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You can trade from anywhere in the world, have the freedom to do the things
you love, and never worry about money again (as long as you have an
internet connection).
They wanted to find out how many % of traders made money consistently.
So forget about the fast cars, hot chicks, and relaxing beaches — those are
comforting lies to distract you from reality.
If that’s what you prefer to hear, then you can close this page now.
But if you want to know the real truth about trading for a living, then get ready
for what I’m about to share with you…
You must have an edge in the markets
You might have heard the saying…
That’s BS.
I don’t care how good your trading psychology is or whether you have the
best risk management in the world.
Not convinced?
Then go down to a casino, bring along the best psychologist and gamble with
proper risk management.
Clearly, this won’t work because you don’t have an edge over the house —
and it’s the same for trading.
So if you want to trade for a living, focus on finding your edge before anything
else.
Moving on…
Now, you might think 20% a year is too low, and you can do 100% a year.
Sure, that’s possible with huge risk-taking. But I’m talking about making
consistent returns, not “the go big or go home” kind of returns.
Then ask yourself… “Why do hedge funds raise so much money? Why not
just trade their own money so they have no one to answer to?”
Because you need money to make money in this business. Still not
convinced?
Then go find out who are the richest traders in the world. You’ll realize most of
them owns a hedge fund that has raised millions (if not billions) of dollars.
Why? To make this world a better place and eradicate poverty in this world.
But, that’s not the amount you take home because you haven’t factored
in commissions.
Now, let’s say your commission on a round trip (buy & sell) is $40, and you
trade 1000 times a year.
Now you make $20,000 in profits and pay $10,000 in commissions — and
you’re a profitable trader!
Most traders neglect it and simply go with any broker they come across.
But the math doesn’t lie. If you pay high commissions, your equity curve won’t
go high.
Next…
If you make $50,000 a year from trading, did you really make $50,000?
Now if you previously had a job that pays $100,000 a year, then you didn’t
make $50,000 from trading.
I’ll explain…
Instead, ask yourself what could you accomplish (or earn) if you were NOT
trading for a living?
Winning rate?
Nope.
If you want to make money every single day, you must have a high frequency
of trades — so the law of large number can work in your favour (within a short
period of time).
Confused?
But here’s the catch, you can only toss your coin once a day.
Of course not.
Why?
Because in the short run, your coin toss results are random — you could get
tails many times in a row (and thus losing many days in a row).
Now, what if you can toss your coin 1000 times per day, how will the results
change?
Well, you’ll get close to 50% heads and 50% tails after 1000 tosses — which
means you’re guaranteed to make money every day because your edge can
play out within a short period of time.
So, the “trick” here isn’t your winning rate or risk-reward ratio but, your trading
frequency.
Great!
If you want to make money every day, you must have a high frequency of
trades.
In my opinion, the odds are stacked against you because commissions run
sky high and it’s unlikely you can spot so many trading opportunities using
your naked eye (consistently and profitably).
That’s why this field is largely dominated by high-frequency trading firms and
yes, they can make money (almost) every day.
One example is Virtu Financial who had 1 day of trading losses in 1,238 days.
Nope.
It means you shouldn’t expect to make money every single day. And that’s not
to say you can’t make money every quarter, or every year.
If you want a long-term trading career, do this…
I don’t care how good you are, but the truth is, you won’t make money every
day (unless you’re Virtu Financial).
Why?
Because the markets are always changing. (It can move from an uptrend to a
downtrend, low volatility to high volatility, etc.)
So if the markets are always changing, it means your trading strategy won’t
work all the time (and that’s how you enter a drawdown).
#1: Keep your profits during the good times so you can pay for your losses
during the bad. The key is to play good defence so you can survive and see
the good times again.
#2: Set aside 12-months of living expenses separate from your trading
account. This way, even if you have losing weeks or months, you can still pay
the bills and put food on the table.
Cool?
You must have an edge in the markets, sufficient trading capital, opportunity
cost, and the right expectations.
And you can’t trade like the hedge funds because they have access to a large
pool of capital, can pay themselves a salary (whether they make money or
not), and opportunity cost is negligent.
So now the question is, how do you level the playing field?
I educate others on how to trade the financial markets, and in return, I get paid
when they purchase my premium courses.
After paying all expenses, I use it to increase the size of my trading account!
Remember, the larger your capital size, the more profits you can make
(without increasing your risk).
Also, this doesn’t have to be trading related because if you have skills which
are in demand, you can offer that as well.
For example…
If you are skilled in using Microsoft Excel, you can create a course on it
If you specialize in creating viral videos, you can teach others how to do
it
If you specialize in training dogs, you can set up a program around it
Pro Tip:
If you’re not sure how to get started, the easiest way is to offer 1 to 1 coaching
(through skype or meetups).
It takes less work to set up and you still get paid the same (or even higher).
No worries.
“What’s an affiliate?”
An affiliate is someone who earns a fee (or commission) when someone signs
up for a product they recommend.
Then here are some products (or services) that offer affiliate partnerships…
(Note: I’m not endorsing any of them. These are just examples for educational
purposes.)
All you need to do is reach out to the service provider and ask them if they
offer any affiliate partnerships, and that’s it!
Never promote products you don’t believe in just for the sake of affiliate fees
— it’s not worth burning bridges for short-term gains.
At this point…
Moving on…
What do you want to get out of trading? Why do you want to trade? What’s the
end goal?
Financial freedom
Escape from the corporate world
Not having to stay at a job you hate
Peace of mind knowing you have another source of income
So…
Would you stick to the old way of trading for a living — save up a lump sum of
money, grind it out, and hope for the best?
Or, adopt this new way of trading, so you can reach your goals quicker, safer,
and with less risk?
Now before you go, I’d like to hear your thoughts on this.