Becoming a Successful Stock Trader Requires An Iron Will and A Tremendous Work Ethic
If you are a stock trader or even interested in one day trading stocks full-time, then you are probably aware of the statistic that says that 90% of "day-traders" will end up failing.
Now, there are some (rare) instances of smart people who put a tremendous amount of time and energy into learning how to trade stocks and it just didn't work out for them.
But most of the "failures" amongst traders stem from a couple of things: laziness and compulsiveness.
If you are a person who trades for a living, then I am sure that you have run into your fair share of people that want you to teach them how to make some "easy" money in the stock market. You, who have spent many years of your life perfecting your craft, will suddenly dispense all of your most valuable knowledge to this person who probably turned their nose up at your choice of a job when you started. These people will get offended when you don't pull out a pencil and write down your most valuable tips on a napkin, pass it to them and say "Have fun spending all of your newfound wealth." It happened to me all the time. The same people who told me that I was destined to failure where now suddenly badgering me for information.
The point? Most people who decide to "trade for a living" don't really take it seriously. They don't treat it like a job, where you need to put in 8 hours+ plus per day to succeed. They see it as an "easy" job, where they can put on a trade in the morning, make a couple of grand and then hit the golf course for the rest of the day. You want to at least give yourself a shot at becoming a successful trader? You need to realize that this will actually be a job, requiring AT LEAST forty hours a week of research and work in order to make yourself a success. Hours spent at the computer, researching companies and looking at charts. Weekends spent poring over all of your trades from the past week, figuring out where you went wrong and how to correct the mistakes. A lifetime spent perfecting the strategy that is best tailored to your income expectations and risk tolerance.
I would say that most traders fail because they don't take trading seriously. If you half-ass it and expect it to be easy, you are doomed to failure. You may get lucky now and again, but ultimately you will fail. There is no question in my mind. If you are willing to work your ass off, never get over-confident (another killer with traders) and constantly evaluate your trades, then you stand a good chance of making it as a trader. Plus, you need a decent amount of capital to make it, but that's another story. If you quit your job with $30k in your trading account, expecting to pay all of your expenses, then good luck to you. You should have a decent sized trading account and at least six months of expenses saved up before you even think about making the jump.
If you really want to make it as a trader, then my advice is this: keep your full-time job. When your friends are watching their favorite sitcoms and late-night TV shows, sit down at your desk and do your research. Cut back on any unnecessary expenses in your life and start saving up capital. I would spend at least a year in this routine; working, saving and researching at night. Hopefully after a while, you will have enough saved up so that you can even cut back on your work schedule (if possible) and take a few days per week to try your hand at trading. If you feel confident and have a decent amount saved, then take the leap into full-time trading. See if you can't work out a leave of absence from your full-time job, just in case it doesn't work out and you need to go back. Understand that you will have really bad days and really bad months where you lose money. Do you have the intestinal fortitude to withstand these losses and keep on plugging? Or does the thought of taking a loss make you want to hit the bathroom? If so, you might want to stick with your full-time job.
In the end, trading and becoming a trader is hard work. It's a full-time job and then some. If you don't take it seriously, you are doomed to join the 90%.
Filed under: Motivational | Stock Market Education