Most trading platforms and so-called gurus avoid talking about the dark side of trading. They usually focus only on the benefits of day trading. As a result, many beginners underestimate the difficulty of becoming full-time traders. They fall for the dream of leaving the 9-5 rat race and making big bucks with stocks or forex. Here are some reasons why becoming a full-time trader might not be the best “career” goal.
It’s a zero-sum game
Because the cost of admission to the trading scene is so low, the participation level is high. You compete against some of the smartest people and sophisticated hedge funds as a trader. It is a zero-sum game where the money one trader loses is the profit gained by another.
Is trading gambling? Very close!
Without rock-solid risk management and discipline, trading is pure gambling. Even the brightest traders often lose. Add commissions to the mix, and you get a very risky endeavor.
You’ll be lonely
If you start a business, you can split the risks and the emotional burdens with your co-founder. But in trading, you execute alone. Chatting in a trading forum with strangers will have a limited effect if you blow your account.
Forget about trading on the beach
There is a popular cliché about traders enjoying trading on the beach. It’s a scammy myth. You will quickly get fed up with the sun glare on the screen, sand in the keyboard, and pain in the neck & back. You do need a proper and ergonomic chair for any serious work on the computer. Also, it’s totally unproductive and distracting.
It will be very stressful
Trading is emotionally very taxing. A roller coaster with sharp downs is guaranteed. As the famous economist John Maynard Keynes said: “Markets can stay irrational longer than you can stay solvent.”
Long learning curve
Learning to trade can be overwhelming. There are thousands of books, youtube videos, and courses. And, even when you find the best materials, it takes a long time to master the craft.
Glued to the screen
Another common myth is that you can “trade anytime.” In reality, once you become dedicated to trading, the markets dictate your daily rhythm. Most full-time day traders are glued to the screen for at least 8 hours a day, and the news days can require 10-12 hours of monitoring, or the next few weeks could be shooting in the dark. Of course, swing trading and other longer-term trading styles offer more flexibility with screen time. However, if you ever open a $5,000+ trade, you’ll see how hard it is to avoid monitoring it all the time.
You still need a safety net
Due to the unpredictability of the markets, if you want to reduce anxiety, you need a more reliable source of monthly income to pay your bills. Most traders eventually realize that they need an additional source of stable income. That’s why you see so many traders selling books and courses. Because it’s tough to make a living trading alone.
Does trading add any meaningful value?
Whenever you choose how to spend your time, it’s worth considering what value you will add to the world. If you think about it, trading does not add much value to our collective existence or the planet in general.
There is a high chance you’ll lose money, and even if you make profits, it will be at the expense of less lucky traders on the other side of your trades. It is quite a selfish pursuit, actually. So, if you manage to make loads of money with trading, you should probably consider giving back to the community in other ways.
Ok, but can investing be meaningful?
It sure can. You can invest in companies that are helpful to society or simply bring pleasure to their users and treat their employees well. By investing in such companies, you help them grow, and if they continue growing, it can be a win-win for all parties. They get more capital, and you get a share of their profits through dividends or stock price growth.
Learning the principles of trading is useful. You’ll discover the psychology of markets, the principles of the macroeconomy, geopolitics, and much more. This knowledge will be valuable also for investing and business. So should you aim to become a full-time trader? The statistics say that most likely not. However, there are always exceptions.