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Trade Well, or be Homeless


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  #1 (permalink)
 
josh's Avatar
 josh 
Georgia, US
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If you have been trading a while (so trading is not particularly new to you), and suddenly tomorrow you woke up and found that you had no other income or job, your savings had been taken away from you, and had to either make it trading, or live as a homeless person, how would that affect you?

Knowing that you will not eat next month or have a place to sleep indoors if you do not make money trading, would this cause you to perform better, or worse? Would you hesitate to take that trade you have been waiting all day for, or would you execute like a champion? Would you be reckless with your risk, or would you value your capital, knowing that it's all you have? Would this kind of pressure bring out the survivor and champion inside of you, or would you crumble under the weight?

Obviously this is a bit of an extreme scenario, but I think it could be a valuable exercise to consider. Answers will differ, so I'd like to hear what you think!

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  #3 (permalink)
 
Big Mike's Avatar
 Big Mike 
Manta, Ecuador
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josh View Post
If you have been trading a while (so trading is not particularly new to you), and suddenly tomorrow you woke up and found that you had no other income or job, your savings had been taken away from you, and had to either make it trading, or live as a homeless person, how would that affect you?

Knowing that you will not eat next month or have a place to sleep indoors if you do not make money trading, would this cause you to perform better, or worse? Would you hesitate to take that trade you have been waiting all day for, or would you execute like a champion? Would you be reckless with your risk, or would you value your capital, knowing that it's all you have? Would this kind of pressure bring out the survivor and champion inside of you, or would you crumble under the weight?

Obviously this is a bit of an extreme scenario, but I think it could be a valuable exercise to consider. Answers will differ, so I'd like to hear what you think!

If you have no assets then it doesn't matter how great your past trading was. Your future trading will be completely different after this radical of an event in your life.

So you first need to get a "normal" job with a dependable and steady income, find your footing, build up a bit of a nest egg, and then you can return to trading.

But I would hope that this scenario would actually never happen because even if you got divorced and your wife took everything, your house burned down, you got audited by the IRS, etc, then hopefully you still made some decisions prior to those events that allowed you to have some money put away somewhere. I think traders in general are good at diversification.

Mike



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  #4 (permalink)
 
Big Mike's Avatar
 Big Mike 
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gain247 View Post
This is real situation for me. I lost my job and with not much savings I've been trading to stay afloat.

Stop trading immediately. Get a normal job.

Read this thread front to back please:


Has been covered many times in that thread as I recall.

Mike



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  #5 (permalink)
 
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 Private Banker 
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josh View Post
If you have been trading a while (so trading is not particularly new to you), and suddenly tomorrow you woke up and found that you had no other income or job, your savings had been taken away from you, and had to either make it trading, or live as a homeless person, how would that affect you?

Knowing that you will not eat next month or have a place to sleep indoors if you do not make money trading, would this cause you to perform better, or worse? Would you hesitate to take that trade you have been waiting all day for, or would you execute like a champion? Would you be reckless with your risk, or would you value your capital, knowing that it's all you have? Would this kind of pressure bring out the survivor and champion inside of you, or would you crumble under the weight?

Obviously this is a bit of an extreme scenario, but I think it could be a valuable exercise to consider. Answers will differ, so I'd like to hear what you think!

This is probably the worst scenario one could have for being a trader. It would be better to realize the situation at hand and get a guaranteed income and work yourself back to being a trader rather than go through the financial hardship. The psychological aspect of this would simply be too much and you would inherently discover your worst fears to become a reality. Its like a tractor beam sucking you right in psychologically.

Your chances of success in this situation are greatly reduced because of the psychological hurdle and would probably have the equal opportunity to success by just walking up to a Roulette table and placing all your money on "black". Just a very difficult endeavor.

One should only be exclusively trading for a living if they are consistently profitable and have more than enough assets to support their lifestyle and living expenses. If a trader that wishes to do this full time but isn't at that level, you'll have a hard time. If you're married, your marriage will suffer. If you're single, no one will want to be around you. You'll never be yourself because you'll be too worried about trading. Its best to have at a minimum, a modest income to compliment what you're doing in your trading. Its all about piece of mind in knowing you do not "have to" make money from trading to pay the bills, eat and live a normal healthy life. Its all about balance.

