People around the globe attempt to make a living, whether it is part-time or full-time, through trading in some fashion. Many of these individuals are referred to as day traders. The definition of a day trading refers to “the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close for the trading day. Traders that participate in day trading are called active traders or day traders.”
What is it that draws so many people to the financial markets to risk money that they have accumulated? Could it be the risk itself that captures the excitement of so many? Could it be the quickness in which money can be made? Maybe it is the freedom, control, or the limitless potential one has if they become experts and figure out a consistent profitable pattern. It could be a combination, and probably is for most. It is not a profession that in youth you think, “I’d like to be a day trader when I grow up”, because it is truly outside the box. If you have ever thought about a career change into day trading, there are a number of things you should know and consider as it is a complicated profession and not for the faint of heart, literally. I personally know a number of individuals that trade or have traded at the Chicago Board of Trade and their experiences and successes range greatly. The most interesting story is one about a man named Alan.
Alan was trading his own commodity account and had lost everything including his trading seat around 1980. He borrowed $125,000 from a trader friend to buy his seat back and retired as a multi-millionaire in less than three years. Not only did he figure out a revolutionary strategy, he amplified his use of leverage to create profits quickly. Many other traders worked for decades never coming close to Alan’s success he had achieved in a short amount of time. Some drank themselves to death, and suffered heart disease, and sadly, one even took his own life (he was the father of a friend of mine).
This is the dark side of the trading profession. So the stress of day trading on a large scale can be quite high as unless you can see the future, a paycheck is not guaranteed. This takes a special type of candidate. It takes one that has an entrepreneurial spirit as that is one of the prerequisites of an entrepreneur, (not knowing if you are going to make a steady living). However, you have the hope of making a significantly better living than the hourly worker or in many cases, more than a Fortune 500 salaried executive.
What you need to know is that it is an art but also a science. It is a profession requiring education, practice, money, and most importantly, discipline. You can know virtually everything there is about technical and fundamental data but if that knowledge is not put into a disciplined approach, it is simply a recipe for disaster. In the trading market, everyone else trading the market you are participating in is out to get your money. You need to be aware of this. You are on your own against millions of other traders, all at different skill and knowledge levels. What makes things even crazier in today’s markets is the speed of electronic trading and how quickly data can be processed and found. With the evolution of technology in the past two decades, the speed and efficiency of the market has increased, which has opened the door for more manipulation than what has occurred in the past.
Before getting to the positives of the profession of day trading, lets look at what challenges most traders face. It is often a high pressure career with emotions flying whether you are making money or losing money. Emotion causes errors in trading, deviations from trade plans and frustration when a plan was working and then fades away into a loss. It is important to have a good stress relieving routine as a day trader. You will need it often or your mental state can suffer. You need to be a decision maker. If you are an indecisive person, day trading may not be your cup of tea. If you struggle with time management and a disciplined way of life, it will likely carry into your trading and prevent a profitable trading account. These were not pointers that were given or taught to me before entering into the profession but ones I learned through the school of hard knocks.
What draws me to the profession of day trading is the technical and analytical data that makes trading often more predictable. The excitement of making money will always be there, but it is not the passion behind what I do. If you are getting into it just to make money, good luck. You need to enjoy doing it for long term success. Drawing technical levels and charting in general is enjoyable for me. I also enjoy the freedom. If there is a day I can’t or don’t want to trade, the market will always be there the next day. If I take a loss, I will most likely soon take a win. I enjoy statistics and probabilities. These mathematical subjects and formulas are exciting to me. This is what I use for my trading and having it down to a science as much as possible is what makes it comfortable. There are endless strategies, formulas, and algorithms in trading. If you can find a combination of one that works while handling the stress, emotions, and discipline that it takes to be successful, day trading might be for you. If not, there are endless other opportunities out there that may not have the risk to reward that day trading has, but are equally fulfilling.
We would like to begin a series for readers of Secret Entourage. Though we have touched briefly on subjects that day traders have to deal with, in addition to what you can expect if you think day trading is for you, there is more value in sharing how to deal with each emotion and how to control your stresses and decisions. We look forward to writing these articles and helping other day traders grow in their careers.
About Holland Global Trading: Holland Global Trading is a registered commodity-trading advisor (CTA) with a client base that includes a unique blend of both seasoned Forex veterans and people who are completely new to Forex. Our trading team is dedicated to providing research and technical excellence.
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