Think Like A Trader Blog

Monday, 6 July 2015

Is trading Forex and Indices difficult?

Is trading Forex and Indices difficult? I’m asked this question frequently. And I think that if someone is going to answer that question, then a little background information is in order. I mean, if I’ve lived the life of a pampered Saudi Prince, what right do I have to weigh the difficulty of trading as a career? I’m sure it’s more difficult that being flown around on a private jet everywhere, but that isn’t what you’re asking, is it?

So, background – I like to believe that I know what hard work is. In my previous life I would often work 100+ hours per week. My longest single shift was 44 hours straight with four 15 minute breaks. That was in the building industry. Worst experience? I was working such long hours, with so little time between shifts, that my body wasn’t getting enough rest and my work boots didn’t get the time to adequately dry…I developed trench foot (yuck, right!)

So yeah, I like to think I know what hard work is.

And is trading difficult? Would I say sitting in a comfortable chair, pressing a button to go long or short in the market is more difficult than all of that?

The simple answer? You bet your ass it is!

Trading is by far the most difficult practice I have ever undertaken and I know this to be true for pretty much everyone who enters into the arena.

Why is it so difficult? Because there are no rules. And it attacks your mind on a full frontal attack, cavalry charging right after the cannons have cleared the way.

The learning curve is steep. You will read over and over again that 95% of traders fail. That means they quit or, more likely, they run out of equity. 95% is an enormous failure rate. 

You can be sucked into the screen, into something I’ve come to term as ‘Tunnel Vision’ (more about this and how to combat it in future posts). This is a place where all sense leaves you. You will revenge trade. You will buy high and sell low. You will become enraged. Greed and fear will take over. You will become upset. You will watch your account dwindle and when you sit back at the end of it all you wont know how it happened.

A normal career has a training period. University. Apprenticeships. Whatever it may be. With trading it can last for years. You may never pass into the realm of becoming consistently profitable. But you WILL lose money in that training period, that is for certain. And that is very difficult to handle.

People come to the markets expecting to master it in a month or two. It wont happen. These ‘specialist’ four week training programmes that promise you profitability wont work. Because it’s not the ‘system’ that makes the trader. It’s the mentality and the psychology. And that takes time and practice.

So why do it? Why go through all of that?

I can answer that easily. The first reason to pop into my mind happened only last week. My father messaged me asking if I wanted to go to the cinema with him to see Terminator (I know, we’re suckers for action films!) I didn’t need to think about the response. It was yes. I closed my laptop without concern and I went to meet him. There was no boss to answer to. There was no worry about missing a trade. There was no feeling of guilt.

Trading can give you complete freedom. And if you’re not working for the freedom to do the things that you want, when you want to, then what exactly are you working for?

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