The Path to Becoming a Full Time Trader
There's something about trading for a living that's always drawn people in. It's one of those rare and special professions that can actually meet the criteria of being the ideal job because it offers so many potential advantages, but it's also important to be realistic on what's involved in becoming a full time trader as well.
For many the pursuit of trading at an elite level is all about realizing "The Dream". What that means is different for each person but it's usually about finding some kind of fulfillment that is lacking in their current work or profession.
For some it's the freedom of not having a boss or a set work schedule, for others it's having the flexibility to work from home and spend more time with the family, while a handful see trading as an opportunity to travel the world and take their work with them wherever they go. Of course, many people also find themselves drawn to trading simply for the financial reward as the possibilities are near limitless with skill and consistency.
The potential for total financial and career freedom as a professional trader is just as compelling for aspiring traders now as it was for me well over a decade ago. While it's absolutely possible to achieve those goals it's also important to realize that the path to become a consistently profitable full time trader will not be an easy one and has its share of challenges to navigate. It's essential that you're properly prepared for the task ahead.
There's No Free Lunch
Becoming a full time trader isn't about getting rich quick or taking shortcuts to find the easy way to success, even if that's initially something that draws many to the profession. If "easy money" in just days or weeks is your goal or you don't want to put in the effort and time required to develop a new skill then learning to trade probably isn't the best fit for you Nobody becomes proficient at playing a musical instrument or competing in a new sport overnight, and trading is no different.
Like most professions, trading rewards those who work hard and have a vision for what they want to achieve. It offers near limitless potential to those traders that are able to identify their strengths and reinforce them, that can confront and learn from their mistakes, and that have the humility to understand that there is always room to grow and improve both professionally and personally.
Having known a lot of aspiring traders over the years I can say with certainty that the trading world is very, very effective at weeding out those who aren't serious about their own self-improvement and their ongoing skill development as traders. Dabblers need not apply.
For those who are sufficiently motivated and determined to succeed, the path to becoming a trader is about having a clear development plan and being focused enough to keep pushing forward until you reach your trading goals.
Personal and Professional Development as a Trader
Becoming a professional trader is a challenging task, as most things worth doing are, but it's possible to navigate around many of the pitfalls of trader development through a combination of good planning, focus, and by thoroughly educating yourself on the markets before putting your account on the line. There will be inevitable challenges along the way but building your skills as a trader is really no different than developing any other skill.
There can be minor setbacks, there will be plateaus at times, but there will also be periods of incredible growth and profitability as each new level of development as a trader is achieved. If you can remain focused and stay on the path other professional traders have taken then it won't be long before you can look to transition into full time trading yourself.
So given that there's no easy path without commitment and focus, the question for those aspiring to be full time traders is "what will make the effort worthwhile?" If you're like me then much of the passion for this business simply comes from always having fresh challenges and being able to continually learn and grow. Trading the markets is partially a puzzle to be solved but also an incredible test of self-discipline and trust in your own plan. Being able to come through those challenges successfully can give an incredible amount of satisfaction on its own. The profits are almost a bonus!
For many aspiring traders the benefits are all about having professional freedom. This might mean being able to work for only an hour or two in the mornings to spend time with the family in the afternoons. Or being able to take Mondays off every week so you can focus on other projects or hobbies (my preferred approach). It can even just be having the flexibility to escape for the summer and take some time off without having to plan your schedule around it. You're the boss so it's up to you.
Others take their career flexibility to another level by taking their work with them as they travel around the world, as anywhere that you can find an internet connection for your laptop instantly becomes your mobile trading office. While we are now transitioning into a much more connected and online working world, the freedom of trading is still something few other professions offer.
Becoming a Full Time Trader
Whatever your ultimate trading goals may be, it's the journey along the way that truly matters. In order to make sure you survive where others have failed it's vital that you stack the odds in your favor by taking the best possible approach. While the path to achieving your trading goals is not a straight line and will see ups and downs along the way, there are a number of key elements that can make the journey far smoother.
