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Key Insights
· Trading isn’t easy, it requires time, discipline, and emotional control
· A trader is hyper-focused on their health and mental clarity
· A trader knows when to work and when not to work
· Trading requires intense discipline
· Trading shouldn’t be viewed as a hobby
· Trading isn’t a get-rich-quick scheme
Perceived as nerds and superstars alike, what traders live like remains shrouded in mystery for many people. Whether you are an aspiring trader, have been trading for a while, or merely looking into what a trader’s life is like, there’s always more to understand about the trading lifestyle. Here are some of the most fundamental things to understand about a good trading lifestyle.
Nearly anyone who has attempted and failed at being a trader will either say trading is a scam or a form of gambling. At first sight, trading looks extremely easy, draw a few lines, buy when it's low, and sell when it's high, it's easy as that right? Well not quite. If it was that easy everyone would be trading. Why would people even attend their 9-5 jobs if they could be making bucket loads of money with such ease? Because it just is not that easy.
The idea that a person is good or bad at trading straight from the beginning is a great example of ill-education surrounding trading. No traders sit down for the first time at a trading desk and immediately become consistently profitable in trading. It cost a lot of practice in order to become good at trading as a craft. This is due to both the technical education required and the emotionally controlled temperament a trader has to cultivate.
Although having a controlled temperament and not being affected by greed or fear certainly makes it easier to trade unemotionally, it does not disqualify anyone who does not have the proper personality traits from becoming a good trader.
Trading comes down to a gruesome learning process. Many hours have to be spent and many dollars will likely be lost in the markets during the process of learning to trade. The losses are what teach you trading.
No good trader that I know of was profitable straight from the beginning. Many mistakes had to be made to become the legendary traders they have since become. Staying around and loving the game of trading is what makes you a good trader. No matter how many accounts you may blow up and how much pain you may go through, stay around.
Traders don't become profitable by being good at winning. In fact, it is quite the opposite. Traders often lose more than they win yet remain profitable by winning bigger than all their losses combined. The key is being good at losing and not being too affected by it. The idea is to learn how to be great at the least fun part of life, losing.
Being good at losing can be done by having a trading plan and knowing that it works.
In this business, if you're good, you’re right six times out of ten.
You’re never going to be right nine times out of ten.
-Peter Lynch
There are two common conceptions of a trader's lifestyle. First, we have the nerd. This conception is characterized by a person that is unhealthy, on the extreme side of either skinny or fat, never outside, and merely sits behind a desk and trades.
The next conception of a trader is a superstar. This conception is characterized by a person who has a lot of free time and makes a lot of money, all of which he spends on women, vacations, fitness, and booze.
People think traders live either in a cave or live the ideal lifestyle that all men aspire to. Neither of these is quite right.
As a trader one of the most important things to focus on is maintaining mental clarity. Traders have to keep a clear mind in order to make trading choices. If anything is bothering them in their day-to-day life they have to get it out of their system before stepping onto the trading floor. However uncomfortable the situation may be, they confront it by either fixing the problem or facing up to it as much as possible internally.
They have to confront the discomfort they are feeling head-on because the repercussions of not doing so are more immediately clear on the trading floor than anywhere else. A primary tool used for creating and maintaining mental clarity is journaling.
Maintaining one’s physical and mental health is central to a proper mindset. Therefore, traders tend to eat well. Eating well creates a balance within your body. If you feel good and are well energized, you increase your focus and performance while trading. The foods you eat directly affect your mood and mental. Eating well comes hand in hand with a good exercise regimen. Not only does exercise make you better, but your mind will also actually work better and make more sound decisions on the trading floor.
Sleeping well can’t be emphasized enough. In today's day and age, and especially as traders we are constantly surrounded by computer screens and blue light which greatly affects our sleep. To trade optimally traders have to must sleep well and according to a consistent sleep schedule.
The truth is, traders are somewhere in between a person who works extremely hard all day and a person who takes time off to enjoy life. Traders understand themselves, including their limitations and habits. Through the understanding of themselves traders are able to exert more self-control.
Traders tend to abstain from actions or supplements that distract them or throw them off their A-game. Often traders either abstain from or have extremely controlled and disciplinary use of substances such as alcohol, drugs, and food. They even exert discipline over their social media usage and their work hours.
Although you are your own boss when freelance trading, traders still need to be at the trading desk a lot. Most traders have daily dedicated trading hours. As a trader, you are likely to work as much as your boss would make you work, if not more. With enough love for the game, it doesn't matter if someone's watching over you because you’ll want to be trading all day.
Knowing when to trade and when to take breaks from trading is pivotal to good trading. The easiest way for traders to lose money is to overtrade and therefore make bad decisions. Good trading isn’t about being there all the time and taking all the possible opportunities. It's about spotting those few opportunities in between the mass clutter of poor trades and fake-outs with extreme precision. Traders tend to take time off to be with their family, go on trips, go to the spa, or even simply go for a walk to maintain a healthy mind
Sorry to dispel your dreams of getting rich with trading as a hobby, but successful trading often can't be a mere hobby. It'll be difficult to spend such limited hours as one does on a hobby on trading while expecting to earn big bucks.
Trading requires an extreme love for the game of trading. If you are satisfied with trading and studying trading only a few hours a day then you probably don't have the love for the game required to make it in the markets.
Trading will cause a lot of pain, so you need enough passion for the game to stay in the long term and not be shaken out at the slightest signs of hardship. This is not meant to discourage you, but rather to ignite even more love for the trading life for those who have the passion.
Even if trading begins as a hobby, with enough love for the game it will soon turn into your full-time job.
Traders need a daily routine that they love.
If you don’t love it, you’re not gonna do it.
- Scott Redler
Trading is not a get-rich-quick scheme. If that’s what you want to trade for you might as well quit before you put any money anywhere near the markets. You're not going to get rich any quicker than you’re going to go broke. There's a long learning curve to trading, and if you don’t know how to maneuver these markets it will eat you up.
How much you earn in trading completely depends on how much capital you're using to trade. If you only have $100 there's only so much you can do. You have to realize that the more money you have the more you can make, and the less money you have the less you can make (even if you have a lot of there is still a long learning curve ahead for you).
Here is a in-depth article on how much you can earn trading.
Every trader has had to learn the difference between trading and investing. Picking between trading and investing comes down to knowing what your time horizon is. Knowing which one more fits your lifestyle before attempting to allocate capital to either is going to be the key to not losing money. Trading and investing are in many ways similar but not at all the same.
