Let's hear from the small guy

[dwaddell]

Lets hear from the small guy

Some of my thoughts on the whole trading lifestyle...

I dont think there's any doubt that most of us on here would love to give it all up and trade for a living, whether from home or from a sunny spot on the Mediteranean Coast.

In real terms, a lot of us on here (me for one), will not have the capital or the time to 'trade for a living' - we're probably men or women with full time jobs, dabbling in the markets when we get a chance, spending evenings researching possible investments with a couple of grand in our trading account with an SB company, happy with our lot if we make a couple of hundred a month 'additional income' to treat our wifes/families or pay off that bl**dy great VISA bill.

I'm not saying we're treating it as a hobby, I'm sure we're applying ourselves to our TA, entries and exits as seriously as some of you guys who are doing this for a living...it's just that we lack the capital to trade at a level that will let us work towards our dream lifestyle.

I'd love to trade £10 a point, but I cant. I trade £1 or £2 a point because I only have around £1500-£2000 in my trading account. I want to apply my discipline rules, stay in the game and learn more and more, so to risk any more on a trade would be going against most of what I read on this board.

I dont think being a big player or small player should have any bearing on what we do, if you can afford to play big then do, reap the rewards and have the lifestyle.

My question? How do us little guys get to become bigger guys?

Do we re-mortage our houses and take the risk, get £50K together and give up our day job...somehow I dont think the wife would approve!

I'd like to hear from anyone else in this position and some wise words from you guys who do this for a living.

Cheers.

 

[Skimbleshanks]

You learn to double your money. And then double it again, etc. In other words you are training yourself to be consistent in your trading. No big drawdowns, no emotion, no ego, no greed, no fear.

So your first objective is to build your 1.5k into 3k. If you can't do that, then you just have to go back to square one until you can. This is by far the hardest thing you will ever do - but once you can double your initial money, then you are well on the road.

One month I made 1,100%, and thought I'd found the goose which laid the golden eggs. Next month I realised that it was just a scrawny old hen I'd found, and my golden eggs had rolled away into someone else's account. You'll learn good lessons like this all the way, so learn from them, and never ever get angry.

 

[darrenf]

I face this dilemma as I am sure many others here must do.

I have a reasonably well paid, full time job, wife kids, mortgage and trade forex (in the main) part time.

Trading for me is longer timescales than many full time traders. ie my positions will last a few days generally. I check the markets/ positions at least 3 times a day. first thing am, late afternoon, and usually 11-12 pm. This fits in with my other commitments.

My capital base is a little larger, but I am still aiming for the 10k mark at the moment. However, I would need a much larger capital base in order to consider full time trading.

It's a very frustrating position to be in because the only way to make money quicker is to increase risk( position size) or remortgage the house which obviously increases risk in itelf. This goes against all the trading rules you will ever hear.

For me, I want to get at least 1 full year trading profitably before I even consider any of these options. And then, I would look at increasing size/ risk only very gradually whilst still trading in the same manner.

I would be intersted to hear from people in similar situations and also people who have succsessfully gone from a very small capital base to become a profitable full time trader (and how).

 

[darrenf]

Skim

When you were learning to double your money etc as described in your previous post, were you trading full time or did you trade part time, with job etc?

I'm really interested in hearing peoples "stories" as to how they went from beginner to successful trader, particularly how they managed the transition financially.

 

[dwaddell]

"This is by far the hardest thing you will ever do - but once you can double your initial money, then you are well on the road ."

Skimbleshanks

Yes , this is a point I find very difficult to discilpline myself to do. On a good month I may have a profit of £200 or £300 and it's far too easy an option to take that and use it for the family/house etc. I know, that's probably my biggest fault - leave it there for 6 months and I'll have doubled my initial cash...I must, I must not touch my profit, that'll be my mantra from now on

Darrenf

In pretty much the same boat - wife, mortgage, new baby, good job - and lucky that I can trade from office or home as I'm IT Manager for a Company in Edinburgh, plenty of access to PC's and big Internet pipes. I'm mainly trading the DOW with IG but am in the process of moving to D4F for the interface and lower spreads.

"It's a very frustrating position to be in because the only way to make money quicker is to increase risk( position size) or remortgage the house which obviously increases risk in itelf. This goes against all the trading rules you will ever hear."

Yep, I agree, it's a bit of a catch 22, bigger money, bigger profits.

