Wannabe Traders: Stop Pissing in the Wind

Recently, I was talking with a complete stranger (a 20 year old “kid”) who I met as I was being shuttled from point A to point B. During the commute, he told me how he had 3 jobs, was going to school full time, had no debt, owned a car that he paid for in cash, and saved as much money as he could.

The jobs were mixed: 2 of them having specifically to do with his field of study, and the other completely unrelated. He worked these jobs on the weekend and during the week (when time permitted) in order to pay for his own education. His parents could have paid for his school – they had the money – but he wanted to do it himself. 

Working 3 jobs while being a full time college student is impressive, however, what stood out to me the most was what he shared about his college education. He had essentially found various ways to get a degree that typically costs around $150,000 (for those students who live on campus for 4 years) for about 1/10th of that ($15,000). Between his parent’s advice and his own due diligence concerning decreasing the cost of college, here you have a 20 year old kid who had significantly lowered the “risk” associated with getting a college education in the modern era and as a result, increased his probability of success. While his peers were “getting the full college experience” by living on campus, he lived at home. While his peers attended college at the school’s primary campus location, he attended a satellite location. When he graduates, he’ll have no debt; when his peers graduate, most of them will be loaded with debt, and many of them will not be able to find a job related to their degree (he shared how many people with a degree in his field worked at various local fast-food restaurants because they simply couldn’t find work).

What does this have to do with trading?

Most, if not all, of the schmucks who attempt to trade for a living do not take the time to learn the underlying core principles that all successful traders learn (e.g. process over outcome, adopting a probabilistic mindset, risk vs reward, expectancy). Unlike the kid, they do not do their due diligence, and thus their risk and probability of failure substantially increases (just like the knobs who pay full price for a college degree). Moreover, most failed traders (and people in general) have a very poor relationship with money – they spend more than they make and carry debt, which puts them in a disadvantageous position to succeed at trading and life in the long term. Combine these two things, and you have a wannabe trader pissing in the wind.

Put yourself on a path to succeed by building the foundation of your mindset with concepts by Mark Douglas (“Trading in the Zone”) and Van Tharp (“Trade Your Way to Financial Freedom”). Familiarize yourself with the most important principles that the most publicly successful traders utilize by reading “Market Wizards” (the series). Create a toolbox of ways to help deal with mindset issues by reading “The Daily Trading Coach”. This is the first and most crucial step that most who fail at trading simply do not take the time to learn.


Full list of general steps to take to progress as a trader

In addition to this first step, here’s my full list of general steps to take to progress as a trader, which I’ve learned via due diligence, hard work, and failure:

  • First, build that foundation of your mindset with key concepts, principles, and tools (as previously described).
  • Next, develop a methodology and business plan. The methodology should be based on said core concepts and principles, and should be constructed as part of your own business plan. Do not skip this step if you want to have a chance at making it as a trader. By developing a business plan, you will force yourself to define your process and rules. It is via your process and rules that you will make the transition from gambler to trader.
  • Then and only then should you start practicing your methodology on a trading simulator. Do not ever start trading your methodology with real money until you’ve proven that you can be profitable for a period of time (1-3 months, in my opinion). After all, if you can’t make money trading paper money, what makes you think you’ll make money trading real money?
  • Once you do prove profitability as a paper trader, switch to real money and trade your methodology the same way.
  • Do weekly and monthly reviews to track progress, making sure to track as much data relating to your trading as possible. It is through review of said data on a monthly or quarterly basis that you will unlock key objective insights into your performance (or lack thereof).
  • Refine as needed based on said reviews and push forward.
  • Switch back to the simulator if your reviews are showing that something is clearly wrong with your methodology.
  • Get your debt under control. Get your spending under control. Read books such as “The Millionaire Next Door” and “The Total Money Makeover” to help do both. Grow the fuck up.

Make a choice: Trading or Pissing in the Wind

If you want to have an outcome that is different than the many who attempt to trade, then choose to do what they do not do: Travel the road rarely taken by doing your due diligence, busting your ass, and staying resilient through it all. It is your due diligence, work ethic, and resilience (i.e. ability to bounce your mindset back from setbacks) that will ultimately determine whether you make it as a trader or spend your time as a wannabe trader pissing in the wind.