How To Be A Trader
May 23, 2013 at 11:37 PM (QQQ)(DIA)(SPY)(GLD)(TSLA)
To Think Like A Trader Is How To Be A Trader
To be a Trader requires a shift in thinking, because rational thought is immediately required to take a back seat. Most professions leave little room for error, yet a Professional Trader is expected to be wrong 30-40% of the time. Imagine a pilot who missed his landing more than once, or an engineer with structural supports unable to bear the load they were created to carry. Both professionals would quickly find themselves seeking new careers. To be a Trader, is to be wrong repeatedly and still collect a bonus.
According to Bloomberg, Wall Street Traders with 10 years experience earn upwards of $1M annually, while their neurosurgeon contemporaries pull down only $600k and are often required to spend as much as 1/3 of those earnings on malpractice insurance. Why? Because the surgeon is expected to get it right.. every single time. The Trader? Not so much...
How To Be A Trader On Wall Street
A few decades ago when "greed was good" and Gordon Gecko ruled the world, a masters degree on your resume opened the boardroom door at most all trading firms and investment banks. 20 years, 2 bubbles and the greatest recession since the great depression later, things have changed. With economic growth in most countries near standstill and unemployment rates near all time highs, college degrees no longer carry the weight they once did. You will still need a degree to be placed in the "consider" pile, but when the final hiring decision is made, you will need something far greater to garner the hallowed second and third interview.
To be a Trader on Wall Street, the most important thing you can have on your resume is experience. Real world experience, the type which only comes from trading real money. It doesn't matter if it's a retail account with Charles Schwab and you only have $5k of your personal money under management. The sheer fact that you understand trading, have at least one years experience putting on and taking off trades, puts you head and shoulders above the applicant next to you, no matter how high their GPA.
Even if your track record is less than pristine and shows you lost money your first year, at least you have a track record. Experience is priceless. Expect plenty of questions about what you've learned during the past year. Be prepared to give solid answers that show the money you lost to pay for your education was in fact, money well spent. It might go something like this - "I learned not to do this, or this." Believe it or not, your initiative will receive high marks during the initial interview and will go a long way towards getting you back for interview number two.
How To Be A Trader On Main Street
To be a Trader on Main Street means to work for yourself. To be a self-directed trader is to be self-employed where your primary duty is to trade your own account. One only has to turn on the television or radio to see and hear endless commercials for a myriad of courses which guarantee you success in the stock market. You will even see television programs which are often nothing more than thinly veiled infomercials filled with emotional testimonials espousing the apparent ease with which one can reap untold riches by taking a course or attending a seminar.
To clarify the issue, there are I'm sure, more than a few courses and seminars which do teach very valuable information. The information being sold claims to help you make money online by investing in the stock market along with various methods on how to trade options and how to buy commodities such as Gold, Silver, Soybeans etc... Often the information being sold is similar to books you can check out of your local library. In many cases, each class or course simply lays the foundation as to why you really need to buy the next and more important class or course. Be very wary of the "up-sell". It is extremely prevalent in the world of financial education.
If you posses a true desire to be a Trader, to make it your career, let's face it.. you won't learn everything you need to know in a weekend, not in a week, not even a month. Quite frankly, a little bit of information can be a very dangerous thing. We've all heard the dreadful statistics for new Traders and I believe a lack of knowledge is the root cause. Whenever someone asks "How can I become a Trader?", the answer is always the same - "You must learn how to trade."
To be a Trader, there is no other solution. You simply must learn how to trade. Find a firm with a good reputation and excellent references. Next, request a Free Trial to see if what they teach is something you can readily grasp. No one will share proprietary methods or indicators with you for free, well almost no one, but if their goal really is to teach you how to trade, they should be willing to allow you to audit several classes before you write a check.
A quality education is no small investment so be prepared to spend between $5-$10k dollars. Hopefully for this amount of money you will receive weeks, if not months of online training or classroom instruction. Also inquire about access to follow up instruction and ongoing support. Keep in mind this is only the beginning, the journey of a Trader never really ends. As the global economy evolves and markets evolve, your working knowledge will evolve right along with them.
Final Considerations On How To Be A Trader
Whether you decide to be a Trader on Wall Street or a Trader on Main Street, you are embarking on a wonderful journey that truly offers unlimited potential. Read Definition Of A Professional Trader if you need help deciding which type of Trader you want to be. You will also need to determine what type of markets you want to specialize in. There are several to choose from
- Stocks
- Options
- Commodities
- Exchange Traded Funds
- Emini Futures
To help with this decision, be sure to read The Fundamentals Of Emini Futures Trading.
While the sky is the limit, there are also no guarantees. If you do land the job on Wall Street with a salary plus bonuses, that guarantee is only as good as your last string of Trades. To be a Trader is to live a performance based life. Not everyone is prepared for the pressure that comes with the job. Are you?
As you seek your education, be wary of the pitch that guarantees success. No one can guarantee that you will be profitable after taking their course, class, seminar or training program. Hopefully you will be, but the second you hear "Guaranteed", it's time to move on and interview the next firm on your list.
Another criteria is this, will you be able to watch the instructor place Live Trades in Live Markets? Textbooks and videos are important parts of the learning process, but nothing compares to watching the real thing and having the ability to interact with the instructor, ask questions and have him walk you through each and every step. This type of training while a bit rare, is available, priceless, and will shave months off of your learning curve.
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