There are clear differences between the approach of those who are new to the markets and those who are consistently profitable professional traders so it's a good idea to emulate those who have come before and have successfully become the type of trader you want to be.
Setting Realistic Expectations
This is the most common trap out there for aspiring traders and devious marketers of trading programs know it. They promise 1000% returns every week, $10,000 per day, and millions in your first year. While there is nothing in the trading game that is truly impossible to achieve (sometimes through skill but occasionally through pure dumb luck as well), these attention grabbing claims are usually very unrealistic for the total market newcomer.
These poorly aligned expectations encourage traders to take on too much risk too early in their search for huge, instant profits. The resulting combination of greed and anxiety often completely destroys a trader's efforts by leading them into poor trading decisions. They simply don't have the experience, confidence in their trading edge or emotional tools to deal with taking on that kind of risk so soon.
The market veteran no longer thinks in terms of potential profits, but instead prefers to focus on risk and the proper execution of their plan. They know if they control these aspects of their trading then the profits will naturally result, so it's best to focus their efforts there. They don't over-leverage their positions or take trades outside their plan because they are know that keeping their risk manageable and building consistency is what will bring them better results over the long term.
Becoming a full time trader is similar to developing any other skill - it takes time, effort and determination to reach your goals. If you are willing to apply yourself to a set path that focuses your trading development and you stick to it, you will reach your long-term goals. There will be good weeks and difficult weeks, but over time your consistency will improve until you are the type of trader you originally set out to be.
Stick to the Trading Plan
It's vital that when you start trading that you have a clearly defined plan. This means having a trading system you are confident in, but also the focus and determination to follow it and stick to your rules.
You need to know the setups you're looking for, how you're going to get yourself into those trades, and what you're going to do if price moves in your favor or against you. While having some flexibility is useful for experienced traders when managing trades there is really no excuse for taking a trade with no real plan at all and risking unnecessary loss.
It's easy for novice traders to let their emotions get in the way of their trading which leads to losses that are too large and wins that are far too small. By keeping your discipline and following a plan with well-defined rules you will be able to counter some of these emotions and build your confidence as a trader. Confidence is a vital element to long-term trading success, and without structure to your trading it will be extremely difficult to develop.
Honestly Review Your Performance
This is a crucial element of trading development that is far too often neglected. If you don't take the time to thoroughly review your trading results it's extremely unlikely that you make large leaps forward in future weeks and months.
One reason that many market newcomers don't fully review their results is because they are embarrassed to confront their losses. They feel that somehow a single losing trade is a reflection on their ability as a trader, their intelligence or even their own self-worth.
A professional trader knows this couldn't be further from the truth. Losses happen to all traders, but what separates those who make a profession out of trading and those who don't is that the consistent full time trader carefully analyzes all their results and adapts as needed. They embrace their losses if they fit within their trading plan and were good trades than simply didn't work out. If those losing trades were poor decisions or errors upon review, then they see them as opportunities for growth and improvement as a trader.
Master Your Trading Edge
Another all too common trait of novice traders is something called "system hopping". Many new traders have an extremely narrow focus when looking at their results and the first time they have a small string of losses they suddenly jump ship to another trading system, looking for the new Holy Grail of trading that will never have a losing trade again.
Of course, this perfect trading system doesn't exist which means that this patterns repeats itself over and over. Since the trader is jumping to something new at the first sign of trouble they are essentially always moving to a new trading approach when their results are hitting a new low point. They go from one low to another and eventually this leads to a complete account implosion.
The experienced trader knows that a single trade or a single day is unimportant in the big picture. They take a broader approach, understanding that they need to look at a larger sample of trades if they want something that is statistically significant.
They know that having a positive trading expectancy over those larger samples is the way forward. That knowledge gives them confidence to stick to their plan and to trade their setups even when they have a difficult set of trades or a day or two that doesn't go their way.
