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Who trades full-time?

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Re: Who trades fulltime?

Hi aramz;

that's what I thought - and got confused about injections about Millions in blue chips and time for the golf course.
Some people can't play golf or don't like golf.
Some people may enjoy working from home for a living.
It's indeed a question of choice, of lifestyle, of physical capabilities, and many more.

If I had a Million Dollars or two, I'd probably trade/ invest in a different way to the short-fuse daytrading and swing-trading that has paid my wages for the past ten years. Initially, the stress of having to perform was on a par with the stress of frustration in a middle management position, where the next layer was more interested in their perks, right to make stupid demands, and insist on ineffective principles, policies, and procedures.
Compared to that, working as a trader from home is Paradise, thanks to the ability to discuss matters en famille because trading success affects and interests everybody. The bliss of being able to say "I love my new Boss!" and really mean it!

On the other hand, the need for a professional approach, strict hours and attention to details - routine though they may become - is paramount. By the time the ASX opens, I have to be prepared - usually starting an hour before, checking Overseas markets, obtaining a feeling for which challenges and opportunities to expect today, checking on vulnerable and maturing positions, and finding options for new trades.

There are days, when nothing much is happening: all trades are humming along, and nobody is bothering me with emails and questions. When that happens, I don't consider it unprofessional to leave the office and have a "social life" for a change. Or communicate with friends and family around the Globe.

After Market Close, I go straight into book keeping: enter trades into my portfolio management system; evaluate successes and reasons for less successful early stop-outs, and have the computer report the actuals.

The afternoon is then free for family, friends, hobbies - whatever one's inclination. And if one's mobility is somewhat restricted, the computer can again be a window to the world.
The key to "Trading for a Living" is "Enjoying what I'm doing". If the attitude is professional and positive, success will follow inevitably.
 
Re: Who trades fulltime?


There was an earlier comment where someone said, I would rather be a lawyer during the day, problem with that is that every hour you bill, is ever hour you spent in the office.

But with trading, it does not have to be based on hours spent, look into automation, you can have a computer do all that for you ... just be proficient enough to program in the rules.
 
Re: Who trades fulltime?

Thanks Pixel. That is exactly the reply i am after. An insight into the life of someone who makes a living from the market. Whether they spend strict hours at a computer or sometimes take a day off when on a roll and how much preperation is involved with each trading day etc. Also possibly what instruments they trade and if they may mix up their trading when the market trends change for instance a trader may look for brief day trading rallies and shorting opportunities when the market is trending down etc. Ellaborate as much as you want.

I will re post the bulk of my last post which goes into specifics of what my original post was intended for. Being at the bottom of the last page it may be missed by quite a few posters:

Basically i wanted to know how some traders operate during their trading day. I am moreso interested to hear from traders who derive an income from the markets and do so not by investing some of their millions into blue chips an reaping dividends and steady profits.

Whether the trader scalps forex for everyday profits and dabbles in the some equities or whether he/she trades the SPI and and also trend trades while writting puts and calls off these short or long trends he/she follows. How many hours a day this person may trade for or research or if it varies from day to day. Also if they are happy with their choice of 'trading for a living' or if it is alot harder and stressfull then what they first thought.

Basically if someone wants to suss out what it would be like to work as an engineer for a living or a plumber etc you can do work experince and you can speak with lots of people openly about life in these professions. With trading for a living though it is hard to find people to talk to it about or get an idea what it would be like and learn of the rigours they go through during the day.

I started this thread so people who traded for a living and derived an income from the market could share their experiences and offer an insight to others who might like the idea of trading for a living or those who might be currently on a rigorous journey of knowledge and skill building so they one day could do the same.

Cheers
 
Re: Who trades fulltime?

After reading the recent posts encouraging silent members to post more often, I thought I'd make an effort to become more active.

I'm interested to hear how people have made the transition from a 'day job' to trading for a living.

I try to spend a couple hours each night studying & SIM trading futures, and most recently European bond futures. One issue I'm finding is that 2 -3 hours per night is not sufficient to research recent news events, charts, plan some trades, and then wait for the price action. (I have been looking at short term moves, mostly 1min & 5min charts)

So my question is: If you were starting over and had 2 hours per night available, what are some pros & cons for a End-of-day style vs a day-trader style.

