When I was at
school, they had a multiple choice assessment for all the kids when they
reached the age of 13. It tested various skills and it’s aim was to give the
students and their parents an idea of suitable careers they may wish to
consider. At the time it was considered cutting edge and the ‘tests’ were
viewed with trepidation for fear of being pigeon holed as a future chimney
sweep, cobbler or window cleaner – no offence to any cobblers, cleaners or
‘sweeps that may be reading this.
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| The Best and Worst Job in the World |
One job above
all others was seen as ‘the job’, it was as if getting this profession selected
as a potential career was in itself a huge boost and step up the slippery
ladder amongst ones peer group. Ridiculous but true.
When the results
were published, there seemed to be a year group full of mostly lawyers, marine
biologists (not sure how that one was triggered), teachers, explorers and a
select few that hit the jackpot - ‘commodities traders’. Of course, at the
time, being a trader was all red Porsches, cocktails and braces. Open outcry
trading was still in existence and it wasn’t necessary to have a degree to
become one of this new breed of confident, arrogant alpha males. Fortunes were
made and lost and it seemed that all you needed was confidence and ‘chutzpah’.
In the early 1990’s, it felt as though being a trader was the quickest and most
exciting way to become very wealthy, very quickly. It helped that traders
appeared to flaunt their wealth more than equally wealthy lawyers, consultants
and bankers. In many ways, not a huge amount has changed, as successful traders
can still earn huge amounts of money and compared to other professions, it can
be done quite quickly.
There are many
different types of rader. Some risk their own money and
work from home, others risk their firm’s money and are rewarded with a split of
any profit. Others work for banks or funds and receive a salary and bonus
dependent on how well they have performed. Of course there are a myriad of
products that can be traded and most traders tend to stick to one product until
they have developed a mastery, or as close to a mastery as possible, of that
particular product. It is rare that you find a trader that can trade several
products equally well, even though the rules and skills are pretty similar.
Other traders
are not traders at all. They are ‘account managers’. They are not really
‘account managers’ either. They are salesmen. I used to employ many of these
type of ‘traders’ and their job was to build relationships with their clients
and give advice on the markets when required. They never traded their own funds
and the trade ideas mostly came from analysts. Of course, if you give advice on
the stock market, you can legitimately claim to be a trader I guess, but it’s
worth noting all the different types as some have lots of brains and others
just have lots of chat.
Most people
become traders because they wish to back their judgement against others and be
rewarded handsomely when and if correct. The best paid traders will be those
that deliver the biggest profits and those will be the traders with the biggest
credit lines and best information, research and lowest fees. It will also be
the luckiest ones, as all traders need lady luck smiling on them occasionally,
I assure you.
I have met a
handful of traders that claim they enjoyed the mental challenge of trading
against others in the market, but most of all, I think they enjoyed the way
they were able to keep score of how they were performing during the challenge
and you keep score by counting your money. It all comes down to money in the
end. You live or die by your decisions and results, there are no excuses or
explanations required – the result is binary. You win or you lose. That is very
appealing to people with personalities that don’t have a high tolerance for BS.
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| The Best and Worst Job in the World – Being a Trader |
I see many
training courses being marketed online and in print offering to ‘train people
to trade and earn a fortune’ from the comfort of their own home. These courses
claim they will reveal the ‘secrets’ of all successful traders and the courses
tend to cost thousands rather than hundreds to attend once you have been lured
into attending the first (free) session which is a series of hints and vague
talk of these ‘secrets’.
Of course, there
are no secrets and these courses and their marketing are cynical ways to take
advantage of those most desperate to earn a good living. In fact, there are a
handful of rules that every successful trader needs to stick to just to be in
with a chance of making that fortune. I will share the most important ones now
and they are simpler than you may expect.
-
Accept you will lose almost as
often as you win
-
Be prepared to cut your losing
trades and run your profitable ones
-
Don’t have opinions set in
stone. Markets change and you need to be flexible
I will discuss
these rules in more detail at a later date, but rest assured, only around 5% of
traders can stick to them consistently.
Of course, in
2017, it’s less to do with personalities and chutzpah and chat have taken a
back seat to technology and trading programs that execute thousands of trades
in the blink of any eye. These trading algorithms are the present and the
future, but if you can win more than you lose and keep your cool when others
are losing theirs – you may still be able to make a fortune. But it won’t be
easy.
James Sanders is
a London based prop trader and investor who provide the help in property
treading and business development.
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