 

[Skimbleshanks]

darrenf:

I did a bit of both actually - I just fitted the little work that I did around my trading. I did more end of day than intraday, and gradually built up the intraday.

dwaddell:

You've knocked the nail on the head - you're teaching yourself discipline, and that's what this game is all about.

 

[neil]

I began by taking half my profit each month and spending it on whatever the wife thought best.

The other half ( still does) builds up the account.

 

[dwaddell]

neil

A very sensible approach, now why didnt I think of that?

So, what we're saying guys is that for us smaller stake players, who want to get there, it's going to be a long(ish) slog, filled with doses of discipline, waiting and hoping.

Patience is not one of my greatest virtues, but I apreciate that there is no short-cut to trading success, despite what some would suggest (I refer to my purchase of a certain VS trading guide - we wont go there).

It'd be nice to hear from some of you who have climbed the trading ladder and how you managed to keep your 'want to get there as quickly as possible' under control.

I think that's another of my failings, I want it and I want it now!

 

[grubs50]

Skim, without being too nosey (lol), how small was your initial capital (just give a range i.e less than £2000 or something like that) and how long have u been trading and how big has ur pot grown since then (2x , 10x , etc) ?

 

[ford]

If you're starting on a small base of capital (like me) the name of the game for us is compounding with very little (if any) draw down.

I'm some what privileged because I am in a situation where I have very little to cover in outgoings, but others may not be so lucky so the slog will be longer for them.

This isnt a sprint, it's a marathon..

 

[dwaddell]

Do any of you have a 'trading plan' - I suppose like a business plan, with goals over 1,3 or 5 years...do you write it down and review/follow it or do you do it all off the cuff?

 

[ford]

Yes, to keep it simple I'm aiming to trade an additional contract every two months (as long as my capital meets my risk criteria), with the ultimate goal of trading 10 at a time. When I reach that goal I intend to stand back for a moment and set myself a new goal. It seems best to take things one step at a time.

 

[dwaddell]

I've only ever traded the DOW and FTSE Indexes...I feel comfortable with them as I have kinda of an idea what's going on. I've never considered FX but read alot on the board about Bund and DAX as being pretty good for intraday.

I understand that a bit of diversification could be a good thing - can anyone suggest a starting point for adding to the range of markets to trade as us smaller guys build up our trading?

I often feel that with dealing with only the DOW or FTSE that I'm doing the same on both as very often the FTSE will mirror the DOW movements.

 

[mma]

The small trader has a lot more relevance than most people know .

I will soon be posting an article on this.

 

[dwaddell]

thanks mma, look fwd to it.

I'm pleased this topic is generating some good discussion.

cheers

dave

 

[jonnyy40]

Symantec have withdrawn the newest version of their well-known internet security software which was developed in collaboration with the Irish talk-show host of the same name.During in-house trials they were horrified to discover that it positively encouraged Back-Orifice attacks.

 

[dwaddell]

eh?

 

[stevet]

if someone wants to get into a profession such as a doctor etc - they have to go to university etc and earn zero bucks for years and then do the crap starter positions and earn peanuts and then after 10 years they probably start to break throught to the bigger bucks - but even a senior surgeon (or whatever a top dog in the medical profession is) earns a pittance next to a trader

yet at some point, the same top dog in the medical profession will decide that he is bored with his job and/or wants an easier life and/or to make much more money - so he just decides to open up a trading account and then he will just make loads and loads of money!

net result - hundreds of thousands of dollars down the drain

any one get where i am going with this?

trading is one of the hardest ways there is to make money - but at least it is a way to make big money - but you have to be intelligent, independently minded, determined to win, confident, know when you are right and more importantly know when you are wrong, be prepared to work harder than anyone else, and then actually work harder than anyone else for year after year etc etc until you crack it

if you want the easy route in the trading business - get a normal job doing something in a brokerage, work at a spreadbet company, work for a stock exchange, work for a clearing company, work for the company that supplies computers or paper clips to all these businesses - but if you want the big bucks in trading - work your **** off, full time, day iin , day out, for years and put up with no money, in fact, losing money, constant frustration and pain and all the other **** - and then you have a real real chance of succeding

it might not have to be that way - but i bet the people who get through more quickly are the ones who would stick through to the end anyway

 

[neil]

Oh - Bugger !!!

- but you have to be intelligent,

Oh dear - I wonder if I can get my Mcdonalds job back?


Sigh.

 

[zow]

Hey don't knock McD's !

I worked there for almost 2 yrs...had great time....