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Trading is NOT a business


It is amazing how many people fall into this trap of trading month after month. I have been back testing and forward testing numerous different trading systems and strategies for more than two years. My focus however was on index futures and currency futures. Spending more than 6,000 hours with analysis for this venture, I did not find anything that would nearly be reasonable to call a somewhat viable solution.

Her are just a few systems and indicators of my testing including any possible combination of them:
- MACD
- Stochastics (fast and slow)
- CCI
- Woodies CCI (incl. Woodies trading patterns)
- Moving Averages (SMA, EMA, WMA, TMA, HMA)
- Opening Range Breakout
- 1-2-3 Reversal patterns
- Trader Vic's 2B method
- different price action patterns with and without any indicator
- classic trendline/trendline breaks
- etc., etc.
None of the systems actually generated more profits than losses over time, even by reversing buy and sell orders against the signal/pattern. I have become suspicious that this is nothing but a monkey business, because trading systems strangely seem to be profitable only when paper/simulated trading instead of actual money.

Finally, I have come to the conclusion that one cannot generate any profits by trading. This is an expensive and very time consuming hobby which comes with a daily agony. I do admire the industry and its marketing machinery, as it continues to lure people into this fruitless business for a sheer endless money supply.

Greetings,
TF Trader
Why does day trading need to be automated to make it sustainable for the long term?
Yes. You can make money consistently.

Check out The 3 Main Components Of A Successful Trading Strategy With Steve Primo. It's free on youtube.

It's a fairly simple. Trade w/ the trend. Look for pullbacks. Enter on reversal of the pullback. I do it all day long.

Pull up a chart w/ 1 minute bars. Add moving averages for 5, 25, 100 & 500 periods.


I rarely find time to pause and post, but as I was breezing through tonight looking for something specific, I saw the "Hot Topic" was "Trading is NOT a business".

Before we go any further, let it be know to anyone who doesn't already... I am a vendor with a 10 year history as a financial talk show host and an Emini trading educator. I'm not here to solicit business, I did not slither in on my belly to troll, or fish off the pier of someone else. With the air clear, let's go...

The #1 reason Traders Fail (90% so the statistics say in the magazines) is the very topic of this thread. However, my take on it, is quite different. Traders fail because they DO NOT treat it like a business. It is a unique business as anyone who has seriously endeavored to become a Trader will quickly tell you, but very much a business. There is profit and loss. Capital expenses. You must possess a well written Business Plan and Trading Plan. While you can use a template to get started, boilerplate verbiage will not do the job. Part of your initial training should cover exactly what both Plans must include.

Each plan must be as incredibly detailed as the manuals you receive when opening a Subway or any other type of franchise (we are not a franchise nor do we offer them). So while it must be incredibly detailed, written by your own hand, it must also be as unique as you are. I find that when most would be Traders are confronted with this task, I get a big blank stare. While you should open your Trading Business with your own funds initially (no family or friends money) you will not be applying for a loan either because well.... you won't get it. Creating debt to learn if you can create a successful trading business is financial hari-kari.

One of the most common characteristics among highly successful traders is being extremely goal-oriented. People are most effective, happy, and not surprisingly, physically and mentally healthy when they have clearly established goals. From the small and mundane tasks, such as cleaning your desk, to more important life issues ranging from child rearing to estate planning, having a goal and making steady progress towards that goal creates a state of mental clarity and a sense of purpose.

That’s the good news. The flip side of the coin is that poorly planned goals can have the complete opposite effect. Once we firmly establish a specific goal, our subconscious kicks in gear to “get ’er done”. This has nothing to do with will power — it’s simply the way we are wired. While establishing and pursuing goals can lead to a higher quality of life, unless they are structured properly, they can also lead to depression and an overwhelming sense of failure. So before we start flipping those switches and the synapses start firing, let’s clarify some sound and solid principles that will become the foundational structure of every goal we set both in our E-mini Trading business and other areas of our life as well.

