Why trade?

[CityTrader]

Guys, I have to say, that all those " the newbie must fail" articles mistify me also, but then I'm not a newbie. My trading " apprenticeship" was paid for by the likes of UBS, Marc Rich & Citibank- where I've traded for almost 25 years. I now work for myself, BUT I have to ask the question " why do you guys all want to become traders? " I never leave the dentists thinking " damn, that's a job I want" so why is it? is it for the income? quality of life? excitement? to be "masters of your own destiny"? A quick path to fame and wealth?
I do it, because it's the only profession I know.

 

[JeanM]

I am retired, and trade because of the mental challenge. Trading is supposed to be one of the most difficult things one can attempt. I want to be successful at something that so many fail at, and of course the money would be nice but it is a by product of the success not the be all and end all. It gets me up in the morning and on my computer by 7.30am. Hopefully it is also keeping senility at bay!!!!

 

[hampy]

City Trader,
My vision for the future is trading from home, earning £100k pa +,
therefore no commute, and the possibility to move to a more desirable part of the country or even abroad.
All profits made would be my own, and no grief from the management above me. Ah well, I can always dream!
Seriously all comments both negative and positive, welcome.
hampy

 

[FTSE Beater]

Hi CityTrader

Interesting question this 🙂

I have to be honest and say I'm in it for the money - well mainly anyway. I'm not content to be a £25k a year office work for the rest of my life. Life's to short and we only get one go at it - why spend 40 hours a week doing something that ultimately just allows you to live comfortably?

There are other side benefits that keep me focused.

• Short working hours.
• The knowing of being in at least the top 10% of traders in the world.
• Sharing knowledge and teaching others to improve there trading, and also their lives.
• Conquering my own emotions and being "At one with myself"

I don't mind saying, I'm either going to make it or die trying. There is no other option in my mind 🙂

<hr>Hi Hampy

Don't dream - DO!

 

[neil]

Like JeanM, I am retired (early) and am now making small amounts of money via futures (No spreadbetting but I cut my teeth on them initially until I was smacked with a wet fish and saw the light.)

As my confidence and discipline WILL build I shall triumph.
It's money and freedom.

 

[nobrainer]

It's the buzz, the excitement on being in control of one's destiny.Money meets money but unlike casinos , you can find your own niche where intelligence decides your fate.
Unlike in business or in a job , you rely on no one but yourself.
Every day is bl**dy exhilarating.It's not every one's cup of tea, but for those of us who excel at it and like pressure ,I can't think of anything which could come close to matching it.

 

[ChartMan]

Hey! NB, long time no see. :cheesy:

 

[Skimbleshanks]

Once you've had the pleasure of having to sort out the continual stream of problems brought into your business by a) two legs and b) four wheels, then you'll understand why it is just sheer bliss to sit at home and press a button occasionally. 😀

 

[nobrainer]

Hi Chartman, Hope things going well!!Tried logging into the T2W chatroom a few months back for a while but no one trades uk stocks or keep silent if they do! I must be a dinosaur or something!! Anyhow,am having a fantastic year to date so its their loss!!
Regards.

 

[Homeschoolma]

Here's my story. I was in college when my first daughter was having problems in school. I was so fed up with with those problems that I decided to drop out and be a homeschooling mother. My father is a very wealthy man and was paying for my college at the time. Although he wasn't happy about my decision, he chose to support it and helped pay for my homeschooling supplies. In order to make me "useful" in some way, my father decided to teach me about stock research so I could find stocks for him to invest in.

After about a year of his teachings and doing my own research, he noticed that I had a talent for finding stocks that would rise quickly after I brought them to his attention. For some reason he decided to test how I would fare as an investor and set up a $5000 internet account for me to trade with. That was the scariest summer of my life, but I ended that summer with over $6000 in that account. Impressed with my results, he opened another online account with more flexibility and put a large chunk of my inheritance in it.

I average 20% profit and can use it to pay for my homeschooling supplies and supplement my husbands' income. The market dive after the attacks of September 11th hurt my account, but only by 30%. Last year was just plain flat for me. This year has been a good year so far. I've already reached my 20% profit and hope to exceed it for the first time.

I love trading because I can do it at home while homeschooling my girls. I enjoy the research, love to learn new things, and I think there's a bit of a gambler in my soul. 😈 Plus my father and I can tease each other about our stock choices. We have lots of fun taunting each other about our different approaches, but we both make money with our own methods.