For example, EOD data appears to be cheaper (or free) but then holding positions overnight increases risk.

Being a complete novice, any feedback would be appreciated. Thanks.
 
Re: Who trades fulltime?


After reading this thread, it seems to me that some people are not yet aware what is really going on in trading. Trading in the real world is totally different than what the media or mainstream shoves down our throats. I believe that it would beneficial to first properly contextualise trading because it some of the questions being posed in thread are context depended, and hence if the presumed context is wrong, then the questions being posed and the answers are to some extent meaningless.

When you sit down at a card table, you know who are the good players and who the amateur/hobbiests are in the first or second round of play. You’re not really going to make money a lot of money from the pros, but the amateurs come and go in steady streams. Amateurs who play loosly and passively pay the bills, so to speak. At first glance, it seems logical that it is this way in trading also. Pros don't really make money from other pros. Pros make money from amateurs. Pros set up shop here and there and trade various intruments, but they probably won't extract money and show a net gain from other good professional operations. Pros make money when amateurs lose money.

Amateurs lose money by: 1) making technical mistakes, 2) making emotional mistakes, 3) not knowing the game rules, 4) making trade mechanics errors. List all the ways amateurs lose money? They buy down, blow stops, buy too much for their nerves and get too emotional, take random trades, get impatient, take a shot when the odds do not favor their play, general lack of planning, general lack of understanding and experience, general craziness.

In order for a growing number of Pros to continue to make money, fresh greedy amateurs who believe they can beat the market in short order, who have no ideas of the odds involved, are necessary. Some do so with thought, applying the principles learned in other careers. Others attempt a more haphazzard and reckless approach, which is all the more better for the pro. By the way many portfolio managers and bank traders are also amateurs who contribute to the pot -- especially in a long term bear market. Now, more than ever, people from all over the world have access to the markets. So instead of reading threads on developing “holy grail”, start seeing Pros from this context, and then you’ll realise that discussions on defining traders as full-time vs part time, or retail vs professional (institutional traders) is somewhat meaningless.

In terms of daily routines, it is a very individual thing, depend on your level of awareness of your own psychological weaknesses. For example, someone might read all the news and what happened in other markets, etc, and over-intellectualise everything and thus introduce new elements into trading which will translate into second guessing of what the price does. For some it might be better to be removed from the market because any sharp intraday reactions in the general market will scare them out of trades.

The bottom line is that life as a trader is once again a very individual thing, there is not black and white or right or wrong answer. You have to find out for yourself what it is like to live like a trader, because lots of people will paint you a rosy picture and that’s not the case at all. Let me assure you that if trading would be as easy as some people would like you to believe, then everyone would be rich. Those who sell trading courses and/or newlettters have figured that out a long time ago, that’s why they show you trades in hindsight vision.

That’s how trading is in the real world, amateurs vs pros. The reality is that trading is a form of professional gambling. Amateurs just don’t get it, and it is manifested in their crowd behavior on which the pros capitalise. Once you understand all of the above, and I don’t me just intellectually, but rather internalise it so it becomes your automatic thought process, then your focus will be on how to capitalise on what’s happening in the markets, following the volatily, and focusing on thing like that and actualy building the structure and frequency of your routines around that.

As a trader you have to constantly adapt and think for yourself. You have be humble about your weaknesses and flaws (we all have them), and instead of sweeping htem under the carpet you have to be fully aware of them so you don’t become part of the crowd. You need to be able to observe both, the crowd and yourself. Not many people can do it. If you want to be a very good trader then trading become as a mirror of your personal development, and but unfortunately that’s not how people see trading. I wish you all the best.

Sorry about the typos
 
Re: Who trades fulltime?


Great (first) post but I have to point out that point isn't true. Read up on some trading legends stories. They blow up millions/tens of millions. Where do you think that money goes ? Mostly to other pros. Most people consider people Jesse Livermore a pro. Yet he lost everything 2 times or something - that money has to go somewhere.

