[TheNegotiator]

Hi!

This will be a thread where people can discuss their hopes and dreams and fears about trading full-time or part-time, but either way trading for real. There are many considerations a wannabe trader must take into account before trading live and many of those will likely be missed or overlooked understandably by someone new to the business. Some will be breakers like account size, some will be obstacles like investigating which product may suit you and your trading.

If this thread can be a source of knowledge and be an eye opener to what may be involved in beginning to trade then it's goal will have been achieved.

It'd be great to get some posts from new traders here to see some of the hurdles you have had to overcome or even problems which have prevented you from trading completely.

Looking forward to sharing your experiences.

Cheers,

TheNegotiator.

[TheNegotiator]

I'll start the discussion off with a few core points which I would say any trader must consider(btw I consider anyone who is buying and selling products is a trader. So that includes longer term investors too).

1-Why.
Firstly I would consider why exactly it is I want to trade. Is it to make money, is it to prove I am the best, is it to learn to be the best? The markets are a great humbler and anyone who walks into them with their eyes shut is likely to get their arse handed to them on a plate.

2-Commitment.
How much time can I/will I commit to trading? Trading is not like riding a bike. You have to learn the basics and progress to the more advanced material and understanding. But it is ever evolving. So when you can't make heads nor tails of something, it's possibly because it has changed before you understood it in the first place. Commitment is key. If you don't provision for time, you'll likely lose money.

3-Timeframe and method.
Will I be a swingtrader or a scalper? A position trader or a news trader? How might that fit in with my account size and my other commitments? Will I trade fundamentals or technicals? What is a technical?(lol j/k).

4-Account/investment size.
How much can I realistically afford to start an account with and what are my expectations of potential return? Have I got enough savings or additional income to support me before I become profitable? There are those who say it takes at least 18 months of live trading before you become profitable.

5-Money management.
Have I got a firm and realistic plan of how to deal with profit and loss? Can I say that so long as I have a reasonable trading method I will make money. People often overlook this part of trading but it is critical. If I don't accept that I have to take losses as part of doing business, I won't plan properly for when things go wrong. Also, how will I know when I can or should increase my position sizing?

6-Product.
So which type of product would I like to get into? Stock, bonds, fx, metals, energy etc. Spot, futures, options, cfds (contract for difference), spread bets etc. etc. etc.. All of these products offer a multitude of different characteristics which must be understood. How volatile is the product, how much margin is required, how much are commissions, what affects the market, what are its trading hours.

7-Broker.
How do I find a good broker that is going to be genuine and well managed. This is my money after all. I know that brokers net all their clients off in some cases and I certainly don't want to have something go wrong. It shouldn't be a problem, but I must research any potential broker thoroughly. Low margin and great commissions are not the only consideration.

8-Platform.
Which platform is going to fit in best with my plan? Different platforms are generally employed for different product classes and so finding the one which is most appropriate is important. Also, how much is it going to cost and how stable and efficient is it?

9-News source.
Some people hardly even use news. Some people use it a lot. But which news source if any will I use? I know some TV channels are really not too great. There are so many websites and commentaries and even something called squawks which have people speaking relevant news. Newswires which banks and trading arcades have are probably uneconomical at least to start with. I think they run into the thousands of $$$. The absolute minimum I need to know is the times of economic and possibly earnings data.

10-Computer.
Is my PC up to scratch? Will it run the platform I selected? Is it clear from clutter and junk that bogs down even very decent computers?

11-Internet Connection.
Do I have a decent enough internet connection? If I want to trade through my pc, the data need to get through to it fast and reliably.

Just a few ideas to look over for you guys and comment on/question.

Cheers,

TheNegotiator.

[Tradewinds]

1-Why.
I want to trade as a career. It did not start out that way. Originally, I just wanted to manage my own retirement account. I came out of the manufacturing and construction industries. I don't want to go back into either industry, and I don't see any way I can get work in either industry. I'm looking for a way of life and a career. I don't feel that the U.S. economy has anything to offer me. I don't feel like I have any other good options. I caution anyone wanting to go into trading as a profession. I don't have a family to support, or any real expenses, so that has been critical to my being able to put the time in to learn trading.


2-Commitment.
I have committed a little over 3 years now. Probably 2 to 2 1/2 years full time, every day.

3-Timeframe and method.
I guess I'd call myself a swingtrade scalper. I hate trend lines, and do not use them. I wasted a lot of time on trend lines. I only use price levels, support and resistance on my price chart. Then I use mostly the Advancers / Decliners for the general trend direction. I do not use multi-time frame charts. I only use a one minute chart. For me, something like a 133 Tick chart is just information overload, and takes my focus off the longer trend. I will be making up to hundreds of trades a day.

4-Account/investment size.
I expect to eventually make $800 to $1000 dollars a day. If I had a $100,000 account, I'd want to make $5,000 dollars a day. I've gone through about $25,000 dollars of expenses for bare bones living, and I have no rent, mortgage, heat or food expenses. Right now I have $10,000 in a trading account.

5-Money management.
I have a reasonable trading method that I have proven will make money. But it's taken over 3 years to get to this point. I've made all the typical mistakes that traders make. Let my losses run, take profit to early, etc.

6-Product.
All I trade is the ES e-mini futures contracts. Originally I looked at stocks. I consider stocks to be to much of a hassle, to much research, to difficult. I don't see any reason to trade anything else. My focus is to totally master what I do to an extremely profession level.

