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Identity crisis when switching to full time trader
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,737 since Nov 2014
Thanks Given: 3,422
Thanks Received: 2,997
I am interested in knowing traders' experience when they switched from wannabe/part-time/hobby traders to Full-time or Professional traders. I am planning to do the transition over a period of about 12 months from now.
I assume lot of members here had some sort of past-life NOT related to trading and wondering how they managed the transition and the barriers they faced.
We are all aware of the monetary and practical benefits of being a Full-time trader. Hence I am going to ignore that part for the sake of this thread and focus on the difficulties or negative aspects of the transition, particularly the emotional and psychological ones.
I haven't made the leap yet, but I've thought about it a lot as it is my goal within the next few years. One of the things that I've thought about a lot is finding a way to not feel guilty for all the extra free time. So you kinda have to keep working to get better, without screwing up what already works for you, I think. Be your own boss, guide yourself and congratulate yourself and discipline yourself.
Years or swing trading profitably part-time, followed by years of well paying job to amass enough capital to afford to fund trading accounts and afford to not take a paycheck for a while.
I would recommend you have a long run as a profitable swing trader before going full time into futures.
As a part time trader with a career there will be several things.
Routines - I will need to establish a new routine.
Friends - A lot of people at my workplace are friends. Will have to have time for clubs, etc. To stay social and not turn into a hermit. I do jits and judo so that helps, but may need some creative or social club to stay well rounded. Maybe a salsa club or similar.
Screen time - Half of my screen time is actually otj, it is usually interruption free, when at home I get interrupted way more, I will have to be more strict on office hours. Maybe an off site office.
Insurance - you will need medical insurance which is costly
Cost of Living - consider moving to reduce initial cost of living to be abe to absorb more set backs
Exercise - I exercise on the job. I will have to get exercise.
I actually am going to stay in my J o b atleast 6more years. I will have enough years for early retirement. That will allow me to collect medical insurance. It will also allow me to grow my accounts and skills while keeping a safety net of the j o b income. I'd like to grow my trading accounts to 250k with in the next 6years this will give me enough size to keep risk low and live comfortably.
I have been trying to become a full time trader for a couple of years now..and am only recently starting to show some consistency.
The most important thing I think one has to do is view their results in an extremely objective, realistic manner. Believe me, it is very easy to be delusional in this endeavor. It often happens after someone has a little streak of winning trades for a few weeks. All of a sudden, the fantasies of being a great trader making untold amounts of money start taking over one's mind. Of course it's always good to think positive, but you have to have a firm grip on reality at all times.
I, unfortunately wasn't able to do that for many years. I thought I was "ready" in the past many times..when it became obvious I was not. Looking back, I had no long term live profitability to provide any kind of statistical evidence that I was proficient at trading. Still I deluded myself ..perhaps because of ego ..or maybe even "magical thinking" that I was good. Now..I may have had the essence of a system, but did not have the psychological tools or emotional discipline to even follow it's rules or methodology. And I learned the hard way by losing close to $100k in my first 5 years of trading. It's painful for me to face that...because I wasn't able to come to grips with the fact that I was foolishly trading large sums of money without ever having proved I could even do it.
So after many tweaks to my system and years of conditioning myself to strictly adhere to it and all it's rules 100%, I am finally making the progress that I once believed I could. If I could go back, I would have proved myself on 1 contract for many months before trading larger size.
Hopefully, before you transition to trading full time, you will have many months of positive metrics that demonstrably show..you have the required skills to do this.
Lancelottrader thanks for relaying your experience.
I do have one caveat, I think trading 1 lot is a lot harder than 2 in many cases. With 2 lots you can scale and have a free trade in many systems.
as a leveraged trader, one makes short-term decisions/trades, manages the risk/ keeps draw-downs to manageable levels and occasionally turns short-term winning positions into longer ones. that being said, the market and its past is identical for all observers. yet, the market and the future are understood uniquely by each trader. no matter how crude or refined a method one follows in ascertaining the likelihood of change, it still boils down to surviving against one's own incomplete intellect, a misfired bout of randomness, in controlling the risk, and in executing a set of consistent ideas day in and day out, so that chance can prevail. drilling down further, the end game is still about making the most money with the least cost. so, it's not how often you're right, but how much you're right. if you want to make money and do this for a living, then asymmetric payoffs and maximizing geometric returns should be front and center in your thinking.
there are a number of "leaps" one must make in their progression as a trader, and none is greater than the transition from "hobbyist" to "professional" i define professional trader as a trader who is able to live off of his p&l and continue to scale his account. trading takes on a new meaning and presents a vast new challenge when it becomes your sole source of income. you losses are now compounded, by the fact you now have to draw money from your account to live. a few losing trades in a row or more as the bills come due and your monthly-expenses disbursement hits your account, can be far more than many traders can handle; at least emotionally, if not financially.
the misconception among most traders making the transition is that they have achieved a consistent alpha-grabbing methodology that will allow them to "collect-a-paycheck". in reality, this couldn't be the farthest from the truth. if they have achieved anything resembling this kind of consistency, the odds are they are not taking enough risk i.e., trading not-to-lose, and will not be able to scale their strategy. in other words, most successful professional traders experience "lumpy returns" i.e., the majority of their profits come from the minority of their trades. therefore, to be able to "expect" to be aboard those "difference making" trades means you would mathematically have to sit through between 6 and 7 trades or more, until you could have "expected" to have had one of those of those big winning "minority" trades. this of course, requires great amounts of both monetary and emotional capital. the bottom line is; growing your account by-way-of reinvestment and compounding is always going to be compromised by your cost-of-living (expenses). you can try to ameliorate the problem by withdrawing as small a percentage of your profits as possible, while scaling your size as aggressively as is allowed by prudent money management, but you better be EXTREMELY well capitalized and EXTREMELY well prepared emotionally, because the leap is a quantum one, at the least.