Lot of exalted hedge funds have big draw downs - that money also has to go somewhere, most likely not towards the amateurs. Lots of pro hedge funds close down due to large losses.

If pros don't make money from pros that means pros do not have big draw downs or losses at all.
 
Re: Who trades fulltime?


+1

I would even go as far to say that pros fight other 'pros' all the time: predatory algos, squeezes, moving your server closer to the exchange... If you're a $2bil fund, you can't make money fleecing mum and dad investors. You gotta hit other whales whether actively or passively.

And as a final though, this only applies to Futs and FX which are 0sum. Equities are not 0sum so there's less cutthroat action.
 
Re: Who trades fulltime?


Just as trading live is a completely different mindset to trading SIM, trading without the safety net of a regular wage is completely different mind games to trading with it. Its easy to take a loss knowing a pay check is coming next week, very different to taking one knowing its your capital that is gone, especially if you have to answer to a spouse!

I dont agree that anything has to be zero sum. I buy at $10 and sell for $12. The person that bought at $12 then sells for $14. We both won. The loss comes to someone at the end of the trend, but not everyone.

Forget about amatures vs pros, finding an edge etc. They all set you into a win loss mindset and everyone wants to win, so you will be more likely to hold losers and hope to win. I prefer to think of myself as just following the others. Dont try and beat the market, just follow it. Our trades are so small that the pros dont even know we are there, and probably dont care.

For me the idea of day trading is just dumb. As someone who has spent my whole working life in front of a screen, day trading is the last thing I would ever want to do. The only way I trade short time frames is with a script so I dont have to be there. End of day gives you time to do other things. Plus Larry Williams reckons its a dumb idea...good enough for me. Read this http://www.rb-trading.com/article10.html Believe that triple digit annual returns are possible with an end of day system.

Forget about the prestige of being able to say you are a futures trader. Decide what you want to trade, stocks, currency, index, commodities, bonds etc and then choose the type of instrument (shares, cfds, fx, options, futures) that is best suited to your account size.

Dont confuse risk with probability. There is no more risk in holding over night if you position size correctly. There is a higher probability of a gap for example, but also a possibiliy that the gap is in your favour.


For your 2 hours per day, set up a watch list of say the asx top 20 and your favourite commodities, index whatever, and go over every chart every night, back test, prove your system, then go live with an account size that allows you to take losses that you are comfortable to take. Forget SIM, it doesnt prepare your emotions for the loss of real money.

from someone that has had a lot of expensive lessons in the past. Good luck.
 
Re: Who trades fulltime?

Hi

From the outset, I would not approach the question of EOD versus intra-day. I believe that the following questions are the most pertinent to answer:

1. How am I going to make money from the market?
2. Do I have any proof that this is the case?
3. Why will it persist?

The answer to the first question is wide open. You can make money buy-hold or trading by the micro-second. In equities, bonds and...my favourite...frozen orange juice.

The next two require a degree of proof. You can choose to have no proof ("Just 'cause"), or you can move it up the chain. It's entirely up to you as to what level of evidence you require or are satisfied with.

When you are ready to operationalize, all sorts of behavioural matters come to the fore. These generally subtract value. I find the following from Morningstar (Kimmel, 2014, via Forbes) instructive. Investors as a whole totally suck at timing markets. If all they did was not looked at markets, the aggregate would have materially beaten the buy-hold outcome. This survey goes back several years and previous vintages show the same pattern. We suck, as a cohort. It is largely behavioral things which lead to selling low and buying high. These are confirmed in fMRI studies and evident in many other ways than displayed below. It is a serious matter:



If you should come to the conclusion that hi freq trading is your thing, then you might possibly need to assess the odds of this style being successful. This is an extract from a very significant study (Barber and Odean, 2000) which examined a the trading records of a major US brokerage house in the US. You can think of it as examination of anonymous records from Westpac Securities. It shows that, on average, trading does not add gross value relative to those who trade least. It just chews up a ton of trading costs, making the brokers rich (and thus their owners and execs) and providing liquidity to demanders in the market:




Good points and counters have been raised. I'll just add my few cents worth and maybe we'll have fifty cents between all of us when this is done.

