed really small lot sizes, looking back I made so many typical mistakes; poor risk/money management, failure to be able to take a loss or let a winner run, ultimately I got bored and gambled my bank away on the hope of hitting a couple of home runs and decided to forget it. I'd at least learned that it was far from easy despite being simple.
Besides, I was doing really well in my day job so there was no sense in spending so much time on losing money.
Then the credit crunch came and so I suddenly wasn't doing so well in my day job, although I was still able to continue and make money it was a lot harder and the fun had gone, I guess I was a little depressed and much less busy, so I returned to my trading education. Wiser.
This time a big reason why was that trading didn't require speaking to anyone. I could hide away, just me, my charts and my trading account and shut out the outside world of doom and gloom crashing down around me.
I learned position sizing and money management, developed a set of rules and stuck to them. There were good trades that made and lost money and far fewer bad trades, in fact the bad trades were mostly ones that started good but I lost my nerve on a big run in my favour and closed too early rather than keep moving my stop up and taking money out of the trade and letting it run its course. Given time hopefully I would have learned to overcome this too, but at least I never moved a stop the wrong way.
I started a journal here in 2010, it only lasted a short while because despite my consistency I never felt comfortable committing enough funds to make usable returns, so I once again chose the day job over trading.
My interest in trading has been piqued again in recent weeks, I'm not sure why this time and maybe it won't last. But it's lasted long enough for me to ask myself (and now you) why I would want to trade at all because not only is my time at risk but so is my capital, whereas in my day job I can spend a lot less than 1% (what I used to risk per trade) for a return of 3-7%
So currently I'm wrestling with that fact and thinking my energy is better spent on my day job, which is replicable, so I could recruit more people to do what I do and multiply the results, whereas trading is a lot harder to teach and still doesn't guarantee positive results. Even if I have a bad month in my day job I still actually make money, just less.
I hope the final part of this post doesn't read like I'm bashing trading as a job, I'm not, I'm hoping there's something I'm missing that will make me realise why I keep coming back to the idea of trading.
As gulam recently said to me on the phone "trading is the hardest way to make an easy living".
Over you you...
