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John Forman - The Essentials of Trading author
I’ve written on several occasions about the considerations involved in trading for a living andtrading full-time. Most of what I talked about in those pieces was the financial and performance aspects of it all. James Altucher, though, looks at things from the other side of the equation in his post 8 Reasons Not to Day Trade. Here’s the list.
Altucher suggests that most day traders will suffer a bad patch that will make them suicidal. While things may not be quite that bad, the psychological impact of poor performance can definitely be destabilizing.
I actually see this as one side of a two-sided coin. The other side is not getting enough exercise, which tends to be more my problem. Sitting at a desk for hours on end is definitely not conducive to keeping a narrow waistline.
I can speak from experience here. Staring at charts all day definitely does my eyes no good and can sometimes lead to major eye fatigue. I do try to set up my desk configuration to the least stressful setting possible, but the hours still add up.
No Social LifeThis one is a bit of a mixed bag. Sometimes trading war stories can improve your social life. Altucher’s point, though, is that you’re so focused on the markets that you really don’t want the distraction.
Blood PressureWe all know how stressful trading can be. Add in a poor diet, a lack of exercise, and not getting out into the world of real people and you definitely start ticking those check boxes for risks of a heart attack.
Let’s face it. Trading can be very financially rewarding, but it’s not very productive in the grand scheme of things. Traders face this question all the time. Michael Lewis talked about it in his book Liar’s Poker. (If you haven’t read that one, by the way, I strongly recommend it.)
No CareerDay trading is very unlikely to be beneficial to any sort of career you may want when you decide you can’t take it anymore. Networking is limited since you have no social life or co-workers (although Currensee certainly alters that equation!). You don’t develop any marketable skills or have any demonstrable achievements you can list on a resume.
It’s ImpossibleThe odds of being a successful long-term day trader are very, very low. The burn-out rate is high for exactly the reasons mentioned above. This is true for institutional traders just as much as individual ones. You just don’t see that many “old” full-time traders.
Now, of course, trading for a living doesn’t necessarily mean trading full-time. I’d contend that it’s better if it isn’t. Certainly, there are those who are well suited to the full-time gig. I can think of a guy I worked with who’s just a natural, but he also has a lot of outside interests to keep things fresh for him. He’s not all markets all the time. The point is, don’t feel like you have to dedicate all your waking hours to the markets. You don’t, and if you try to there are consequences.
Struggling with support & resistance and knowing what the key market levels are? Check out the Price Distribution Analysis methods I use.