Is it really possible to make money in this trading lark?

I am a complete newbie to trading and have read a couple of books and visited websites such as this to gain knowledge. What has most impressed me is how difficult it is to actually make money in this game unless (a) you have massive starting capital and / or b) you are a trading genius.

It seems that there are riskier strategies like options trading which can improve your return on capital but the downside is increased risk. As for day trading - forget it! All that I have read suggests that only a minute % make any money at it.

What I really want to know from you veterans out there (or anyone who has been burned) - can you really make money with this trading lark?

Thanks 😕

Hi Mark

Thanks, the reason I am asking people is actually quite relevant as I am hoping that people who actually do make money will take time out to let me know how they go about doing it. I am not expecting a life story, just a few pointers, tips on what to do and what not to do, how they make their money, is it a living or a hobby..that sort of thing. How about you Mark, is trading a hobby or a full time job?

Kazza,

"is it really possible..." - then answer is YES. This doesnt mean YOU can make money !!

You might as well as ask "is it really possible to win an F1 race ?".
The answer is YES. This doesnt mean YOU can win an F1 race.

You have to train, and train. And then trade with NO EXPECTATION of making money.
Once you learn that, you can start thinking about making money.

People make the mistake that they will start earning money immediately.
Just ask around.
Most of the traders here took a couple of years before they flet comfortable to trade full-time.

I am still learning - blew my first account last week !!!.
Still learning...
Can I make money trading - not yet - but I will stick at it until I do !! 🙂

Hi Trendie

Thanks for that informative reply. Perhaps I should rephrase to say that I know a few people do make money trading but, and I suspect that this is true, the vast majority do not make money. In fact, the vast majority probably lose not just money but valuable time that could be profitably spent doing something else.

I think that you are right when you make the point about training - like anything in life you need to put the effort in. However, with trading, I am not sure that the effort is worth the payoff.

Do you actually know of anyone making money in this game trendie? I admire your approach but fear that it may be a while before you see dividends appear. How long have you been in this game?

Kazza said:

I think that you are right when you make the point about training - like anything in life you need to put the effort in. However, with trading, I am not sure that the effort is worth the payoff.

Do you actually know of anyone making money in this game trendie? I admire your approach but fear that it may be a while before you see dividends appear. How long have you been in this game?

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Hi Kazza,
Payoff: if you have a job, your income is dependant on your boss giving you a pay-rise. Your pay-rise will be relative to the industry-sector.
With trading, if you re-invest your profits, your income can grow based on your trading ability, and not on how much somebody else thinks you are worth.

I have said that I am not consistently profit. ( I can make profits, but I fail to take my losses quickly. I can read the market correctly. But there are times when I impose my views on the market, and I lose. )

I have been in this game, off and on for 3 years. But only regularly and meaningfully since mid-this-year.
I am sure, that once I control my emotions, and follow what is a logical plan, I will succeed.

re: do I know successful traders? I can only go on what others are willing to tell me. In that case, perhaps, only 3 who trade successfully full-time.

I hope I dont come across as negative, but there is a learning curve, as in any profession.
Stick with it, and I believe, you too can succeed.

Thanks for theadvice trendie, it's much appreciated. You're right, it will take application and effort to do well (unless you have some inborn ability). I will follow your advice and read up on the subject as well as start to papertrade. thanks for the honesty in your replies, I suspect the vast majority, like you, trade on the side and this is probably what I should aim for.

Making money from trading is simple all you have to do id BUY when prices are going up and SELL when prices are falling, it is not difficult.

The aim of all the charts, sytems, indicators, stategies is to identify these two facts.

As with anything in life the more you put into something the more you will get out, olympic athletes don't just train once a fortnight, it is the same with trading.

Thanks marcus, your help is much appreciated.

Juanbyte, I admire your approach - it is like saying that winning an olympic gold medal in sprinting is just a matter of putting one foot in front of another. I am not taking the p*** but I am curious to know if you are one of the few who are actually making money in this game and, if so, how long did it take you to feel comfortable with the business?

Kazza
Interesting question, I am probably less comfortable trading now than when I first started trading 4 years ago. This is because I know what the market can do, the market is always right and it is no good arguing with it, it will go where it wants and does not care about your position.

But as I said originally if you are long and prices are going down this has broken the rules.

I think your first job is to decide what sort of trader you want to be e.g. longterm/swing/EOD or intraday/daytrader. The latter is where the money can be made but in your post you said forget it.

Take a look at the first steps thread and see if you can find something that suits you.

Kazza,
All the above is very sound advice. I started before I found this site. I wish it had been the other way round. In two years I haven't blown an account yet but I have come eye wateringly close.
I am up on my original pot but have a long way to go before the profits do more than pay for my hobby.

