Trading > Becoming a trader
Becoming a trader
Misconceptions about traders
When most people hear the word "trader" they picture someone sitting in front of a computer clicking 'buy' and 'sell' every 30 seconds. This is largely a myth because people completely underestimate the amount of time spent analyzing the market. Most traders probably spend 95% of their time figuring out what to do and 5% of the time actually doing it.Some people think that short-term traders don't do much analysis either because their positions are so short that they don't need to do much homework but they also spend most of their time doing research. Even day traders (the traders that do the most actual "trading") do a lot of analysis. Their analysis is the kind of analysis where there is less number-crunching and research but they have to constantly process incoming data.
Becoming profitable
Anyone who attempts to trade for a living will probably undergo losses for the first couple of years. This is especially true for traders who don't have a good mentor, which most don't have. It isn't even unusual to sustain small losses for up to a decade before getting control of your trading.It isn't unusual for beginning traders who suffer losses during their initial learning period to receive, and have to endure, the disapproving looks of long-term investors. "If you just invested the smart way, then you wouldn't be losing money."
In trading, there is a non-linear relationship between competency and returns. The break-even level of competency may be an "8" on a scale of 1 to 10. This means that if someone is a "7" then they will lose money. If someone is a "9" they will perform better-than-average. If someone is a "10" they may be very successful.
