Built to last. This is a topic that often is neglected by traders but it is one of the most important point in trading success. Traders come from every walk of life, they can be laywers, managers, salesmen, etc. Usually they come to trading because they are fed up with their current work and they think that trading can overcome all the pitfalls that their current work has. Then they discover that trading is a long lasting endevour, it takes time to learn how to make money and it takes time to make money. Look at the VIX in the recent weeks, it does not move, worse it gets down. How to make money in a market that is everything except volatile ? So you need to wait: weeks, months, sometimes years. Good years are rare and average years are the norm. Even worst years are rare, so that to fine a good year you need to wait much time.

At that point the average trader goes from the idea that trading must be the only one economic activity to the idea that it is better to find a second activity that guarantees him from the worst years and the average years. And it is frequent to see successful traders that open bars, restaurants, discoteques. It seems to be the perfect crime: by day you trade, by night you sell pizzas.

But it does not work like that: to sell pizzas is a respectful job that deserves much attention and energy, the same as trading. You cannot do both because in the middle you need to rest, to take a sleep. So eventually lawyers that sold their business, arrived to trading, will again sell their restaurant.

Trading is a dedicated full time job that does not allow other activities. Scale economies work in a way that you can make a seminar, write an article, develop a system, they are all activities related to trading and sometimes really educative for the trader himself. But you cannot cook a pizza and think to have a scale economy in futures trading.

One of the main point for the lawyers that sold the activity and started to trade is the lack of the proper trading capital. If the capital is too low then average years will wipe you out, you need to wait for the good years hoping not to fall into he worst years that can kill you. Everything is difficult.

Sometimes I fell also on the case of somebody that sold the activity and started trading with too much capital, so suffering huge losses at the beginning when he was still learning how to trade and then when trading became successful it took years to recover the losses. The sheer opposite case.

In conclusion patience in trading is the same than in business. Just think to the time it serves to build a company, to launch a new product on the markets, to acquire a large customership, to have a brand which is recognized by consumers. Business takes time and the same trading. There are no shortcuts.

And as in many other businesses here the intelligence of the trader is to understand what is a good year from a bad one. Many beginners trader stop trading because they are upset by poor performances that in reality are good performances. The problem is that they have little capital and the results are by consequence poor results in absolute terms. Many beginners trader start trading when the worst years are there and they do not realize that they simply should go ahead. Many beginners trader start trading when the good years are there and they do not understand that that is the biggest luck you can meet in your life. In these cases you need to take the money and run, open a restaurant and leave forever trading.

There is a trader in Italy that did that: during the bubble of 2000 he made a fortune, understood that he was mister nobody, and opened a pizzeria in Milan. A pizzeria that by the way make a very tasty pizza. Congratulations to him: he is the best trader around. And pizza cooker too.

Share.

About Author

Emilio Tomasini is Chief Editor of the Italian edition of TRADERS’ MAGAZINE (www.traders-mag.it), the leading monthly publication in Europe for trading and investment, and since 1999 he organizes the TRADERS’ CUP the most important real money European trading competition (www.traders-cup.it). His personal weekly free newsletter L’Indipendente di Borsa (www.indipendentediborsa.it) is one of the most reputable Italian financial media and counts more than 100.000 readers. His website in English is www.emiliotomasini.com

Leave A Reply