The first step we cover during our interviews with candidates for a position in our NYC office is a series of questions designed to discover a trader’s motivations and goals for entering the business of short-term stock trading.
As we cover the questions, we recommend you write them down on a separate sheet of paper and answer them for yourself as honestly as possible. Your truthful answers could make the difference between opening and committing capital to a rewarding business venture vs. opening a business that will be fighting your personality and temperament on a daily basis.
- Why are you entering stock trading as a career? Why did you choose this career choice over other options you were considering?
One of the most common answers we get to these questions is that the potential trader wanted to be his own boss, wanted to make his own hours. And, of course, unlimited income potential.
The differences between traders who we see succeed vs. the traders who are gone from the business after only a few months are quite obvious. The traders who succeed want to learn a skill that will enable them to earn a consistent living, and if they perform well, a nice living.
The traders who do not succeed get frustrated easily because they are not learning. The reason they are not learning is because the’re trying to make money from the very first day.
Said another way, successful traders have a growth mindset.
When you decide to become a trader, the proper perspective is to look at the big picture and not the first few months. If you speak to experienced traders about new traders getting frustrated after a few months they will laugh. If you truly want to make it a rewarding career, consider where you will be a year from now compared to your other choices. It will help you keep the learning curve in perspective.
- How much time and capital are you going to commit to the business?
Keep in mind at all times, there are no minor leagues in trading. If you are going to succeed at short-term trading, you must come in early to read the news and stay late to review your day. You must keep a journal, read blogs from other traders, and prepare for tomorrow’s trading today by doing proper homework on the stocks you trade. We say you must turn one day into ten.
This is the minimum commitment. I know you have the time; you just need to be organized.
When it comes to capital, there are two considerations you must make. The cost of learning to trade and the funding necessary for the trading account. A solid trading education is one where you can learn and be mentored by active traders who are currently making money. The cost of trying to learn on your own will make for a very long learning curve. In my new book, The PlayBook, there is a wonderful passage (There is Always a Market Tuition) that walks you through the financial education commitment for traders. It never ends and you always must be learning.
We can tell you first hand that most traders will be penny wise and dollar foolish when it comes to a good trading education. Funding capital is obviously important. Unless you trade for a prop desk like ours, you need to fund your business with risk capital, not with money you need to pay next month’s rent.
- What skills do you have from other areas of your life that you can bring to trading? What skills do you need to learn?
Are you analytical? Do you like to do research? Are you good at making quick decisions or do you always need more information? Are you bored easily? Do you treat money in your personal life as if it was precious capital or do you spend like there is no tomorrow? Are you disciplined or lazy and indifferent? Trading shines a bright spotlight on who you are as a person that seeps into your trading.
The honest answers to these questions will help you decide what style of trading you will take on and how you will manage risk. Someone who enjoys making quick decisions will make a good scalper. Someone who is analytical will probably want to make fewer trades.
I can tell you from experience the number one skill new traders need to learn is to make good decisions, One Good Trade at a time. At SMBU we say One Good Trade and then One Good Trade and then One Good Trade.
And the only way to learn this skill is to actually place live trades so you can learn to trust yourself to make good decisions. This is where confidence comes from. Most new traders think they need to learn the technical stuff to succeed. Trust me; you need to work on the mental stuff first.
- What are your long term goals? How much money per year would make you feel satisfied?
If you are currently earning $75,000/year and want to make $100K as a trader, I say go for it! Your long term goal is obviously to make money and to make shorter milestones along the way to boost your energy as you pass them. I will be gross positive by month three. I will be net positive four out of five days. Get creative! Long-term goals are met by short-term actions. Make it a goal to learn something new every day.
You can be better tomorrow than you are today!
Bella
no relevant positions
