So I’ve been thinking alot lately about getting into trading stocks, options, and/or futures as a sort of “side business” to practicing law. I’ve been reading everything I can get my hands on about this (everything good anyway, there’s lots of trash out there), and starting in the new year I’ll “paper trade,” which means to trade without using real money, to see how I do and how it suits me.
Just about every time I mention this desire of mine to someone, they tell me that I’m going to lose everything or not make much, and they’re just generaly very negative on the whole thing. Also they invariably say they’ve never known anyone that made a lot of money trading, and/or that guys like Soros and Niedermeyer (sp?) and others are crooks and/or liars.
So, any of you Dopers know (or are you) someone that makes or has made a significant amount of money trading?
To be more specific about what I mean by “trading,” here’s what I’d like to do (written to be understood by everyone). My plan is to essentially steer a middle course between investing (buying something to hold onto for long periods of time) and daytrading (closing all positions at the end of the day). According to a trading plan that I’ll develop and write, I’ll put in orders at night using end of day data; I’ll go both long and short; I’ll use stop orders religiously (a stop order becomes an order to buy or sell at the market price when a specific price is hit; it’s used to limit losses); and I’ll use good money management techniques (i.e., size positions according to volatility; never risk more than 2% of my account on any one position; use trailing stops to protect profits but still let them run).
I’m really not looking for a debate on the merits of any particular aspect of my strategy (but I welcome emails from those of you in the know, or you can start your own thread debating anything), but I’d love to find out if you know someone that successfully does essentially what I wanna do.
I know someone who’s a trader, but he’s not a “day trader”; i.e., he has a seat on a commodities exchange here and trades in currency futures. I’m afraid I don’t personally know anyone who does the from-home stock trading via a service and their home computer, if that’s what you were aiming at.
Like ferret herder - I know several folk involved in various aspects of the various markets, but no home traders.
In the business, my impression is there is a pretty rapid turnover of folk who try it but don’t make the cut. Meanwhile, you can burn thru a lot of money quite quickly in the process. Realize, you are competing with smart and aggressive people who do this as their fulltime jobs, who have access to expensive tools and info you lack, who are sufficiently capitalized, and who will often have lower transaction costs than you.
This is not to say it is impossible to be successful as an individual trader. But it is certainly not easy.
To a man, the professional and successful traders I know and speak with are very eager to encourage amateurs. And as I said, these guys are a competitive lot.
A good friend of mine is a trader on the AMEX. He started off with an internship at an investment bank when he was in college. After college he worked in their backoffice for a couple of years. Eventually he became an assistant trader then a full trader.
He makes a great deal of money. He also has access to all the high tech tools and information that Dinsdale mentioned. He is also capitalized by his firm so he isn’t playing with his own money.
You, on the other hand, will likely have access to none of that.
You will be trading in a bear market, in contrast to the bull market of the late 90’s that started the daytrading fad.
You will be required to pay Federal short term capital gains tax and a brokerage fee on every trade.
You will be playing with your own money.
In any market there is usually a fool. If you don’t know who the fool is, it’s probably you.