I don’t know many professional traders. By professional, I mean traders who work for a bank, a fund, an institution of some sort. Nowadays I’ve heard you need to have some degree to become one – and an FSA exam. My fellow traders are like me; people who got fed up to be told what to do or who couldn’t get a job anymore because they are ” too old” ( i.e. above 45). But they are guys who still want the money.
Now lots of people have distorted glasses when it comes to trading; you have the ones who believe that it is evil, that only greed drives you, you’re a bloody useless capitalist ready to take the wool out of some poor workers stiff back and you will end up in the streets with no one to cry over you. You have been warned. The others think that you are going to be the next big guy, flashing Rolex and Ferrari with two blonde girls to body guard you. They want to be in your shoes. What make are they by the way? You have Tods as slippers, haven’t you?
The 3rd cathegory is far more discreet. They are the ones who knows. You don’t make money in one day and it doesn’t take a genius to figure out what to do. You may end up having a Porsche , but it will mostly remain in the garage while you sweat behind your computer. Your wife wears Prada, Armani and Gucci, but you wouldn’t know your kids names as you never see them. The reason you’re not divorced is that, for all that you know, your wife’s lover might have been in your bed for the last ten years but as for you, you sleep in your office. You drink tons of coffee- tea if you’re English- and you look 15 years older than you really are.
So what does it take to become a trader?. You have to want the money, all the way deep down inside. If you think you do but somehow believe that money is dirty/ tacky/ undeserved- you’re fucked. Then you have to have an open mind. The market always have the last word- and the last laugh. What you think is going to happen doesn’t count. It is what you see that matters. You have to be ready for the market; you must have at all time an answer. If you don’t, it will be like driving a car without knowing how to brake.
You have to be disciplined. The only way to find out what you are worth is to have a trading plan, including some money management ( no, you don’t bet all your money on one horse only), some risk management (how much can you take and how much are you willing to suffer?) and a strategy. You should always know when you buy, when you sell, when you cut your losses. And you have to be prepared to have losses- they happen all the time. Keep a journal and write down everything- how much you put on a trade, your strategy, the time of your entry/exit/whatever and the outcome.
Once you have all this, you start working. It means you try a strategy, you play it until you know even in your sleep what you’re doing and you back test everything you have done. Then you learn another strategy- once you have started making some money. If you lose more than 40% of your initial savings- stop. You’re doing something wrong. Have a look at your trades. Review one by one each of them. You may discover that between 10 and 11 Am you’re not good and make bad decisions. You may discover you enter your trades too late. You might even discover that your strategy makes you nervous or that after a loss or a gain you blow it. Find were your weaknesses are- and you will find a path.
In most of the books I have read the emotional side of trading is reduced to a few paragraphs on what the French call ” de la psychologie de cuisine” ( cooking psychology, i.e. such basic stuff that your 4 year-old kid could tell you what it means). Truth is, you are going to ride on a roller coaster. And you’re gonna puke many many times. You have to have good nerves and be ready to take a few punches in the stomac. You have to be focused and hold on to your dreams. If you’re in only for the money, you’re lying. You have to love the game. If it gives you white hair within the first 6 months, get out. You’re dead already and you don’t know it.
Now you will always meet a trader who’s cleverer than you are. Some lie – they are easy to spot. Some brag – but soon reality takes them back to earth. Some have ups and downs. Some never say a word. You can work with a guy 12 hours a day and not know that he has a mother, a wife and speaks 5 languages. All you talk about are the markets and your latest trades.
You will never stop learning and you will have to be adaptable. The tools, the markets, the people change all the time. History sometimes repeat itself but sometimes not. Learning is never enough you will have then to apply what you’ve learned.
When you start dreaming about it every night you have a foot in the door.
And if you go that far…You will wake up on your death bed. I guess. Give me the time, but before that, I’ll say : ” show me the money!”.
PS:Oh yes. Every little hiccup is a she. Currency is a bitch, trades are hookers, and so on. I don’t care, I am a bitch myself and take great joy to see these tough guys on their knees because of a “she”. Told you I am mean.