Some contests are zero sum. These are like futures, FFX etc. For every buyer, there is a seller. The positions net to zero. For every winner there is a matching loser. The system is closed and then expenses are taken out too.

In FFX, the professionals profit at the expense of retail and the commercials.

In agricultural and consumable commodities, the loser is the producer. Professionals pick up the premium. Retail is a side issue.

When it comes to purchasing physical equities, it is not zero sum. It is possible for everyone to win (as an aggregate, at least) and lose. However, the question of who is the patsy changes to ask who does relatively well or not as the market is zero sum relative to the average. If other words, the market might rise 10%. In aggregate, wealth rose by the increase in market value. Yet some will not do as well and some will do better. These sum to zero, and then expenses get taken out. In this contest, there is a certain demographic of investors/traders in retail who get creamed. Other sorts of restrictions (some caused by the clients themselves) also cause some insto money to be constrained to the detriment of their own investment clients. In Australia, domestic insto does well in aggregate but with significant dispersion, retail is flatline in aggregate and foreign insto loses out.

Just to be clear, it is important to note that all insto/pro is succeeding at the expense of retail etc..is not what I am claiming. Within each classification is a lot of internecine rivalry.

The final point I'll make on this note relates to risk management. You have to survive if you want to have any chance of prosperity. Portfolio management and solvency management are vital if you are to allow your money making ideas to show through.

And my actual final point is that: Things generally don't turn out the way we expect. Heaps of what I/we believe to be true right now will eventually be falsified. Investments is a contest of beliefs. If your beliefs happen to be closer to the mark for the times, you will do alright. Markets don't stay still and change in nature all the time. Question: what way will you develop to evolve your beliefs most effectively?
 
Re: Who trades fulltime?


I'm not really sure where you got the idea from that pros do not have losses at all or that they need to have big drawdowns. There is a huge difference between a loss from 'limited risk trade' and 'big drawdown'. The former is a function of cost of doing a business, the latter is an amateurish psychological errors and lack of risk control.

Account sizes are totally irrelevant as there are some people trading millions of dollars each day yet they wouldn't be able to trade their way out of a wet bag even if their life would depend on it. For example institutions' income is derived from clients management fees, and not from P&L. On the other hand there are traders who trade much smaller accounts but their income is strictly dependent on the results they produce. The latter, by my definition are the real pros, they need to be continually on their toes in order to stay in the business because their living depends on their results and not on some management fees from clients. Therefore they assume totally responsibility for what ever happens to them in the market, they never blame the market because they understand that the biggest variable in the market is the trader himself.

The reason why you and skyQuake disagree with me is because you’re both still not fully developed as professional traders, and hence at this stage you yet don’t know what you don’t know. Once you’ll learn more about trading, then you’ll realise that at this stage of your trading development you are not yet at the level to be able to understand the hidden insights in the stories of Market Wizards or Jesse Livermore. Reading it and actually understanding it are two entirely different concepts.

I’ll leave you both with Jesse’s own quote, “A man has to guard against many things, and most of all against himself” . . . . and I’ll let others to interpret the hidden meaning in Jesse's quote instead of me doing it (I've already done it indirectly in my first post).
 
Re: Who trades fulltime?


Very good points.



These days it is actually not that simple to define what is zero sum and what isn’t. These days there is lots of hedging going on, plus there are many synthetic positions in the market (I’m referring to international markets), so at the end of the day all the money goes into the pot like at a poker table, and that’s a good thing as it gives everyone an equal opportunity.


DeepState said:
The final point I'll make on this note relates to risk management. You have to survive if you want to have any chance of prosperity. Portfolio management and solvency management are vital if you are to allow your money making ideas to show through.
Click to expand...

Finally someone gets it, and you actually seem to genuinely understand what you''re taking talking about. Congratulations.



Even a better insight, you’re absolutely spot on. People don’t trade the markets, but they actually trade their beliefs about the market. You’ve made an excellent point by posing the question “what way will you develop to evolve your beliefs most effectively?” . . . People often think that just having a method with positive expectancy will solve their trading challenges. That's a common mistake, although having positive expectancy is a prerequisite. You’ve absolutely nailed it by pointing out that "investing is a contest of beliefs", and that one needs to evolve his/her beliefs. Many people don’t realise that beliefs are filters to reality, they just keep on searching for the holy grail in the wrong places.
 
