What you have to understand is that you're competing in
an environment full of very talented, smart and highly motivated competitors.
The guy on the other side of the trade, is as eager to make money as you are.
This forces you to constantly improve your trading and adapt quickly. If and
when you stop, your competition won’t, and they’ll quickly be ahead of you. - Marco Mayer (source:
Tradingeducators.com)
Trading is one of the toughest and
the most difficult professions in the world, as well as one of the most
rewarding. The public hate trading because they feel it’s too tough for them.
“I am convinced that fewer than
one percent of all beginners go on to be and remain successful in day trading,”
says Dr. Brett N. Steenbarger. What about swing trading, position trading and
investing? The statistics may improve considerably, but they’re still less than
10% of all market speculators.
Members of the public shy away
from trading, even discouraging others who’re doing it, since they think it’s a
gamble. Then why not abandon trading and look for a job that guarantees a
paycheck every week or every month?
Recently, in one Asian country,
2.3 million candidates apply for just 368 low-level government jobs. The jobs
pay 243 USD (before taxes) a month and will involve making tea and passing
files between government offices. Requirements for the 368 jobs include having
finished primary school and being able to ride a bike. The applicants included
at least 255 people with doctorates and 150,000 graduates.
In certain lands, many a university
graduates receive less than 50 USD per month (less than $600 per annum).
In a country where population is
exploding, with more and more houses being built and new sites being cleared to
make way for housing, but fewer and fewer industries are established, what
would you expect? In a country where millions of people go to tertiary
institutions, graduating en masse every year, but fewer and fewer gainful jobs
are created, what would you expect?
The uncertainties in the world are
now greater than the uncertainties in trading: Companies downsizing constantly,
governments owing salaries, incomes getting slashed and slashed, the fear of a
sudden dismissal, economic changes that have adverse effects on small and big
businesses, etc. We’re living in hard times.
Many people are poor because
they’re looking for easy, guaranteed ways, to earn income. They don’t want to
take risks, and therefore, they choose trade, jobs, professions that make them
confortable. Millions of people rush into such jobs, thereby driving the income
lower and lower because the supply of personnel, workers, self-employed people,
and so on, is higher than the demand.
In such situation, the only means
of survival is to reduce what you’re paid more and more. Nonetheless, when
you’ve a career that too many people think they can’t do because it’s
difficult, you’ve the chance to demand a high pay. People won’t have a choice
than to pay – for demand for experts is very high and supply is extremely low.
If people are doing easy jobs, thinking
they must be well paid, employers/customers/clients will immediately get people
who can do the jobs/services better for lower pay.
The easier a job is, the more
people will rush into it, and the lower the pay will be. That’s the reasons why
most people who work for themselves and others remain poor. Take petty trading,
commercial tricycle riding, office assistants, etc., for examples. What other
examples can you think of? I was poor
when I was working as a private teacher.
The more difficult a job is, the
fewer people will go into it, and the higher the pay will be. That’s the reason
why those who can do those mentally challenging jobs are highly paid. Take
programming, astronomy, surgery, oil rig engineering, etc., for examples. What
other examples can you think of? I became financially free when I found a way
to trade Forex victoriously.
I know how much suffering going on
around me. People working hard, struggling every day, yet they’re poor. I know
those who’ve worked for decades, but have nothing to show for their many years
of labor, save for economic survival. I could’ve easily fallen into that lot if
not for trading which the Providence used to rescue me. I could be telling the
same story like many others who struggle, but remain poor.
In the year 2013, the 10th highest
paid trader went home with $600 million. Which company in the world would ever
pay you such amount of money per year ($50 million per month)? The 10th highest
paid trader didn’t get that huge income in one year because he’s a collection
of PhDs, but because he can do what billions of people can’t do – consistently
successful trading.
Pareto’s Law and Trading
The Pareto principle (also known
as the 80–20 rule, the law of the vital few, and the principle of factor
sparsity) states that, for many events, roughly 80% of the effects come from
20% of the causes; says Wikipedia
Originally, the Pareto Principle
referred to the observation that 80% of Italy’s wealth belonged to only 20% of
the population.
More generally, the Pareto
Principle is the observation (not law) that most things in life are not
distributed evenly. It can mean all of the following things:
20% of the input creates 80% of
the result
20% of the workers produce 80% of
the result
20% of the customers create 80% of
the revenue
20% of the bugs cause 80% of the
crashes
20% of the features cause 80% of
the usage
And on and on… - By Kalid Azad
(Source: Betterexplained.com)
Can it be said that 20% of the traders make 80% of the
profits?
One source says that there are
over 50 million active Forex traders worldwide, and the number is rapidly
increasing. But 1, 2, 3, and 5% or maximum of 10 % make money.
When talking about the number one
source of profits for traders, Dima Vonko, mentions that, our fellow traders, specifically
those who are less knowledgeable, less experienced or simply too slow on the
draw, can be a source of profit for us. Of course, the traders are out to make
money, but many of them will also lose money. Here we can profit by applying
better trading skills and better quality trading systems.
Retail Traders Also Have Their Advantages
There are always interesting
events that move the markets; which are major sources of concern to
investors/traders. In May/June 2015, investors were most concerned about
geopolitical crises. In June/July, they were worried mostly about the Eurozone
breakdown. In August, they were most afraid of China recession. That was what
was happening at the time of writing this article.
Traders like you and me also have
certain advantages over institutional traders. We can go long and short at
will, since we’re not bound as institutional traders are; although our freedom
to do what we like also has a serious demerit. We can open our small positions
without being noticed, unlike big players. We can move into or out of the
markets faster than institutional traders
Seeing Beyond Loss
In TRADER’ magazine (August/September 2015 edition, pages 30
- 36) Mark Minervini, who’s now a legendary trader, shares his success story.
When Mark began trading in the early 1980s, he endured a six-year period when
he did not make any money in stocks. In fact, he had a net loss. It was not
until 1989 that he began to achieve meaningful success. What kept him going?
Unconditional persistence! An investment in knowledge, which takes time to
acquire, is an investment in yourself, but it requires persistence.
Profits are only a by-product of a good trading plan. Try to
become permanently successful. Try to be smarter than millions of traders in
the world. You may ask: “How do I predict the markets accurately?” That
question can’t help you. If you ask, “How can I make money without being above
to predict the markets?” Then you’ll enjoy more success and popularity than you
could’ve imagined, making huge amounts of money.
Trading is the best and the greatest tool for financial
freedom. It’s better than any multi-level marketing systems. Please mention the
highest paid multi-level marketer in the world, telling me her/his annual
income. I’ll then tell you the annual income of the 20th highest paid trader in
the world.
When you’re able to prove your expertise with a small
account, you can be given a bigger account. If you show your expertise with the
bigger account, you’ll be given another far bigger account. Your portfolios
would keep on growing until you become extremely rich. You try yourself as much
as possible to attain enduring success as a trader. Ultimately, you’ll find it
difficult to believe how rich you’ll have become.
Conclusion: Andy
Jordan, also at Tradingeducators.com, says it is difficult to recuperate from
being "chewed up and spit out" by the markets. There are students of
the markets who are determined enough, who will not accept defeat, and who
started over again from the beginning of studying the basics, of sorting out
and discarding wrong mindsets, in order to face the realities of the markets,
and who learned self-control and how to run their trading in a businesslike
manner. In the process, they developed stronger character as well as better
skills, and emerged winners in the "game of life" and in the world of
trading.
This piece is ended with the quote below:
"What is the one sentence summary of how you change
the world? Always work hard on something uncomfortably exciting!" – Larry Page
