Is it time to quit trading?
|January 14th, 2012, 11:58 PM||#1 (permalink)|
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Is it time to quit trading?
I am copying this from SMB capital blog. It may help some traders.
Is it time to quit trading?
Jan 7th, 2012 | By Bella | Category: Mike Bellafiore's (Bella's) Blogs
Iím a longtime reader of the SMB blogs. Trading from a home office, I miss out on all of the trading floor banter that I had when I was starting out. It is good to ďconnectĒ with other traders, even if it is only virtual. I read your book One Good Trade, while I was on Christmas vacation and there was a passage that shot right through me. The hairs on the back of my neck stood up, so I felt compelled to write you. The quote was:
ďYou do not slip from trading successfully for five consecutive years to being unable to trade profitably anymore. That is, unless you get in your own way. But your skills are there. Now itís time for you to compete.Ē
Let me summarize my approximate net results:
I applied to the SMB desk in late 2010 and interviewed with GMan & Steve, but was not selected for your desk. I had been hoping for a chance to get back on a trading floor. After that confidence-crusher I spent most of 2011 on the sidelines (I have a 2 & 3 year old which kind of forced my hand, day care being so expensive). So, to sum up, I was totally knocked flat on my butt.
I have really been struggling with a confidence issue. This is why your quote struck me. Iím not sure if it is all in my head or if I am just chasing past years. On a deep fundamental level, I KNOW that I didnít just get lucky in those years. As you say, I had some skills that allowed me to post those results. And yet now it feels so elusive. I canít help wondering if it all was luck.
I guess my question, if there is one, is how do you KNOW there ďis always an escapeĒ? Maybe my head is just a basket case and I need to get it sorted out. I read once that when you get knocked out of the game, it is difficult to come back because it destroys your ďmental & emotional capitalĒ. Such intangibles are difficult, if not impossible to get back. I can identify as I most definitely feel like a failure. But how long is too long to sit and net scratch for an entire year? 1? 2? 3? It is getting old. Maybe I am a washed-up has-been. In some ways it would be much easier if I could point to a single blowup trade where I blew out my account. At least then I could walk away. But I didnít make a huge mistake. I didnít go down swinging. In some of the most volatile markets I kept my risk controlled and never blew up. Thatís what makes it so hard for me to decide to walk away from trading, and why I havenít yet. How can I quit when I havenít struck out yet? I was patient and waited for the next pitch. Well, it seems I am still waiting, years later.
Sorry to clog your inbox with my nonsense. But I felt compelled to write and I feel better for having done so. I really enjoyed your book.
If you have made money consistently from the market in the past you can make money now and ten years from now. Particularly you. And my argument is all about how you define skill.
You do not slip from trading successfully for five consecutive years to being unable to trade profitably anymore. That is, unless you get in your own way. But your skills are there. Now itís time for you to compete. One Good Trade
The skills that I refer to in One Good Trade are not just the trading skills you developed. You have a more important skill. You have the personal skill of being able to be successful. This is a skill far superior to chart expertise or advanced tape reading.
You did not start during the easiest of times to begin your career. 04 was not a great trading year. It was not 07 08 99 2000. Yet you found a way to succeed. With no trading skills you were able to learn how to build the skills to make money. This is extraordinary. You were the 5 percent.
I have written often in the past that many are capable of becoming a successful trader. There is work to do that builds trading skill and if you do that work then you will find out how good you can be. The slogan of SMB Training is: How good can you be? Not: We will make you rich. This is a game of elite performance. Honestly very few will have a passion for trading to sustain the energy required to do the work necessary to play at the highest level. You are not a bad person, untalented, unintelligent, or lazy if you fail as a trader. It is just not your thing. Or better said- the trading you did, at that time of your life, at the place you did it at, was not your thing.
Given your past results you should have made more in 09. This coincides with the best thing that could ever happen to you, your new child. But also a gift that brings more responsibility, less time to work on your game, and more pressure. Did you lose your passion? Have you made the adjustments necessary from this life change to continue your trading success?
We teach our traders very differently than we did in 07 and 08. The momentum trading that was so effective in 07 and 08 is deemphasized. We ask our traders to create their own trading playbooks of set ups that make the most sense to them. We encourage SMB traders to expand their time frame and concentrate on trending stocks. Have you made adjustments to your trading as this new market rewards different set ups?
It is up to you when to call it a career. And how you manage your family is not for this blogger from afar. Since your wrote to me, personally as someone recently married who hopes to have children, I would not be 3 years into being a father without making money- unless my wife and/or I were independently wealthy. Trading is not worth financial insecurity for your family.
Having said all that, there is going to be a new path to being a sustaining, successful independent trader that is more than just the development as an intraday equity trader. The days of sit down and JUST learn to be a discretionary intraday equity trader are gone for almost all. This is still the best place to start your trading career for many reasons. This is still the best way to build your trading foundation. But this will not be the beginning and the end anymore for the new and developing trader.
The trading world has changed. Itís both harder and more opportunistic. I will write more about this in the coming months.
One Good Trade
I often run into traders who are working full time and can not wait to QUIT their jobs and trade full time.
Making money 4-6 months does not mean to quit job and become a full time trader. If one thinks he/she can be successful, my recommendation will be to apply for a job at prop. firm and see if you can make it.
One , does not have to work for prop firm but selection process at most good firms is a pretty good indicator if one is ready or not.
Another recommendation would be to have as much trading CAPITAL as possible, so one can trade without LEVERAGE .