At The Close by Dan Altman
Is Trading Right For You?
If you are interested in becoming a trader, this is
a very important question to ask yourself.
ost traders new to the business donít ask themselves if trading is right for them. They may assume that trading is the thing for them because they have the desire to trade. Anyone who wants to trade should consider whether it is a good fit for them personally. Every profession has its rewards and challenges, including the requirements of hard work and years of practice. However, trading in its specifics is unique.
MISCONCEPTIONS ABOUT TRADING
Misconceptions about trading abound because it is a profession foreign to most people. Trading is not gambling, but that is a common impression. Some think that making money trading is easy and doesnít take much effort, while others believe it is impossible to beat the markets, or that being in the markets has no redeeming social value. How many traders have had the experience of having another professional comment that trading canít be as demanding as practicing medicine or law? It isnít easy to acquire an accurate concept of what trading is like and its daily emotional demands unless you actually do it.
Historically, traders were a small group who had little interaction with the outside world. Since the advent of the Internet, however, ordinary people living anywhere in the world with Internet access can trade. In the 1970s, you needed the services of a stockbroker if you wanted to buy and sell on Wall Street. A transaction could cost more than 5% of the value of the security and take days to complete. Ordinary people had to have a long holding period just to overcome transaction costs. Futures and option markets were as exotic as aardvarks.
Today, trading for a living is an occupation with low barriers to entry for anyone with ambition and a few dollars, but its lure is deceptive. Available to the would-be trader are seminars and trading books that purport to explain how to do it. You may think once you read a few books and understand some mechanical basics, youíll be able to. Beware! Most of these books and seminars are run by people who do not trade for a living. Few other professions have so many nonperformers passing themselves off as experts, preying on the unsophisticated.
Trading done correctly can be lucrative, much more so than giving seminars or writing books. This is particularly true if you have the ability to leverage your trading into the real business of running a successful trading firm, which is no mean feat. It is a lot more difficult to run a trading firm than many other types of businesses because of the risk controls necessary and the difficulty of finding, training, and keeping good traders.
Not many people who know how to trade well teach or write about it. There are some excellent books on trading and some excellent teachers of trading, but the number is small considering what is available, and you have to be selective. Good traders trade, and they arenít any more likely to be good teachers or writers than anyone else. Trading as a basic skill can be taught to anyone with the minimum talents necessary for it. To become an outstanding trader requires a lot more.