If you are currently a successful business owner, you will readily identify with what I'm about to share.

1) Goals Must Be Clearly Defined

In order for a goal to be realistic, it must also be clearly defined. When I ask new traders what financial goals they have for their trading business, I often get answers like, Well, you know, I just want to make some money.”

I inform them that’s not an acceptable goal. The second try usually sounds more like, “Well, you know, what I mean is that I want to make a lot of money.”

That still doesn’t cut it. At this point, I can see the frustration on their face and hear it in their voice. They just want to give me the right answer, but it’s about more than that. Once they get to the third try, in an effort to please me, they go the opposite direction and explain that what they really want is to be able to provide for their families, give money to charity and do good works. I really hate hitting the game show “no” buzzer on this heartfelt response, but I’m forced to do it. They just went from Gordon Gekko to Charles Ingalls. Truth is you can be either one you want, but not without a clearly defined goal.

The point I’m trying to drive home is that a true goal can have no ambiguity attached to it whatsoever. You’re about to throw a very important switch in the back of your brain and your subconscious is going to labor 24/7 to make it a reality. You better make sure it has the proper instructions. Haphazard directions will not only stand in the way of success, but it can make you feel a little bit frustrated, angry and eventually crazy. Sometimes paranoia shows up just to keep the others company.

As with any business plan, you need an earnings projection. Your business plan will cover capital expenditures, recurring fixed expenses, initial investment, the legal structure of your trading entity, etc. However, those items are more along the lines of factual fill-in-the-blank type answers. What you need here is your earnings projection — a hard dollar amount. You can project it daily, weekly, monthly, or quarterly; anyway you choose because it’s your plan and your goal. As we work through the next 2 steps, you will better understand why it is absolutely critical that your goals be well defined.

2) Goals Must Be Realistic

Your goal needs to be within your capabilities. Is it possible to make $50k your first year as a trader? Yes. Is it possible to make $500k? Yes.

“Can I make a million dollars?”

Again the answer is yes because with trading, literally anything is possible. A realistic goal is just as important as being clearly defined. If your goal is not realistic, you will fail to achieve it. If you fail to achieve it, you run the risk of beginning a downward spiral. That’s not to say you can’t or won’t pick yourself up and take another run at it, but after a string of failures, it can be difficult for even the strongest trader to bounce back. Keep in mind, you’re entering an arena where some make 8 figures a year and 90% of traders fail to last a year. Don’t be discouraged; I am just trying to emphasize the importance of goal-setting.

So what is realistic for a new trader? The following has been changed from the original article. The reason? We have become more exacting. Since WE, that would be you and I and any other would be trader and/or currently semi-successful Trader. We have distilled everything it into a Blueprint. You must remain in a Simulator until you have proven yourself consistently profitable. Define "consistently profitable" - you must earn $100 per contract, per day in 10 trades or less, 10 trading days in a row. As a new trader or an old hand, everyone needs the reality check. 8 ticks risk on every trade and every market. Once in, aggressive risk management until target is reached.

What happens if at the end of 10 days, you haven't made the grade? If you are behind the curve, we are aware. You can request private one on one mentoring at any time.

We then figure out why you are not on schedule. Because Traders around the world, even those with no experience have proven our definable edge sufficient, we simply need to isolate your issue or misunderstanding and then we work you through it. Once you meet the criteria and your personal confidence has been restored, we get right back on the horse.

At this point we have:

A clearly defined goal
A realistic goal ($100 per day)

You are now going to earn $100 per day (in 10 trades or less), trading 1 contract with real money, until your account balance has increased by $2,000.00

I want you to step back at this point and understand what an important milestone you have reached and the full scope of your achievement. The amount of time it has taken you to reach this point is not important. You are building life skills that will serve you for the rest of your career, and if managed properly, will serve generations to come. In an industry where some traders earn 8 figures and 90% of those who want to become traders fail. You have made the cut. You’ve crossed the line. You are no longer just some guy or gal with money in an account somewhere; you are a trader. Smile, take a deep breath, and walk in humility.

