Individual Trading or Wealth management?
This question is something that I have been pondering about for a long time. I am a college student that is studying Finance and I have friends with non finance backgrounds that trade equities on their own as individuals. That was my initial goal, to learn a strategy and in the long run be able to trade on my own because they have a lot of flexibility in their day to day life, we all started with the dream of "financial freedom" but since I am in college (we started in high school) my family has told me that I would be good for a career in Asset management or Wealth management and they are discouraging me from trying to learn trading and to just focus on school.
My concern is that I wouldn't have the ability to trade because of restrictions and that I wouldn't be able to go from wealth management to trading on my own as that is what I want to be able to do. My friends make a lot more than what I would be making in my first few years in wealth management but that is based on their capital.
Of course, if by the time I graduate I don't make anywhere near what the bank is offering me, I would take the job and see how I can transition later on. But in terms of transitioning, has anyone here gone from wealth management to investing or trading on their own? Assuming I accept the job, at what point would we learn strategies? Or is this something that we have to figure out ourselves?
Your parents are trying to do what they're supposed to and keep you safe, but most parents are dream killers. Day trading generates a lot of emotion from almost everyone that hears about it. Many people will tell you that you're crazy, you can't beat the markets, and you're going to lose everything. In most cases, they're right, but individual day traders are beating the markets. How many years have your friends been profitable? If your friends have been consistent for a few years, truly have an edge, and control their emotions, then you can learn from them and reduce your learning curve if you listen to what they say. You're also young, so you can take the risk.
The key things to remember are:
1. Not all profitable strategies work for all people. Just because your friends have an edge that works for them doesn't mean their edge will work for your personality.
2. You will lose money before you make money. Don't listen to these people that say they started trading three months ago, and now they're making six figures or whatever. If they're not completely lying, they got lucky, and the market hasn't humbled them yet. Never listen to anyone that hasn't taken an L and been humbled.
3. Don't trade with money that you can't afford to lose. You should be ok with losing any money that you've determined to be your risk if the trade goes against you. If you need a trade to work to make your rent, then you're setting yourself up for failure.
4. Expect to take a year or more to become consistent.
5. Treat your trading as a business. In a sense, you're an entrepreneur. Track your trades, and refine your strategy that works for your personality. You're like a startup, so keep your overhead and expenses low. That means don't buy extra services you don't need like chatrooms, super trading computers with 50 monitors, expensive scanners with a million features you don't need, a trading platform (a free one like thinkorswim is all you need when you're starting), and try to minimize commissions. The point is to keep your expenses low while you're trying to learn how to be profitable. You don't want to be losing money because you're paying for stuff you don't need yet. You don't even know who you are as a trader so fancy equipment isn't going to boost your performance yet.
6. Treat yourself like an athlete. Trading is a performance activity. It's hard to be disciplined while trading when you're not disciplined in other aspects of your life. Go to sleep early, work out (fit body, clear mind), eat healthy, have a morning routine, record your trades, and watch them over like a professional athlete watches tape, study, and learn.
7. Don't listen to people that aren't successful traders. They're not going to understand your struggle and respect what you're doing until you can support yourself from your trading. A lot of people are going to think you're gambling, and then they're going to think you're some sort of genius once you're successful. Try not to talk about it too much with anyone that doesn't trade.
8. Not every profitable strategy works in every market. You can find a profitable strategy that works for your personality, but the market conditions aren't favorable for your strategy. It doesn't mean you have a bad strategy. It just means you have to either stop trading until the market changes in your favor again or adapt to the new market conditions. A lot of people that thought their shit didn't stink because they were "pros" in a bull market are getting crushed. Anyone can buy high and sell high in a historic bull market. Not everyone can trade in a bear market.
9. It takes time to learn what works for you and what works, period. Be patient and survive.
10. A lot of traders fail because they're undercapitalized, but it's also dangerous to start with too much money. $10,000 that you can afford to lose is a sweet spot. That's enough to lose and survive, but it's not so much where you'll start over trading because you're over the PDT. If you can't turn $10,000 into $25,000, you shouldn't trade with $25,000. That's just my personal opinion.
11. Learn trading psychology, but more than that, learn your psychology. Trading is hard because you have to understand yourself. A lot of smart people lose in the market because they're not used to being wrong, and they're not ok with being wrong. For example, if you have mommy and daddy issues and somewhere inside of you you can't allow yourself to be wrong because you need to prove to your parents that you're not a failure, trading will expose that. That's just an example. You have to be comfortable losing, and a lot of people can't handle being wrong. The market doesn't care about your feelings. You can't care about anything but making a good trade.
You have to be able to handle your parents trying to talk you out of trading while they watch you struggle. They're going to judge you, and you can't be sitting there trying to hold onto a losing trade because you can't face your parent's judgment.
12. Don't follow anyone's trades.
13. After all that, trading just might not be for you. However, you won't know unless you try. The best time to learn is when you're young and you don't have responsibilities like a family to support. If you try to trade then you're going to find out a lot about yourself. At the end of the day trading is a solo endeavor. Only you can hold yourself accountable for your mistakes.
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