Sunday, May 31, 2015
Advice For Young Traders
Advice for young traders is popular hashtag right now on twitter (financial), I think it should be "Advice For All Traders". Regardless of how long you been in the business of trading you will run into many of the same problems that a young trader will. You will have stretches when you are not in tune with the market, you will suffer periods of draw-downs that can last days to months, your strategy might stop working and because of that you will be filled with doubt, etc... How you deal with these issues is more than likely what separates a young trader from a more experience trader. Young traders should think about these soft facts;
--"90% of traders fail" is a stat that gets thrown around quite often, more than likely its a made up stat. But if it is true, then these traders are failing in a market that has a tendency to go up. Since 1988 the SP500 has been up 22 out of 27 years, 81% of the time. Think long and hard as to why traders are failing in such a good environment, and remember that your biggest challenge in this arena is YOU. With these 2 stats in mind the next two points should hit home.
--There is something smart about doing nothing (when it comes to the indices).
--If you favor the short side, love shorting, wake up in the morning looking for next big short, etc..then I believe you have not found yourself as trader yet.
--Don't get caught up on; technical analysis is voodoo, fundamental analysis is guess work at best, etc...spend your time knowing what works within your trading time-frame. What moves stocks within 30 days is a lot different from what moves them for 2 years.
--Mentors are great, they allow you to reduce your learning curve. But, they also come along with personal baggage from endless battles with the market that you may not be aware of (I'm a little bit older and a little less bolder). If you learn one thing, just one thing from someone then its a win. However, remember that you must find what works for you in the market based on your beliefs and personality not someone else's. No different than finding your shooting stroke at the foul line.
--Get yourself a corporate job, take advantage of your 401k, Roth IRA, etc...Take advantage of time which is your biggest advantage in the market. Follow Cramer's advice, put your first monies into index funds and then tackle trading.
Photo; Roger Branch
"Frank began his career on Wall Street nearly two decades ago. He worked alongside some of the most respected traders on the street. He quickly realized his true talents were in his ability to interpret market technicals as well as behavior. He was a full-service broker until 2011 when he decided that his no-nonsense approach and expertise was better suited as an independent rather than under the reins of the brokerage business. Since his transition, Frank founded Zor Capital LLC and had successfully managed the portfolios of high net worth individuals. Outside of the cliche cookie cutter approach. His achievements and advice have been featured by CNBC, FOX Business, Yahoo Finance, Benzinga, Wall Street Journal, and CNN Money. Frank is widely regarded as an influential trader in the industry."