Re: Who trades fulltime?

beachlife said:
Forget SIM, it doesnt prepare your emotions for the loss of real money.
Click to expand...


I always cringe when ever I read this.

SIM is the most important thing you can do in trading there is nothing else that is even comes close to being as important.

Repeat SIM is the most important thing you can do.

SIM will show if you have a trading method that may work.
SIM will show in what market conditions you trading method may work.....(this alone will determine your results not your genus.)
SIM will help you determine when your trading method will not work. (sounds crazy but most will not recognise this really important for your results)
SIM will help you determine a basic idea what size account you will need. (Having said that I know people who have blown up $200k accounts they didn't SIM)
SIM will help you build good decision making processors.
SIM will help you start to see what a loss looks like and what a profit looks like. (sounds dumb I know but people don't like losses there is a learning that they are part of the game)
SIM will help you build a psychology to deal with trading, making easy profits will hurt your psychology as much as making easy losses.

Jumping into trading with real money with out doing the above will lead to bad habits and delays in your development as a successive trader.

Note after meeting 1000's of wantabe retail traders over 15 to 20 years have only known of maybe a 1/2 a dozen who make a living full time (longer than say 3 years) trading.
When I say full time traders I am not including people semi or full time retired.
 
Re: Who trades fulltime?

IFocus said:
I always cringe when ever I read this.

SIM is the most important thing you can do in trading there is nothing else that is even comes close to being as important.

Repeat SIM is the most important thing you can do.
Click to expand...

Ummm I think actually trading is more important than SIM. If you're just trading for fun, maybe. If you actually want real dollars coming into your account, SIM will not work.

You can keep on repeating SIM for the rest of your life, let's see how you will pay the bills, I have a feeling the gas company will reject your SIM money
 
Re: Who trades fulltime?


I have to agree with minwa on this one, and I'd go as far as to say that SIM can actually give one a false sense of confidence because all of the emotions are removed, and that’s where majority of people begin to choke.

There is a difference between SIM trading vs trading real money. There is a difference between trading real money with success while having some additional income safety net vs successful trading without any additional income safety net.

Nevertheless, as IFocus points out, trading on a sim definitely has its benefits in terms of back/forward testing, helping one to determine expectancy and distribution of R-multiples, but in my opinion that’s where its advantages seem to end, and am quite confident in claiming that only very few people will be able to replicate their SIM trading success with real trading account. Fear and greed cannot be underestimated.
 
Re: Who trades fulltime?


The latter is generally the erosion of an edge/change in market dynamics or simply variance. (Assuming there was an edge in the first place)

Account sizes are totally irrelevant as there are some people trading millions of dollars each day yet they wouldn't be able to trade their way out of a wet bag even if their life would depend on it.
Click to expand...

Pretty sure thats not how it works. How did they get millions of dollars to trade each day in the first place???


Those are 2 pretty naive assumptions: Instos don't outperform and all they do is make money from management fees.

Finally the issue about zero sum markets - its really quite simple for retail traders. FX and futs are zero sums. Equities are not. Hedging is irrelevant as that pertains to portfolio rather than the market
 
Re: Who trades fulltime?



The institutions in stock market get funds from IRA in the US, in Australian through superannuation, and the institutions charge clients management fees even when the fund is losing money. Most funds are required to be invested in the market and so then cannot just sit on cash. For example in US the funds are focusing on beating the SPX, because they compare their own performance with the SPX.

As an example, say if SP500 is down 20% for the year, and the fund if down only 15%, then the fund basks in the glory of beating the SPX by 5% for that year. However the fund is not too keen to publish the fact that they actually lost 15% of clients money as it wouldn’t sound that attractive for investors. They attract money because of their size and recognition. Obviously it is much harder to trade large amounts of money without moving the stock market, but nevertheless there are so many so called “professional traders” who just keep on losing people’s money and get away with it because the clients pays for their mistakes.

