Trading for a Living Successful trading is based on three
M's: Mind, Method, and Money. Trading for a Living helps you
master all of those three areas:
Trading for a Living helps you discipline your Mind, shows you
the Methods for trading the markets, and shows you how to manage
Money in your trading accounts so that no string of losses can
kick you out of the game.
Stock Trading For a Living - What to Expect
Yes, you CAN trade for a living. But you need to know what to expect.
Unrealistic expectations can frustrate your efforts and adversely impact
results. But first, what NOT to expect:
Do not expect trading to pay your monthly bills.
This is not just dangerous, it is downright suicidal. If you are under
pressure to produce a certain amount by a certain date, you are likely
to take above average risks. If a trade goes against you, you will take
even more risk to recover the loss and still make the quota - a process
that can degenerate into a death spiral. You should have at least 3-6
months of living expenses stashed away in cash/CDs to take the pressure
off trading, or find a way to trade part-time while you are going
through a learning curve.
Do not expect a regular paycheck.
Many traders expect successful trading to generate regular monthly
income. This expectation is reinforced and magnified by TV infomercials
where dumb looking people "making $1,000 per day by 9 am" day in and day
out make you think: "If THEY can do it, I sure can." Not in stock
trading.
The market is not linear. It typically presents 3-5 great buying
opportunities a year, when multiple stocks break out. These zoomers also
tend to top out around the same time, when the market begins to correct.
Your annual income is therefore more likely to come from 3-5 lump sums
per year interspersed with many small losses in between.
Now - what to expect:
Expect to develop your own system over time.
There are several successful ways to trade stocks. But ultimately any
system you select has to be adjusted to your specific circumstances and
personality. Any stock you touch is likely to be traded by a handful of
professionals who know more than you do, have more capital than you do,
and have been doing it longer than you. Do not expect to beat them at
their own game. Any commercially available system is likely to be used
by thousands of other traders of similar skill level. Do not expect to
beat them by doing exactly what they do. Instead, find a method that
will give YOU an edge and get really good at it.
Expect to be alone.
Trading is a lonely endeavor. It's you against the world. If you can't
separate spin from fact or make your own judgments, you won't make it in
this business. Consensus seeking, team building, and support groups and
other corporate qualities do little to boost your returns in this
business.
Expect the unexpected.
No amount of due diligence will protect you against sudden losses,
painful reversals, and humiliating setbacks. No system works 100% of the
time. Expect things to go wrong and be prepared to deal with it. Trading
is not an exact science. Expect to operate on incomplete information,
contradictory signals, and opposing views.
Expect your return to be commensurate with your effort and skills.
Trading is like any other business: trading capital is your working
capital; stocks are your inventory, which you try to turn over for a
profit. Expect to put in a lot of hard work; and if you are looking to
trade for a glamorous lifestyle in the fast lane - best to rethink your
decision.
The question most often asked by novices is: how much money can I make
trading stocks? Aside from the amount of trading capital, it depends on
how good you are. Statistically, you are more likely to lose if you take
things lightly. You are up against the sharpest minds on Wall Street
who, contrary to what you may believe, are in the business of helping
you part with your money. So the amount you make depends on the amount
of effort you put in. There are no born traders, and there are no short
cuts.
Slav Fedorov is a full time stock trader and founder and managing member
of TradingZoom, LLC - a provider of proprietary trading data that swing
traders can put to work right away. http://www.tradingzoom.com/
