Thought I would add a little more.....first off, don't get me wrong, I am a professional trader. I head our firm's trading department, I hire traders, I fire traders, I handle the majority of the large orders and work all the orders from the institutions that do business through us.
Through this thread and work elsewhere, nonetheless, I get a lot of "distressed" non-profession, and some that consider themselves profession, emails from poorly performing "traders' asking for analysis of their processes. One today had mentioned that they had been trading for anout a year and 1/2 and were up about 4%, mostly a result of the recent downtrun in technology, etc. AFTER mentioning about discipline, not taking home stocks, etc. for day traders and cutting losses quickly, stops, etc., I also wanted to point out something regarding opportunity costs.
First off, lets state that the market has been incredible for a number of years and WILL NOT be able to maintain this pace or average rate of return. This is, let us not forget, the greatest bull market ever.
Nonetheless, to make trading a carrer to the exclusion of another profession, as in any career choice, you have to consdier opportunity costs:
1. SPMutual funds average, i believe, about 25,30% over the past two, three years.
2. Some sector and other specialized funds did even better.
2.5 Dell, INTC, MSFT - forget about it, would-have, could-have
3. You could have had your money in those funds and/or stocks with LESS risk, more diversification, professional management,
ALL THE WHILE, you could have been pursuing a career with stable and reliable earned income.
So your opportunity cost as a trader is not only how much MORE a different manager could make with your money, net of their commission or expense fee, but add to it what YOU with your 10 hours a day, could make doing something else.
My point is not to chastise those trading stocks, as there is great reward, but to caution those that have been less successful that as exciting and as fun as it is, you might have done better off elsewhere.
I have often said it that daytrading is unfulfilling and truly good trders move onto other things, heading trading department, managing money for others, mutual funds, hedge funds, they develop trading software. You don't see Harry Houtkin trading day in day out. This man developed a successful business that makes him money whether he trades or not. ( I am not commenting on his firm at all) The truly succesful move beyond short term trading and onto something with more substance and reward. For me, it is my equity stake in my firm and the management of our business. For most, I hope, it is just a great way to get an excellent, MUST HAVE education in the financial markets, that will 1) help you for the rest of your lives in managing your cash and your family's assets but 2) will lead to opportunities elsewhere of more substance.
Its my pleasure to discuss this anyone in greater detail if anyone has concerns. call anytime, mornings are best. someone did it for me a number of years ago and I am in great debt. 800.221.5676
Regards,
steve@yamner.com |
