Learning to be a trader.

[Rockhoundnz]

There's loads of so called 'educators' out there and many of them are more interested in selling their 'system' to people than they are about teaching people to trade. I spent a long time looking at the different options for learning to become a full time trader before I decided to sign up with a trading room called Puretick.com. I've been with them for almost 3 months now and I'm very happy with both the education I've received from them and the trading calls that they make. They focus on Dow Jones futures on the US market, but the information they teach about technical trading could be applied to other markets.

For those that are considering becoming a trader here's a video made Alex, the head trader and co-founder of Puretick:

http://puretick.com/video/thetruth/

The video really hammers home what it means to want to become a trader. If anyone has any questions about Puretick please feel free to email me. Cheers.

[ratkin]

Spam alert.

[AMR]

Rockhoundz, it's not a good look to be posting advertisements on your first post.

[Rockhoundnz]

Sorry guys, but I'm not sure how my post constitutes an ad or, even worse, spam. As a full time trader it took me a long time on the web crawling through the many 'holy-grail merchants' out there to find a good trading mentor and I've seen loads of posts from people on other forums keen to find a mentor. I thought I'd just take the initiative of posting some useful info on a forum on my home-turf. I'm sorry to hear that you think of that as not something that's useful for other members of the forum. How else are members to find good educational services if you frown on one being mentioned? There are loads of other trading education providers out there, perhaps it would be good to hear from other people who they've had success or poor service from?

[AMR]

Ok, sorry for accusing you of advertising:o. That's actually a reasonable video by the way, a good contrast to those other courses which give very unrealistic expectations. Why don't you tell us how you took up full-time trading?

(I'm currently researching the possibility of gap trading on the SPI...so far I'm only using $1 AUSSIE200 contracts from CMC markets)

[Rockhoundnz]

Ok, sorry for accusing you of advertising:o. That's actually a reasonable video by the way, a good contrast to those other courses which give very unrealistic expectations. Why don't you tell us how you took up full-time trading?

(I'm currently researching the possibility of gap trading on the SPI...so far I'm only using $1 AUSSIE200 contracts from CMC markets)

Thanks AMR - and good suggestion. Actually, having thought a bit about my initial post perhaps I would have been better name this thread: "the correct way to become a full time trader" and not mention who I am learning from. I just know there are a lot of people out there who have thought about the idea of day-trading for a living, but haven't really known what that involves.

Just as Alex mentions in the video, the best way to view it is to put trading in the same basket as going to law school or med school - only you don't have to pass any exams to be allowed to start to learn to be a trader. As long as you are committed to a couple of years or more of learning before you start to make really good money and you have a reasonable amount of capital then anyone can potentially do it. In fact, what law school offers to pay you a modest income in the first year or two that you are learning? (As an interesting aside, I know of two former lawyers that are either learning to trade for a living or considering it).

For me personally, I simply quit my day job and decided trading was what I was going to do - the realism of that video (with none of the usual "you can make $1000 a day with as little as $5000" sort of garbage that you hear from most of the 'educators') told me how much commitment was required, and I have accepted that from the start. I'm now 3 months into that process - I am very much a 'newbie', but have been doing it long enough to know that the following information is true. If you'd prefer to hear the same information from an experienced trader I'm sure there are lots out there that will agree.


Here's what I would say you need if you're thinking about trading for a living (and I'm basing this on trading emini futures in the US which is my area):

1. Sufficient capital. A minimum of US$10,000, but better to be $20,000+. At the very least greater capital will mean it takes longer to blow your account which gives you more time to learn. Many of the world's best traders went bust several times before they became good traders.

Here's how long it took some smart and determined people to become profitable:

Linda Raschke - 3 years
John Carter - 4 years
Mark Fisher - 3 years
Hubert Senters - 2 years sitting by the side of an experienced trader before trading

2. A commitment and ability to sustain 1-2 years (at least) of learning without much of an income: be very suspicious of any website that claims you'll be making loads of $ in a few weeks!

3. A willingness to change your psychological view of money, risk and probability. This is probably the biggest hurdle that will cause about 90% of traders to fail. The book 'Trading in the Zone' by Mark Douglas is a great starting point to cover this stuff.

4. A good mentor. Almost all the best traders learnt from a mentor - they didn't just read a few books and do it themselves. Do your best to find someone who can teach you the skills and how to avoid the common pitfalls of trading. You might have to pay a lot for this. Some traders have spent over $100,000 on learning to trade before they became accomplished.

That's pretty much it. If you can commit to those things and do them successfully then you're pretty much on the road to being self-employed, able to work from anywhere with good internet connections, and financially very wealthy. Any comments welcome - especially if there are experienced or, even better, FAILED day traders out there. I hope that information is useful.

[Rockhoundnz]

(I'm currently researching the possibility of gap trading on the SPI...so far I'm only using $1 AUSSIE200 contracts from CMC markets)

AMR, do you mean fading the overnight gap on the SPI? Or are you talking about short term gaps during the day?

[airedale]

Hi Rocky, I am not a day trader, and I don't venture far from the ASX or NZX, but there was an interesting article in the Chch Press on Tu 15th. It was about Oli Hille from Chch who does it successfully for a living.
He estimates there are about 100 fulltime traders doing it in NZ.
He talks realistically about the pain of losing when you start, but in the last year has made $170,000 from 51 trades, averaging $3,333 per trade..

He also writes books, and has a web site which is worth a look.

www.author.co.nz You can download a 100 page book on his philosophy.
Get the paper if you can and read the article.
Cheers, Airedale

[AMR]

AMR, do you mean fading the overnight gap on the SPI? Or are you talking about short term gaps during the day?

Fading the overnight gap..i.e today the Down rose 2.0% and the SPI gapped up, but was able to close off 60 points in the gap. It seems to be a fairly low risk way of doing things from what I've seen so far. An extraordinary amount of volatility in the opening 15 minutes though. Each pip is $25 per contract, I'm not sure how things are like on the Dow.

I'm also planning to scalp or swing trade the mini-HSI. It's a nice market, most of the time it trends quite nicely.

[Rockhoundnz]

Fading the overnight gap..i.e today the Down rose 2.0% and the SPI gapped up, but was able to close off 60 points in the gap. It seems to be a fairly low risk way of doing things from what I've seen so far. An extraordinary amount of volatility in the opening 15 minutes though. Each pip is $25 per contract, I'm not sure how things are like on the Dow.

I'm also planning to scalp or swing trade the mini-HSI. It's a nice market, most of the time it trends quite nicely.

Yeah, on the Dow eminis the gap fade first thing when the market opens in the morning is a very successful trade. It has much higher risk than some other trades as it's usually done with no stop loss and the trade is closed either at the gap close or at the end of the day. Obviously if you have a big day against you (say 200 points) you're losing $5 per point per contract - so $1000 or more on one contract; nevermind some of the larger traders who do tens of contracts. So, it's not for the faint-hearted and not for the under-capitalised. I'd be interested to know if the Aussie market has a similar track record. Also, to do it you need a second account because you can't trade normally on the same contract with the gap trade open.

I'd be very interested to hear how the HSI-mini goes as I'm keeping that in mind once I'm trading on my own, so to speak. The Dow emini is great, but the hours are a little trying.