The 6 Things Traders Need to Make a Living


It’s easy to become a trader. Just open a brokerage account. Click buy. Click sell. That’s a trade, and you are a trader. But can you make a living from it? Or is it just a convenient home casino?

Most traders want to make a living by trading. Yet, most of them cannot do it. This is because it is hard, and there are many things you need to trade for a living.

Here are 6 of the most important.

#1: Passion For Trading

You must enjoy trading and love the challenge it presents.

Trading involves losses, failures, and desperation. You will experience them in your trading career. Without a passion for trading, it is impossible to weather such emotional turmoil.

When the going gets tough, it is what you really want that keeps you going. Do you want it enough to stay gritty?

#2: Trading Edge

A trading edge is what you use to find trades with positive expectancy.  Out of passion, you are willing to sacrifice your time and effort for trading. But without a trading edge, you cannot expect to trade for a living.

Finding a trading edge is difficult. This is because trading edges are fleeting, and hard to confirm. You will spend half the time searching for a trading edge. Then, you will spend the other half of the time in self-doubt.

Use technical analysis, fundamental analysis, or a mix of both. The key is to find a trading edge that gels with you.

#3: Business Mindset

Many new traders see trading as a simple action or an ongoing activity. But if you want to make a living, you have to treat trading as a business.

It means researching, evaluating, and deciding on your trading options. It means having a trading plan. It means hard work and serious decisions.

This trading business checklist is for you.

#4: Discipline

You can have the best trading system and trading plan. But they are useless if you don’t follow them.

You will be tempted to flout your trading rules, take on more risk, and give in to your emotions. At times, you will go with the irrational flow. And this is how traders go bankrupt.

The slightest lapse in discipline is dangerous and can ruin a trader. To trade for a living, you need ironclad discipline .

#5: Independent Thinking

Trading is an independent activity.

You are responsible for all your decisions. Sure, you can follow your mentor blindly, blame your broker, and lament your losses.

But at the end of the day, you are responsible. This is because you are free to choose and decide every aspect of your trading.

You do not have a boss to confirm what you are doing is right. You do not have clients to offer you immediate feedback. The trading forums have 1001 diverging views on 999 trading strategies that might or might not work.

In the face of information overload, you are free to choose your trading path. If you are not fiercely independent, you cannot expect to trade for a living.

#6: Financial Security

You want to trade for a living. The irony is that if you need to make a living by trading, you cannot do it.

If you want to make a living by trading, but do not need to do it, your chance at succeeding is much higher.

Reduce your financial pressure to succeed in trading. If you must make money, you will feel frustrated when there’s no trading opportunity. This frustration will cause you to over-trade and deplete your trading capital.

To maximize your chances of trading for a living, you need to save up. Establish your financial security through other means before trying to trade for a living. Knowing that you don’t need your trading profits to pay the bills is a huge plus. It helps to focus your attention on trading well in the long run.

Want to trade for a living? Let us help

Passion – Read the Market Wizards series. Can you relate to the passion of the successful traders Jack Schwager interviewed?

If you’ve read the Market Wizards series and enjoyed the interview-style sharing, you will also like Momo Traders: Tips, Tricks, and Strategies from Ten Top Traders, which contains interviews of successful retail traders.

Edge – Get a trading edge with one of the technical trading strategies covered here.

Business – The ultimate trading business plan.

Discipline – The Disciplined Trader describes what discipline means in the context of trading. A solid first step.

Independence – What do you think? Do you really want to trust us?

Money – Save up for the financial cushion you need to trade without worries. This website, although aimed at Americans, has useful resources for everyone thinking of ramping up their savings.

The Flying L Trader, July the 12th 2013

Art of WarCan it be Applied to Trading?