Being a trader is no easy feat. If you aspire to be a successful trader one day, you need to be willing to work very hard, develop useful skills and have solid mental fortitude.
You also need to be prepared to lose a bit of money and work for little to get experience.
Failure is a Stepping Stone
A person finally decides to be a trader. Trying his or her best but finding it difficult. Having losses, on and off, for a few weeks, and now thinking that this is all too much and way too hard. We may pause everything for a while and compare this unnerving situation with the following real-life situations and events.
1. After one show, he is fired and told to go back to driving a truck, because of utter lack of talent. His name: Elvis Presley.
2. After having quit school and moving from one low-paying job to another, he eventually starts to work at EMI Music Publishing but soon after, he ends up with a lot of debt, and is forced to move back in with his parents. Today, he is one of the most successful businessman in the entertainment industry. His name: Simon Cowell.
3. This writer was not rejected continuously for a month or six months. But underwent five years of rejection. To this day, the sales from her books are in excess of $2 billion. Her name: Agatha Christie.
4. The Kansas City Star Newspaper fires him. It was believed that he lacked creativity. He later built an empire known all around the world. His name: Walt Disney.
5. After quitting high school at 15 years of age and working as a janitor to help out the family, this man decides to write himself a check for $10,000,000. Seven years later, this was his acting fee for ‘Dumb and Dumber’. His name: Jim Carrey.
6. If one rejection is hard to swallow, this person gracefully endured 200 of them. After Bantam Books took a chance on him, he became their top writer, with 330 million in sales. His name: Louis L’Amour.
7. From the age of 9, this woman was sexually abused by 2 family members and by someone close to the family. At 14 she became pregnant but her son died shortly after birth. Nonetheless, she is known worldwide and her media empire is unparalleled. Her name: Oprah Winfrey.
8. He has applied three times to University of Southern California School of Theater, Film and Television and has been rejected three times. Did he give up? No. Name: Steven Spielberg.
9. At the age of 62, armed with $105, he visits restaurants, to sell his idea of pressure-fried chicken. He is told no, 1,009 times by that many people. Name: Colonel Sanders, founder of Kentucky Fried Chicken.
10. After seeing his factory bombed in 1945, he continues to pursue his dream. Today, the products made by the firm he started, are known and used, worldwide. His name: Soichiro Honda.
Now, you’re wondering how any of this applies to trading. Because it seems at first glance that trading has nothing to do with Honda motorcycles or Agatha Christie’s novels. And yet, it has everything to do. Succeeding as a trader depends on one crucial item. The fortitude and dedication, which allows a would-be trader to meet and surpass, conquer, or find a way around all the difficulties, soon to be encountered.
Sacrifices are Necessary to Make it Big
Here is a plausible scenario: A trader is hired by a non-descript firm, headquartered in Zurich with a satellite office in the Bahamas but you are posted in Hong Kong. On day 1, you get a tour of the premises and a chat with the person in command, and then you are told nicely to enjoy the afternoon off and come back the next morning.
On day 2, you arrive early. You sit at your station. 42 minutes later, a huge announcement is made by the European Central Bank. Markets are either in a nose-dive or climbing the Everest. The second in command appears behind you and tells you that day 2 determines what happens next. This supervisor punches a few things in his tablet and you end up with 4 positions, each worth $5 million. You have no idea how to deal with this.
You are told that day 2 is easy… your maximum loss, after closing all positions, is $2 million. As he is talking, things go sour and your Profit & Loss Column shows minus $3.2 million and rising. Think fast and make it today. If you do, you have to go through day 3 and 4 and 5. If you make it after day 5, with each day presenting a different test, you are hired for good, with a probation period of 8 months. Conditions are harsh. There is a list of things, never to be done. The first two mishaps, you earn a warning. On strike three, you are out.
Break Your Limits
Most traders who are starting at home, part-time, would not consider such a scenario. Yet they should. We should always cultivate the habit of not simply thinking about day-to-day, common difficulties. If we maintain this attitude, of thinking in average ways about average problems, we obtain average solutions, which are fine and perfectly suitable for the most common occurrences. But what if we choose to think exponentially? What if we choose to force our self a little bit more, every day, every occasion we get? If a runner wishes to run a race of 3 kilometers, and trains only over distances of 3 kilometers, in the same way as all the other contestants, with this race to take place in 3 months, then no edge or particular advantage is gained.