It’s like with taxation, some politicians just recklessly spend people’s money without having to feel the pain and accountability since the tax payers foots the bill and pays for the bureaucratic mistakes. These days in many Western countries people by law have regularly save money into some retirement schemes, so lots of institutions trading capital flows in this way.

When it comes to FX, the biggest players are banks in Europe and UK, they got to convert huge sums of money on daily basis for their clients no matter what. Some bank’s dealing desks are actually creating net losses for the bank, which I find rather mind boggling when one compares the exchange rates at local bank vs the spread with STP or ECN brokers. The banks basically have a license to steal from anyone who want to convert money through them. I’d love to trade for a bank :- )

The thing is that when it comes to the psychology of persuasion, people have a tendency to give status and power to anyone who claims to have knowledge then they do, while failing to start looking more deeply into the psychological games we all play.
Obviously not all institutional traders are not like that, there are some really brilliant ones, but unfortunately it is much rarer that the mainstream public is lead to believe.

It reminds of a joke I’veheard from Nassim Taleb;
A trader listened to the firm’s “chief” economist’s predictions about gold, then lost a bundle. The trader was asked to leave the firm. He then angrily asked his boss who was firing him: “Why do you fire me alone and not the economist? He is too responsible for the loss.” The Boss: “You idiot, we are not firing you for losing money; we are firing you for listening to the economist!.”
 
Re: Who trades fulltime?


Hi PurePA... are you a full time trader? If so what instrument do you trade and how long have you been doing it?

Also, what does PA stand for?
 
Re: Who trades fulltime?


Manual backtesting will cover all of these.

IFocus said:
SIM will help you build a psychology to deal with trading, making easy profits will hurt your psychology as much as making easy losses.

.
Click to expand...

Only live trading will bring out real emotions and real reactions to them.
 
Re: Who trades fulltime?


Definition of pro defined by the IRS is here: "Professional traders tend to have extremely high trade volumes. Many accountants use a minimum of 1,000 trades a year as a guideline, but others consider an average of 10 trades a day, or about 3,000 trades a year, to be a typical starting point. In addition to having a high volume of trades, professional traders also generally don't hang on to their acquisitions very long. They often buy and sell a position on the same day." http://www.investmentnews.com/article/20110417/REG/304179997

We were not talking about hidden insights from books. It is laid out clearly most of them have big losses. When George Soros "broke" the Bank of England and made $3billion pounds or something like that did you think he was taking money from an amateur trader at the Bank ?

If you're going to make assumptions on trading abilities and "developments as professional traders" then I have to make the assumption that you are not at that level too from your recommendation in the other post in the forex thread.
 
Re: Who trades fulltime?


It seems to me that you didn’t get the gist of my first post where I used the metaphor of professional gamblers (or card players) vs amateurs, because after all, professional gambling is similar to trading in terms of having an edge, money management, plan, and emotional control.

If your definition of a pro comes from IRS then obviously it is going to be different from other definitions.
In your reference to my post in the Forex thread, then not everyone (including me) believes that your recommendations are agreeable with everyone. And that’s actually a good thing, because peoples’ beliefs are what make prices move, and so the more people disagree the more it reminds me of the heard mentality. When it comes to public forums one has to be very careful about what is fact, what is an just an opinion, and what is an opinion presented as a fact. Experienced traders know what to filter out, but newbies don’t, and it seems to me that there is so much misleading information on forums which only confuses newbies and extends their learning curve.

Since you seem to believe to have more insights than me, which BTW is fine because I actually seek people with better insist than I have so I can pick their brains and adjust my perspective, then please explain to me how do I go about backtesting with ThinkorSwim, because if you won’t be able to do so then I’ll have to assume that you’re just misleading newbies. https://www.aussiestockforums.com/forums/showthread.php?t=28523&p=828106#post828106

I’d appreciate if you’d show me and to the other poster how to use your advice in the real world, and how to get access to Thinkorswim backtester. If not, then unfortunately you’re the one at a level where you don’t know what you don’t know, but you think that you do, which creates kind of a mental trap, hence you spread misleading recommendation while you're not even aware of it. I want to add that my posts are meant in a polite (chit chat) way and not a condescending way
 
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