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  #6 (permalink)
 
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 sptrader 
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Trading under "Pressure to perform" and do it well, is almost impossible...been there done that..
The best situation, is to have a regular income and trade, so that if you lose some, it's not a problem, just save up enough from your regular job, to replace the lost money and continue...
But with no other source of income, the pressure is unbearable...unless you have a large enough Acct size , so that any loss is insignificant by comparison...
I think that's why many traders just starting out fail. They try to trade with a few thousand dollars, the odds of success are massivly against you..

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  #7 (permalink)
 
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 josh 
Georgia, US
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Thanks for the responses so far. This is what I expected, and I think that largely I agree with the responses.

On the one hand, the pressure of an income could inhibit performance. On the other hand, having a "backup" to trading income could potentially allow one to be overly casual with trading, never making it a viable income generating endeavor. @GaryD comes to mind, as in the past he has talked about how he has struggled with having a "regular" steady money-generating job and yet trading at the same time. Without the steady job, while it might force some into terrible performance, it might force some into straightening up and to get their act together, considering the alternative.

Again, these are just hypothetical musings, but I think it's an interesting discussion.

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  #8 (permalink)
 
Big Mike's Avatar
 Big Mike 
Manta, Ecuador
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The first ten or twelve years of me trading was all solely swing trading equities. I made good money, and it was all part time.

Then I went full time. And for some reason I struggle to figure out, I decided that was the perfect time to switch from swinging equities to scalping futures. So I proceeded to blow up a few accounts over the next year or two.

When I started futures.io (formerly BMT) I was still a scalper. I still loved range charts or anything else that moved fast. Basically, I would call myself a complete "noob" who didn't know what he was doing but at least I managed to stop losing money.

Luckily for me, I am semi intelligent, and after lots of trial and error I started to figure out what was working and wasn't working for my trading. Long story short, today I am not a scalper any more. My highest frequency is day trading futures, and lowest frequency is swing trading equities. My smallest chart is 100K vol on the ES (roughly equal to 1 hour chart), although I use the daily chart much more often in combination with the weekly chart.

For equities it is all solely daily charts.

Anyway, my point was a few paragraphs back really - and that was that having a secondary income for the first 10-12 years is probably what led to me being so successful with it. And then when all the sudden I had to depend on trading for my income (post-divorce, I decided to change a few things in my life and quit my job) ... well let's just say that was a rash decision and I made foolish mistakes like completely changing my method, and I paid for it.

Hope something I've shared is helpful. Otherwise it's just a bunch of rambling...

Mike



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  #9 (permalink)
 
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 GaryD 
Orlando, Florida
 
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I'd like to add a twist. @Big Mike and @Private Banker, anyone else who does it full time, if you found yourselves in that situation today, not completely broke, with let's say $50,000.00 total available to you to live, eat, trade... would you get another job, or would you trade?

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  #10 (permalink)
 
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 Patrick S 
Raleigh NC
 
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@Panda warrior and I were having this same conversation. Brian made the same point @josh did.
At the time I brushed it off... but now I am hearing something different.

It sent a shiver up the back of my neck to realize that my discipline is not what I think it is.
The reason is I make plenty of cash without trading. So what if I lose a couple hundred bucks? Big Deal!

How different would I trade if I put 100k in the account and traded 10 lots?
the chance that I would lose a couple thousand would hurt a hell of a lot more.

It is all relative right? A couple of hundred is not a lot of money to me but it might be to my neighbor. A couple of Thousand IS a lot of money to me but it might not be to my other neighbor.

The point I am hearing from Brian and Josh is Trade like my life depends on it. Quit Fu@K!N around!

PS. I will not be trading a 10 lot on 100K. I believe I need to earn that right.

If you always do what you have always done you will always get what you have always gotten.
Celebrate because you executed your edge. Not because you won.
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Last Updated on June 27, 2013


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