the only professional goal -trading

Discussions about personal psychology for the individual trader.
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BARLI
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the only professional goal -trading

Post by BARLI » Sun Mar 26, 2006 7:10 pm

Forum Mgmnt, and everyone else, I'd love to know your thoughts on some psychological things like people who dont see anything in their professional life besides trading. For example as far as we know Jesse Livermore didnt' do any other work besides trading, even when he was broke he went to work for the brokerage firm in Chicago. I dont know much about Richard Dennis before he made it big, but I believe that he also was only trading with his ups and downs and didnt see himself doing/working in any other professional fields. Some folks think: I need this stable job to get money for trading, is it a right psyche ? Or is it more right to be centered on trading only without thinking any other interests in other professions like IT/development whatever....

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Post by Paul King » Mon Mar 27, 2006 11:26 am

For me personally, I only began to be 'successful' (based on my criteria - I'm not comparing myself to any of the traders you mentioned) when I treated the proprietary trading income more as a 'bonus', and put alternative revenue streams in place to pay the bills.

I suppose this is the natural extension of the old advice of 'not trading scared money'. My definition of 'scared' being money that I need to pay business or personal expenses, or to have positive cashflow over all.

It may just be because of the type of trading I do, or the systems I design, but my trading income is not regular enough to pay the bills every month. I can generally rely on it being profitable on a yearly basis - but again this is not a given, and the size of the gain is only estimatable within certian broad parameters (my yearly objective is 20% with no more than a 10% drawdown - quite conservative).

Unfortunately, business and personal expenses are generally fixed, so that one has a certain minimum income requirement for solvency - hence the need for alternative (more predictable and regular) revenue streams.

Also, there is a lot to be said for a dollar earned that is not going to be taken away again next minute, day, week, month, year etc. Even treating trading income as a 'bonus' is risky, since some years your 'boss' could not only not pay you a bonus this year, but ask for last year's bonus back too (with interest) regardless of how well you performed (from a discipline point-of-view). How many people could cope with a 'regular' job that worked like that and didn't pay a salary?

Paul

BARLI
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Post by BARLI » Mon Mar 27, 2006 1:20 pm

Paul, I think that most of the people trade on the side, how often you heard professional traders saying (those who trade the living) "I take money from dentist, lawyer, pilot or IT professional". Marc Marcus was talking this way in Market Wizards all the time. My point was : Do you have to devote yourself full time in order to really excel in the field of trading?

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Post by Paul King » Mon Mar 27, 2006 1:31 pm

"Do you have to devote yourself full time in order to really excel in the field of..."

My answer would be "yes", and that applies to any field, not just trading. To 'really excel' at anything takes a sound theoretical understanding, suitable environment, practical application, commitment, desire, and the time to become proficient. This will be only be accelerated if you apply yourself full-time to it.

Hobbies generally cost money, trading as a serious business usually requires a a full-time commitment. I'm not saying you can't become a good trader if you're 'doing it on the side', but would you go see a 'part-time' brain surgeon?

Paul

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systematically withdraw money from your account

Post by PTCM » Tue Dec 05, 2006 11:46 pm

From my personal experience, you start becoming successful when you learn to systematically withdraw money from your account.

Otherwise, you'll trade bigger and bigger and set yourself up for a huge drawdown. Eventually, your equity curve will suffer and you have to start it all over, which is extremely painful and most people in this world just can't handel it and give up.

BARLI
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Post by BARLI » Wed Dec 06, 2006 11:27 am

Withdrawing money from the account after having a nice streak should be a rule. Its dramatic how Livermore didn't obey his own rule

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Post by PTCM » Wed Dec 06, 2006 11:11 pm

Most poeple think traders are more careful when trading big sizes, but the fact is the opposite. Big positions often clouds your judgement and ability to fight the retracements.

Bruce Kovrner and Mark Ritchie both enphasized this in their interview with Schwager.

The sad thing about the beginners is that they spend 90% of their time researching for magical entry points instead of trying to figure out how to play this game professionally.

With internet direct access and low comm, it's easy to become a trader these days, but it's hard to become a good one.

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Post by tony5147 » Sun Mar 18, 2007 5:07 am

Nice thread.

It's just that, when you are a beginner trader who have decided to trade full-time, your capital would be easily trimmed down by the many drawdowns due to inexperiences and also from one's poor money management.

It would certainly be emotionally daunting to trade full-time in a discipline & encouraging basis when you witnessed your capital chopped to mere 30% or worst, to zero balance.

I've learned that it takes full-time commitment to sharpen your trading techniques, narrowed on one trading system which would create more winners, understand how the market works and most importantly, pure hard work to truly become a professional trader.

If you keep losing in your trading, it not only aggravates your confidence level in your trading system, it would also put unduly stress upon yourself of not being able to have the money to settle your monthly commitments.

So if you really need the money to pay your bills, I would say go ahead and look for a job. You're being responsible for being concerned about settling your monthly bills, so there's nothing wrong with that. But you musn't give up on your trading yet. Pick up your trading endeavors whenever you have time to spare after work.

I believe if you have the passion to succeed with trading, the environment and situations will circumvent around you to achieve your dream to ultimately trade professionally & successfully. Just don't gve up.

BARLI
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Post by BARLI » Mon Mar 19, 2007 4:02 am

good thoughts Tony, you sound like Marty "BUZZY" Schwartz :)
I am thinking of exploring the options trading now since working in the bank gives me an opportunity to constantly monitor them ( Tel Aviv 25 Index options)

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Post by tony5147 » Sat Mar 24, 2007 11:28 pm

Hi Barli :

I'm humbled by your compliments comparing my comments to Mr Marty "BUZZY" Schwartz, who is legendary in Wall Street.

I'm still threading step-by-step in my options trading journey. I believe the only way to improve is to keep building experiences understanding the market & put my focus on a few companies which are leaders in their respective industries.

BARLI
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Post by BARLI » Sun Mar 25, 2007 4:44 pm

have you read Saliba's(another market wizard) book on options?

Saliba's Book
I haven't, but seems like a good read, I gotta get it before I start doing options trading

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