For example...this quarter I told him that CURE was a good short term trade because it has a chart history of sharp drops and sharp recoveries. I told him to buy it while it was around $13, but he decided to place a PUT on it instead where he will have to buy it if it goes down to $12 before February. Yesterday it began it's rise and went over $14 a few times. While he's now e-mailing me and saying "Ha-ha, I made $600 accepting that PUT without putting in any money", I'm hoping to get him back when my 500 shares bring me over $1000 like they did back in May. If I can get $1200, I'll e-mail him and say "Ha-ha, I made twice as much as you did. And I'm not in danger of being forced to buy it if the next set of quarterly reports make it look ugly." 😛

 

[Car Key Boi]

well for me, trading is like keying up someone's car

i do it for the kill, not the bucks. I've stopped counting the bucks a while ago. But it's still fun to beat the system and make a winning trade

DIGTBK!

- Car Key Boi

 

[stevet]

pain and frustration are what keep me going - and there are very few jobs where you get to work 24/7, year in and year out - trading has it all !

 

[CityTrader]

Funnily enough I agree with car key boi- I don't count the bucks. I just like to play the game. When I was a market maker, I always explained the job to graduate trainees or work experience newbies ( or whoever else had been unlucky enough to be dumped on me for the day) that it was a like big video game, and the p & l was the score.

As a small sideline, I have never worked out my percentage return. BUT.. if i was to (say) start with £10 in a spread betting or cfd account which got me a margin gearing of 10 fold, and at the end of the year I had made £10 = would you all consider that a 100% return or 10% ?

 

[Skimbleshanks]

I work on ROI (return on investment), therefore I would consider that to be 100% ROI.

 

[Car Key Boi]

CityTrader, at best it's a 10% return. Although yuo only had $10 in yuor account, if yuor trades had all been loozers, yuo would've been liable for the full 100 (or possibly even more)

 

[stevet]

you cant really base the profit percentage on the £10 originally placed with the broker or spreadbet company, since you are liable for whatever losses you make - regardless of the amount in the account - ( i dont trade CFDs or spreadbet, but i assume thats how they work it)

so to work out your return on capital at risk - you would have to work out the return based on each instrument that you traded in going to zero - or the maximum assets you hold that could be applied to that potential liability

any other calculation is tricking yourself and is why a lot of derviatives traders get real nervous about financial meltdowns occuring where funds and banks, etc dont have adequate expertise to enter into complex derivative type trades, but carry on using derivatives to balance losses, and do not account adequately in their books

i guess your question was asked in a somewhat more light hearted manner than my answer - but you brought up a key point which will start to unfold as contracts cannot be rolled forward, and losses become realised cash losses

 

[Homeschoolma]

When I say 20%, I'm basing it on what I had at the beginning of the year and how much I've made since then. With my old practice account that started at $5000 and ended with $6000 by the end of summer, I would claim to have made 20% profit. With that account I didn't have the option to buy on margin. Now I do drift into margin buying on occasion, but only on occasion if my stock choices and market conditions are favorable to my swing trading style and personal set of rules.

 

[ColinRiche]

You could say its 100% profit but then the loses would be magnified as well

so a £20 loss would be a 200% loss

saying that its a 10% profit and 20% respectively is fine as long as your £10 account is considered £100

trading on margin is a funny thing, i think its best to think in contract size that of £100

but at the end of the day if you started trading with £10 and then walked away from trading with £20 you wouldn't say you had made only 10% would you

being realistic you would say you had made 100%
but to achieve that you had to risk £100

this is similar to betting at odds of 1/10 (10/1 on) but the bookie would ask for the full £100 for the bet to make £10

Where as the broker only asks for £10 knowing that a stock doesnt go to zero overnight and trades within the top 10% of its value

This all originates as well you may know from the days of holding profitable positions and brokers offering margin to increase liquidity on the basis that clients could trade with profits they held on there long term positions

hth

 

[Mr. Charts]

The actual return on capital employed is 100%
The potential risk depends on margin used and diversification of asset classes/instruments employed and is dynamic depending on vehicle-specific stop and position management.
The appropriate use of margin is a multiplier of available capital,
the inappropriate use of margin has a high probablity of loss of capital down to the minimum margin level required for that instrument/derivative.

 

[nobrainer]

Mr.Charts,wow, read that about 10 times and I'm still confused!!Nevertheless it is a 100% return without a shadow of a doubt.
Interesting that investors talk of % returns.It's really a false guide to success imo.For eg.its far easier to make 20k from a 10k stake than it is to make 200k from a 100k stake even though its the same % return.