What does it take to become a trader?
This ends up being a very common question and there isn’t one answer because there isn’t one type of trader.
I always feel that there has always been a division between people who trade and even in that division, there are even more divisions.
First, you have the majority of people that you meet- the people who just started trading, are self taught, or paid someone who claims to be profitable but also usually self taught as well. The worst among the group are the guys who have a MBA in finance which makes people think that they know what they’re doing.
Then you have the institutional guys- the guys like me who have worked on Wall Street. The institutional guys fall into a ton of categories and the reason why they fall into a ton of categories is because you have people who have worked on Wall Street but not in a trading capacity yet they teach people how to trade for a living. After leaving Wall Street, I actually met many people like this - guys who were stockbrokers, investment bankers, order takers, or some kind of assistant position; the worst is when you get guys who worked on Wall Street for a couple of months and act like they worked on Wall Street for decades.
The people who actually do work in a trading capacity still can fall into one of many functions which include market makers, buy or sell desk, quantitative traders, hedge fund traders, money managers (who technically aren’t even traders), and the list goes on. Everyone who works in a trading capacity, has their own way of doing things so even in this case, you can show everyone a chart and get completely different responses.
Because there are so many different functions, there is a lot to learn. Most people think you can learn everything right away from watching a video on YouTube or reading a book but I always say that there is a lot to learn otherwise professionals would not need licenses. Another priceless piece is that while working on Wall Street, you are getting on the job training and are constantly learning as you work.
Most people who haven’t worked in a trading capacity don’t understand this so as they are learning to trade, they don’t realize that they have this disadvantage in both the lack of learning time/experience as well as the money you will lose from errors.
If you choose to learn from someone, I always suggest that you choose someone like me who has put in their time on Wall Street. Many who have put in their time don’t usually spend time teaching with several good arguments
• while learning on the job, it’s vigorous and the pay sucks so we hate putting a dollar amount on something which is priceless to us
• not everyone is good at explaining complex topics in an easy to understand way
• teaching others can be frustrating - aside from having to be a good teacher, you need to have good students who are attentive, critical thinkers, and put in 100%