The Ugly Truths of Trading – Article #8 – March 07, 2022

I’m all for optimism, encouragement and positivity… but sometimes, a reality check is in order. Despite what gets displayed on ‘Fintwit’, not every trader can roll out of bed, make 6 figures in 20 minutes and then head to the beach in their fancy cars. These people have either spent several years and tens of thousands of hours perfecting their system or they are not actually achieving these results (often it’s the latter). Maybe I’m doing something wrong, but I spend 60+ hours/week on my craft and still endure losing stretches, periods of doubt and other hurdles to success. Trading is being promoted as an easy way to get rich and achieve financial freedom – when in reality, trading is one of the most statistically difficult careers there is. Trading can be extremely rewarding, but it also comes with several ugly realities, most of which are overlooked.

Some of the more obvious downsides of trading include its level of difficulty, the fact that the majority fail and the potential for significant financial loss. Most level headed traders understand these risks. What seems to be overlooked is the struggles that extend beyond the ‘growing pains’ at the beginning. There is a false notion that once you find profitability, you immediately enter a nirvana of massive profits and easy work days. So many people expect to be making a doctor’s salary within just a year or two while putting in just 10-20 hour work weeks. Not only is this expectation unrealistic, it is detrimental to a trader’s success.

Finding a profitable system is just the first step of the process. From there begins the long journey of perfecting your system and more importantly, perfecting yourself. I would say this is the stage I am still in – still perfecting my system, learning my flaws and constantly seeking to eliminate mistakes. In fact, I consider this stage much harder than the initial growing pains of trading. A large portion of my losses are from procedural errors (my mistakes) rather than systematic errors (flaws in my strategy). It’s fairly easy to fix an issue with a strategy, it’s extremely difficult to fix an issue of mindset. Fear, greed, lack of focus, etc. are all still challenges I face daily. Of course, these are things I expect to eventually conquer – but this still doesn’t grant me access to the trading nirvana that some (supposedly) have reached.

If your goal is to make a lot of money, trading is a bad career to get into — Hear me out… Yes, the upside is unlimited, and for those who succeed there is plenty of money to be made. However, getting to this part requires a lot of time and capital. There are no health benefits included, no retirement plan or pension and you have zero guarantee of getting paid. Are you prepared to have days, weeks or even months where you don’t make money? Are you prepared for the psychological stress that comes with these possibilities and uncertainties? Are you ready to send a third of your profits to the IRS? These are all things to consider. If your goal is simply to ‘make a lot of money’ you’ll probably find more success with other careers. If you have a passion for trading and are willing to endure the bad to reach the good… well, now you have a chance.

I don’t say any of this to be discouraging, but I find it necessary to provide some reality in an environment flooded with fantasy. If you’ve read this far and aren’t deterred, you likely have the passion and mindset required for this business. I hope to someday meet you all in ‘trading nirvana’ with our lambos and rolexes… but until then, enjoy the process.

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