It’s never easy to recognize who will make it and who will not, but certain traits and trading mistakes are sure roads to oblivion. So I will list a number of the obvious and not so obvious career killers below.
1. The trader doesn’t trade enough. Traders learn by trading. If you trade 5 times a day versus somebody that trades 50 times a day, the 50 times a day trader gets 10 times more trading education in terms of execution, emotion, following trading plan, etc. Do this for months or years and the difference is enormous. Remember we are traders, not investors. Trade as much as you can, in the beginning, you can always fine tune and eliminate bad trades or risky trades. It’s more difficult to trade less then start trading more. You are also collecting data when you trade. You collect data on your trading and the strategy you trade. The more data you have the better you can make inferences or decisions based on that data. So trade as much as you can…within reason.
2. The trader trades too much. See what I did there. So yes not trading enough will end your career but over trading will as well. Some people trade just for the buzz, without any strategy, just clicking. They love the feeling. Unfortunately trading too much will also bring you down.
3. An obvious one, the trader is unable to control the size of their losers. The trader is unable to cut losers. Some people just can’t get themselves to take a small loser and the only losers they take are huge monsters.
4. A trader’s work ethic just isn’t good enough. Setting goals are good, but without hard work, setting goals is just wishful thinking.
5. Some people just don’t have the grit, staying power, and ability to fight their way through the difficulties of learning how to trade. You either have it or you don’t.
6. A trader who doesn’t analyze their trading performance daily, weekly, monthly and yearly is a trader who is not doing a large part of the “trading job.” There are lots of ways to do it, find one that works for you, and make sure you learn from your analysis.
7. Some traders don’t do enough research, don’t learn enough, don’t read the fine print, and are never able to build an edge through their research. Without some sort of edge, you are dead in the water. Build a model, learn the patterns of the market charts and order books, research contract details, run back testing, or do some other edge generating activity, because, without edge, you are only flipping the coin.
8. Some trader’s don’t watch the market enough. A big part of this job is learning through observation. If you aren’t watching the market enough, you aren’t doing your job. If a trader doesn’t keep a journal, written or electronic, they are bound to repeat their mistakes and never capitalize on the big repeating trades.
9. Lastly, some traders just don’t like the job. If you don’t enjoy time in front of the screens, staring at the markets, research the minutia of specific markets, you aren’t going to enjoy this career. If you don’t like trying to figure out puzzles and problems, you won’t like this job. Sure you can make super live changing earnings in trading, but if you don’t actually enjoy the day to day of trading, you won’t ever see the big time.
Did I miss any? Of course, I did. There are lots of other reasons why traders don’t make it, so please share the big ones you think that should also be on this list in the comment sections below and I’ll include the good ones above.
Trade it up.