But if this contestant skips this race, this year, and chooses to train for the race next year, training not for 3 kilometers but for a race of 10 kilometers, with weights on his or her shoulders and ankles and wrists, going uphill and through mountain paths, when he or she will attend this race next year, having trained 10 times more than all the other contestants, then there is a definite edge gained, which could make the difference between average performance and way above the norm. In your trading, if you keep doing average efforts, and if you keep thinking in average ways, there is no edge gained. You must think exponentially.
If you wish to earn 1k each month, ask yourself how you can earn 10k each month. While reducing the losses by a factor of 10. Establish a mental layout of a situation and then, once the limits are clear and well-defined, push the boundaries as far as you dare and then, 5 times further. To which end? So that you may consider possibilities that no one else is considering, because everyone else is busy contemplating the same solutions to the same problems.
Be Flexbile But Persistent
Break down the fundamental aspects of trading until you obtain core truths, which cannot be broken down anymore. Instead of reasoning by analogy, as most people on earth are accustomed to, use first principles thinking. Feel free to look it up and read how Elon Musk is using first principles thinking to accomplish what no one else even considered, such a having a lineup of high-performance electric cars, in a relatively short time, starting from scratch. Related to trading, apply first principles thinking and break down items of any trading methodology until you arrive at core elements. For example, people use an indicator called Stochastic RSI with a default period of 14.
Yet, out of 1,000 traders, 990 traders will never question why the period is set at 14. Worse, fewer than 10 people will actually test all other periods, over weeks or months, on all time-frames. Why? Because it takes time and humans are by default, not extremely patient. It requires effort, which implies an expense of energy, and most people only have so much energy they can run on, but no more. Out of 1,000 traders, most wish to make money now, today. Therefore, there might be just a few people who will actually consider other possibilities. Try it for yourself. What happens if you change the period to 1? To 6? to 34? to 318? to 830? On a daily chart? On an hourly chart? On a 1-minute chart? On 50 different markets? It becomes easy to see that once you adopt this type of reasoning, where you question absolutely everything, not much is spared.
You can clearly investigate, for months and months, doing tests on only 4 indicators. Most people would not use so much time, simply to try out thousands of possibilities each week because all traders need or wish to make money now, today. Yet, I can clearly state that if a trader takes the time to learn everything that no one wishes to learn, then an edge can be gained.
Hard Work Always Pays Off
I know of hundreds of traders who wish to make money today, and this month and this year, and they keep this up for 3 years, without going ahead one bit, feeling discouraged and giving up. Would it not be better to instead, dedicate 1.5 years to learn everything that no one wants to learn, and consider thousands of possibilities that one one is even considering, so as to arrive at dozens of tools which makes you stand out, when compared to 1,000 other traders. It can perhaps be said that if 90% of traders fail after 2 years, and are unable to become professional traders, is because this 90% of people think that same way and act in the same manner.
If you wish to succeed as a trader, distinguish yourself and do everything that no one else wants to do, because they would never even imagine the possibility of anything else out there. Be the runner who is training for a 3-kilometer race, by doing 10-kilometers exercises, up mountain slopes, in winter, with 20 kilos of extra weight, in snowstorms and during torrential rains.
Why could you not train this way? Because it is way way more than what is necessary to win the 3km race. Yet, if you do, you will win that 3-km race, hands down. Apply this to trading, or everything else in your life. You’ll be thoroughly amazed at how very very far you can get, further than anyone ever dared imagine, including yourself, of course.
What should you remember from all this? There will be times when you’ll have to put yourself in a risky position. However, you should know that success and risks are two sides of the same coin. You should also be open to receiving harsh criticism for your trading strategy as negative feedback will help you improve what you have to offer. As you are pursuing your dream of becoming a trader, you will encounter difficulties, setbacks and seemingly insurmountable obstacles.
Each of those is meant to discourage you and make you quit. At any given point in time, you will be able to yield and quit. To do so will be the quick and speedy solution, ending the life of misery you will have endured so far. But to do so will also be the end of your dream. Forever. Life and circumstances will have known and you will have lost. The bigger the dream, the bigger the obstacles and trials and tribulations. What will be against you will be in direct proportion to how big your dream is.
François is an institutional US Crude Oil trader with over 18 years experience. He is also working with startups, helping them secure investments. He is an active real estate investor, in Europe and North America and has a special interest in the tokenization of real estate as well as other tangible or intangible assets. He holds a degree in psychology and finance from McGill University. He lives and works, south of Barcelona and north of Boston.