7-Broker.
I've only used a couple of brokers. This is an interesting topic. It takes a lot of time to get set up with a broker, and learn their platform. Just that alone could take months. It's a chore to determine what broker you want to use.

8-Platform.
By chance, I choose a broker that has very good charting. I believe that this is critical. After all, it's all about reading the chart. If you can't do that, then what's the point? Make sure that whatever platform you are using, you can navigate the charts without getting confused.

9-News source.
I looked into buying a subscription to a news service, but the expense was way more than I wanted to spend. I'm glad I didn't spend any money on it. News is very important, but trying to react instantly to the news is a game I would never try to play. I did go down that road of looking a earnings reports for about 6 months, and then decided that it's way to difficult, and I'm glad that I gave up on it. Don't get me wrong, I always check when the news releases are and make sure that I'm not trading when it comes out. Then I take a look at what the news is. I put a lot of time into figuring out how to interpret the news. That's an art form. But I don't trade the news, I trade the market internals and support/resistance.


10-Computer.
I've gone through 3 computers. One custom built myself. (Nightmare, that I don't recommend. But I'd probably do it again.) I like my laptop with an external screen attached. As with any product, the high end products are sometimes worse than the mid range quality. I bought a high end gaming laptop that I had to return twice, and then bought something else.

11-Internet Connection.
I live in a rural area and started with a local wireless company. It wasn't really good enough for trading. Luckily, during my learning phase, a cable company installed high speed on my road. I have a back up wireless connection through my cell phone company.

[TheNegotiator]

So after 3 years, do you feel you have addressed all these point poorly/well/got them nailed? It's important for new traders to realise how many things they have to look at and how many more things they will find out they have to look at when they get into trading. Being extremely organised should help!!

[Tradewinds]

Originally Posted by TheNegotiator »

So after 3 years, do you feel you have addressed all these point poorly/well/got them nailed?

I'm a perfectionist, so my standard of having something "nailed" is quite high. I'll put it this way, . . . I have the hammer, . . I have the nails, . . . I'm afraid of pounding my finger. The psychological/fear part is the final nail. The psychological part is another category to look at. I'm a perfectionist, and got caught up in trying to find the perfect trading indicator. Then it became an excuse not to trade. The good part of being afraid to trade is that I didn't blow up my account. The bad part is that I haven't made money trading, when I have the skills to do it.

I didn't know about the failure rate of traders when I started. It was quite a while before I heard anything about that. I'm not trying to discourage anyone from trading. I believe that the market needs small retail traders. Just understand that many traders may run out of time and money before you get the skills to be successful. But that is the case with starting any business.

I spent a lot of time, energy and resources nailing down all of those 11 categories. The most important thing is the strategy and product. Another category I would add is psychology. That's the final nail to drive for me. I'm working on that now.

My personality is to attempt to create something that nobody else has. I tend to think that I can come up with a better answer than other people have. So I'm very independent, creative and believe in my abilities. I have programmed my own custom trading indicators and have written hundreds of custom indicators, so I am deep into programing. I don't know what the typical trader personality is, or if there is one, but that is my personality and my perspective.

As far as the computer setup, internet connection, broker, and platform. Those things can kind of work themselves out over time as you are deciding what product to trade and what time frame. When I first started, I spent massive amounts of time searching the internet for good information. Probably 98% of the trading information, websites, and products out there I wouldn't give two cents for. (And thankfully I didn't)

I believe in learning price behavior, but I made it to complicated. When I just started focusing on things like support, resistance, new high's, and new low's things got a lot simpler. I don't like indicators based on price. The only thing I look at based on price is price levels, support/resistance.

I would like to state, that a big part of my learning was helping out other people with what I am good at. I helped people answer programing questions, and that exposed me to a lot of ideas and information that I would not have known about. So becoming part of a group, and contributing was a big part of my journey. I helped people, but I also learned things that I might never have been exposed to. So it's good to get involved, and contribute. You get something back from it.

[leobust]

Find some trading setups, usually from books, modify them to suit your markets and make it your own.
You only need about 3 or max 5 setups to make a living. Re-invent /discover setups that works on trend days, during consolidation and different timeframes. A setup IS NOT one fits all - each one must suit
a specific market condition.
Paper trade your setups everyday under varying market conditions and take notes, especially the market reaction to the news of the day. Trade your setup semi-mechanical, ie. with little discretion - that way you let your setup run its course - whether that particular trade was profitable or not. Record your P/L so you can make some adjustments as you go along.
You have to be VERY disciplined when trading your setups. Follow your setups religiously. NO SETUP - NO TRADE.
When you're ready to trade real money. Just start with very few contracts until you're profitable. Increase the no. of contracts accordingly as you gain confidence.

[dgdevans]

I'd also add the need for disaster planning. Do you know what you will do in all your worst case scenarios.
What if your internet goes down? Do you have a back up?
What if your pc dies? Do you have a second machine?
What if your broker platform crashes? Will you know exactly what positions and orders you are holding and where they are held(locally or at exchange level?) Do you have access to another broker where you can hedge open positions?
What if you suddenly taken ill Is there someone else who knows how to close out your positions?

[TheNegotiator]

Thanks for those points dgdevans and leobust. It is really amazing how much people pick up when they start trading but how little they realise it takes beforehand.

Keep 'em coming!!