Through a combination of a solid trading plan, a well-tested system and a thorough trading education (through self-study, experience, books, courses, etc.) they have the confidence to stick to their methods and allow their trading edge to come through.
The Importance of Money Management
Many aspiring traders stumble on their path to becoming a professional and far too often it is due to poor money management. Money management is a topic that deserves a few articles on its own, but suffice to say that it is a crucial part of any trader's plan and without well thought out rules to define your trading risk you will only set yourself up for trouble.
The professional, full time trader knows that managing their risk is the most important element to their success. They understand that making money can be easy at times but recovering from a large draw-down of their account is very hard.
For this reason they keep their maximum risk on any trade within their personal comfort zone and focus on trading opportunities where their reward to risk ratio is high. This allows them to thrive over the long term in their day trading career.
While I personally think it's best to keep risk within 1-2% of a trader's account on any one trade, I've found that many longer-term professionals actually risk far lower than that as their account size increases. In short, as they become more successful they focus much more on limiting their draw-downs than on maximizing their potential profits.
The STA Development Philosophy
A lot has changed in the world since I started Samurai Trading Academy years ago but some things remain the same. There's still plenty of profit opportunities to be found but it's still difficult to navigate the trading world as there's plenty of misinformation online as well.
Especially in recent years the rise of the "YouTuber" seems to have only added to the issue, as there's dozens of channels out there telling you how to trade things like MACD/EMA crosses or some other indicator combination, but precious few that actually share any real trades or discuss the difficulties of entering and managing trades in real-time. If you want to learn the basics of technical analysis there's some amazing resources but if you want real discussion on breaking down charts and managing trades there's not much to be found.
Indicators are a great tool and help give a trader a good signpost for where they are at the moment but without proper context they don't mean all that much. And that seems to be what most trading resources are about - all about that new fancy toy but no context on how to use it.
When I first started in this business as a Forex trader almost fifteen years ago it wasn't really all that different as there were plenty of "never lose" trading approaches that turned out to be complete nonsense in actual trading conditions. I spent dozens and dozens of hours digging into forums to try and find the nuggets of useful wisdom that I could apply to my trading. It was an incredible amount of work and over time I became quite good at separating the wheat from the chaff, but it wasn't exactly an efficient path to trading consistency.
It's precisely because of those challenges that I went through that I've always tried to take a realistic view on trader development through this Emini S&P 500 futures blog. It's not always easy, you need motivation and focus and it will take some screen time.
There's ways to accelerate trader development through coming across good resources, adaptable trading systems and quality advice. But there's also no substitute for putting in some time and effort to really understand how markets move and how to trade them effectively.
Ultimately, if you want to become a full time trader then you need to be prepared to commit to the full learning and development process, "warts and all". It won't always be easy but learning and overcoming your sticking points will be immensely satisfying,and if you persist then the sky is truly the limit in this profession.
- Strike While The Iron is Hot - March 1, 2021
- The Path to Becoming a Full Time Trader - February 22, 2021
- Looking to 2021 and Beyond - January 20, 2021
It’s great that you talked about becoming a professional trader. Recently, one of my cousins mentioned he’s been getting into investing and trading strategies. My cousin wants to learn more about trading before deciding whether he wants to become one or not, so I’ll be sure to share this article with him. Thanks for the information on trader development and how trading education it’s vital for it.
Thanks for passing it along, Eli! It’s hard to know if day trading futures will be the best fit for him or his goals but hopefully this article at least gives a bit of perspective on the process involved in doing this full time.
Awesome post! I have been working towards becoming a full time day trader for about two years now. I feel I am making progress but not there yet. The journey is enjoyable though!
Thanks, Karl. The path to going pro is no doubt a difficult one and can take a while. If you’re taking the self directed approach you will still reach your goal but there will likely be a few more ups and downs. My best advice is if you know a good trading professional then see if they can mentor you – it will take months/years off the learning curve.