Quoting ItalianSharpDislikedSteve is an employed worker and is accustomed to a monthly paycheck. It's very hard to make the mental shift and accept that for 2-3 months you may not make money, or even lose money.
Just think about it: you quit your job, you are all excited about your great system, you have saved enough capital for 12months of survival...
...and when you start off, markets are rangebound for 2 months. If your system is solely based on trending markets and only works when markets move nicely in one direction - like almost all systems i should say - how do you think you are going to feel at the end of the 2nd month?
Maybe you are down by 10% after 2 months of trading. You meet your relatives, friends and everyone asks you how things are doing. Well, you are a trader right? You are supposed to make money right?
I don't mean to sound negative, but just very REALISTIC.
I went thru that shit and I actually lost 30% of my capital in the first month of trading. And what saved me from losing it all was solid money management. And yes, my system was a trend-based system and couldn't deal with choppy markets.
All I am trying to say is that too many people underestimate the importance of psychological stability and personal wellness and their implications with trading.
1 month without making profits at what is supposed to be your job is a very long month.
If you trade as a hobby and have a stable income, you can put up with even longer periods of famine.
Yet, if you trade fulltime and your bills, family, mortgage, etc depend on trading, it's really tough to deal with famine.
This was one of the reasons why I quit trading FOREX. I knew that in order to make the big bucks trading FOREX you had to use medium to large time frames, like hourly to dailys or even weeklys. That implied periods of famine and periods of feast, just like you said.
As a former employee myself, I just couldn't put up with the fact I basically depended on the big trades. What if the markets stagnate for half a year? Can you just imagine that?
I have no doubt Steve's system is successful over a 12-month stretch.
The issue is, can you trade a system that goes to thru famine and feast and maintain your psychological stability in the meantime?
You made a comparison between trading and running a business. True, trading is like running your own business.
However, if you run a business you get many benefits from your business even during famine periods. You get a car, you almost get all your bills paid for, you can deduct meal expenses, etc. Even the law protects your business. It's easier to get mortgages. In a few words, you are recognized as an entity by the society.
If you are a trader, you are on your own. It's you, your computer, your screens, your charts, and your capital against the best traders in the world.
This is a great topic about trading, yet too many people are concerned about indicators, systems, etc...and once they get something to work, they think the path to becoming a millionaire is wide open in front of them.
How many can actually survive the stress of going thru famine and losing money for an extended period of time and still have the nerve, coolness, and discipline to believe in the system and wait for those big trades to bail you out?
I was not able to do that and I would never be able to. It goes against my work principles. To me, trading should be like any other job in terms of structure. Trading should also be remunarated much more than any other job due to risk premium.
I decided to become a trader simply because it's the only thing I feel passionate about and it's the only "job" that can keep me working for 12-14 hours a day without me even looking at the clock once.
As far as the rest, trading should be just the same as any other job. You work and you get paid for your work. You work very well, and you get paid very well. You work poorly, you get paid poorly.
Yet, not getting paid is not an option to me. Hell, today I am freaking out because I had to close this week with a loss. Even a week without profits makes me angry. One day is fine, two days is way too long.
Steve, you sound like a straight guy. Just make sure you consider all facets of the game before you make the big jump.Ignored
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