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1) Hugely under estimated the amount of time and effort required to become consistently profitable (Still I am not a consistent trader). It's all buy low and sell high right? How hard it can be?!
2) Since I can code I believed, all I have to do is come up with an automated system and there after my laptop will turn into an ATM ! Turn on in the morning, count the money in the evening!
3) Options are so cool, YAY! I can control underlyings worth several thousands of dollars for much cheaper cost and this type of leverage is absolutely going to make me rich! All other vehicles (futures, delivery) looked like worthless things, which I am not even going to bother about! After all with naked options buying I am going to buy the moon some day!
4) Once spotting out a mistake, I won't repeat. This one really got myself baffled as I have always believed myself as rational, level headed decision maker! Just give me the facts m'am, I can come to accurate conclusions and act on them! Discipline is not a big deal because I am already too awesome! <-complete bummer
5) Trading at lower time frame is how money is made, bigger time frame won't help much. Bigger time frame will be less profitable as there are lots of trades in lower time frame. I completely ignored the idea of moving up to higher time frame to catch bigger trends.
My biggest misconception was that market efficiency and equilibrium means I have a trading win rate of 0% and since I have had winning trades the market being trading can not be efficient.
When what that really means is with equal money bets we will have an edgeless rate of 50% winners 50% losers, just trading money back and forth with a -EV equal to transaction costs.
Related to that is the idea that I can beat the market by holding the S&P with 2x leverage or something.
"If the S&P is up 10% and I am using 2x leverage then I have beat the market so market efficiency is wrong."
That is not what is meant by market efficiency but also a good example that there is still tons of money to be made in efficient markets. Efficient markets is not such a terrible term completely at odds with the idea of trading.
Apart from big misconceptions, I want to add I have had few BIG NO Conceptions at all !
Before losing a big chunk of money, it never occurred to me, position sizing is important.
My understanding and intuition for probability, small edges, geometric growth/decline, variance, drawdowns, streaks were all near ZERO ! Awful thing is I have had learned probability in my school and college but the insights never clicked with me and book knowledge of coin toss/redball black ball urn problems never transferred into insights about markets automatically.
Another big blank on my mind during the initial days was : Psychological Edge
Since I have done well in all other areas of life (school, college and first job) I thought I already had everything I needed!
Perhaps my biggest misconception was focussing on chart patterns based on individual bars or groups of bars.... as opposed to focussing on context.
To add one more: that there is a consistent way to make money in the market over time. Markets change and evolve. THERE IS NO HOLY GRAIL.... and anyone who pretends there is one, is either a charlatan or has absolutely no clue what he is dealing with.
You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