Once you increase the balance by $2k, you get the green light to add a second contract. No cheating. No money from Aunt Ida (love you hon, no offense), no 401k money, you must earn it trading Emini Futures. You do want to become a Trader right? You do want to own and operate a Trading Firm correct? Good!

Now you are up to a daily gross income of $200. Some of our Traders in the Philippines and other places, can live like a King on $200 a day. Doesn't matter, as long as you continue to make your daily goal of $100 per contract, you will add 1 contract every 5 weeks. Every additional contract is funded not by outside sources, but by money earned in the market. You know what that does? It moves you from the 90% line into the 10% line. You know what that makes you? A Trader.

Not just any Trader, but the Founder and Owner / President / CEO of a Successful Trading Firm. When we are done you will be in the top 5%. Your designation will be based on the structure set up by your CPA. Yes during the process of writing both your Business Plan and trading Plan, one of the steps was to hire a CPA familiar with whatever you plan to trade. Futures receive preferential tax treatment, but the structure and implementation procedure must come from a licensed CPA. When hiring, interview 3 and make sure you only consider those who are also licensed to practice before the IRS. If there is ever a question, you want someone already familiar with your business structure standing by ready to meet and discuss matters n your behalf.

3) Goals Must Be Attainable

This is very similar to having a realistic goal. For the goal to be attainable, it must be in your wheelhouse (to use a little pop vernacular). In other words, the goal is only attainable if it falls within your scope of capabilities. The good news? Based on how you were trained, step #3 is practically already in place.

Your clearly defined goal was to earn $100 per day, in 10 trades or less. Correct?

Your clearly defined goal was also a realistic goal. Correct?

Had you stepped in with some of the half-hearted but well-meaning goals we discussed earlier, you would probably still be struggling or out of the game by now. Had someone encouraged you to pursue an unrealistic goal of a million dollars in your first year, you would have probably spun out of control and blown up your account.

At this point, you’ve almost met your goals and honed all the necessary skills. You defined a realistic goal and attained it.

There is a 4th and final step to successful goal setting. Please keep in mind that just as we walked through these steps as they apply to E-mini Futures Trading, this structural foundation will work in every area of your life, from being a better steward of your resources, to running a marathon.


4) Goals Must Be Measurable

Unless you can measure your progress, how will you ever know when you arrive? It’s that feeling of accomplishment that comes when you plan your work and work your plan. Did we not measure each and every step of our progress on this journey to becoming a successful trader? And when things didn’t measure up, we knew exactly what to do. We did not get discouraged, we did not get depressed and no computer monitors were harmed in this goal setting exercise.

Now that we’re here, not only will you continue to measure your success, but over time using the exact same method that got you to this point, you will probably choose to raise the bar. If there’s a setback, you will know exactly how to handle it and how to get right back on track.

The 24/20 Blueprint we use in our curriculum is designed to take you from 1 contract to 20, in 24 months. No pie in the sky, no smoke up the chimney, no unrealistic expectations. This is Step #1 in building a vey real Successful Trading Business.

(I'm going to stop here for now. I have much i would like to share, but I want to give the moderators an opportunity to let me know if I've crossed the line. I don't ever need to mention the name of my company. I'm sure the clever guys can figure it ut anyway. I was simply grieved to see that someone was "informing" you that owning and operating a successful Trading Firm is not a reality. I wonder what the boys at GS would say about that? I'm not their fan by any stretch. If the moderators tell me to proceed, over the next few installments, I will walk you through what you need to know. BTW - Wall Street has a new address - YOURS!

Definable - Realistic - Attainable - Measurable



Moderators, standing by...
I make a reasonable amount of money in the currency business. I usually don't go for big investments. I use this field as a secondary money source. I too think tof Forex as an unreliable income source. But it is not a fake system too. It is risky as hell though.