Is it possible to make money trading? yes. Do I make money, yes I earn a decent living from it. Is it difficult? yes and no. Trading is easy it requires no natural ability, take that from someone who has none. All it needs is
1) A simple set of signal rules, many of which can be found on this site, I use divergence from VWAP to value trade some use MA crosses, some breakouts and so on and so on.
2) Effective trade and money management, these are the rules that you impose on the market, basically your entry and exit points. This is perhaps the most important part of trading because if you don't have them and use them then you are subject to the randomness of the market and it will wipe you out.
3) The discipline to take the trades only when signaled and to follow your rules.
The difficult part is no 3 master that and you will make money. I have made thousands of trades and I disect every one of them winners, losers and trades I didn't take when my signal said I should and the vast majority of bad losers and missed winners have resulted from my failure in respect of number 3.

I firmly believe that the psychology of trading is the single most important aspect but the only way you can adress this is to trade and you have to accept that until you master yourself you will lose money and if you cannot achieve that mastery you will lose your entire trading capital sooner or later.

I have been well over 10 years in this business both trading for others and then for myself. I am not retired yet and I do not have many properties abroad or a big sunseeker sitting in Monaco. I work very hard and I make a living and I love what I do.
I think anybody who says it is easy just got lucky in the bull market. It is easy to be a "great trader" when you get on the right side of a long trend but you need to remember that nobody just hands you money on a plate, you have to be smarter and more decisive than the rest of them to keep the consistent returns coming in.
The advice about discipline is really worth a lot IMO this ties in with not letting losses effect you, it is all part of the process. We just play probabilities and try to find a small edge to bias our chances.

twalker
I probably wasn't clear I meant the mechanics of trading are simple in that you follow a signal, thats why back testing usually produces such good results. The trade itself can be very difficult because of the need to deal with the self part of the trading equation.

As to market conditions these are all immaterial to me all that matters are my trading rules because the market will do what the market will do we cannot influence it. And that is an important lesson for any trader experienced or inexperienced

Making or losing money in the markets is down to the individual, you get what you put in. There is no such thing as a free lunch and once we accept this we have a chance. Many times we all forget that it is the percentage return we make on capital that counts and matters as opposed to the monetary value. (Trader A turns £500 into £800 and Trader B makes a profit of £15,000 off a capital base of £50,000; who is the better trader?)

It is a zero sum game, no new money is created and the successful few take from the losers. Unfortunately, most market participants lose money (that is fact). We are all looking for a bigger fool and that is the premise on which markets are based. Why else would analysts urge you to buy airline stocks when oil is north of $50? Why would a seemingly rational individual buy a share on a rating north of 100? Do not buck the markets I hear; follow the charts; follow the money etc. Sound advice if you wish to end up in the poor house.

To trade successfully in all market conditions one must stand back from the crowd and make trading decisions that are soundly based. You will never be right all the time but you will have a high strike rate and make bucket loads of money in the process. I know that there are those out there that may strongly disagree but before you discard what I have said, ask yourself what your ROCE was last year; last month or last week. If you made anything less than 100% last year, you are not as good as you think and there is always room for improvement.

Lions63, great post.I agree with most of it.But I don't agree with.....

''Many times we all forget that it is the percentage return we make on capital that counts and matters as opposed to the monetary value.''
When I meet another trading ''punter'' or an ex-city boy turned private trader from home........all I want to know is does he make more than me in pounds and pence.Whether he makes a better %age return, uses TA, reads balance sheets, trades different markets is immaterial. The good traders build their capital base pretty quickly , thereafter its just a comparison of pounds and pence.
In your example above I'd say trader B was the better trader cos he makes more money.ROCE does not come into it for private traders imo.
I'd say that more would agree with you than me but that's likely down to risk profiles and performance.

Nobrainer,

I enjoyed reading your post, it confirms my view that one of the reasons many people come unstuck is that they seek unrealistic returns. If my capital is only £2,000 how can I expect to match an individual who is trading with £25,000 (nominal returns)? However, I can definitely outperform him in percentage terms. We must remember that when we read tables showing the performance of funds and or investment trusts, it refers to percentage returns and not the absolute £/$ returns.

If one were to take the argument further, Trader A in the example above would be able to exceed Trader B over a period of time by simply reinvesting his capital (even if Trader B did the same).

Is it really possible to make money in this trading lark?

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If you regard it as a lark and treat it accordingly, then I would say the answer is no.

For newbies to trading you can learn what not to do ( the mistakes most of us have already made ) from Sally Nicoll's diary, free on Finspreads home page. 😱

Is it really possible to make money in this trading lark?

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Answer - yes - because people do so. It is however, not simple. Traders need to constantly learn, adapt and evolve to the markets and technology, and not rest on their laurels. Discipline and risk management are fundamental requirements for success in trading.

For me, a trading approach stands a greater chance of success if it follows the KISS principles - Keep It Simple Stupid.

Cheers
🙂
jtrader.