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View Full Version : Becoming a professional stock trader.



Chopstick
01-28-2010, 06:50 AM
For those of you who have thought about doing this, here's my story.

I had a big day yesterday. Perhaps the biggest of my life so far. I passed the FINRA Series 7 license exam. I have heard some say that it is an easy test. Sure, if you a twenty something year old with a degree in finance, it probably is easy. At 56 with a high school education, it ain't easy.

I am currently employed as a computer systems engineer and I work full time from home. I am responsible for the main production environments of several fortune 500 corporations. I am the guy that gets called at 3:00 am when they blow up. This has cost me several girlfriends over the years. It is also the main reason I am seeking another way to make a living. I am too old for this crap.

My company, like most of the industry has adopted a policy of moving all of the jobs offshore. It is only a matter of time before they get around to me. The only reason I have survived this long is because I am one of the top guys in my field and have been so for nearly 20 years. I am also paid as much as some of the executives above me so I know those guys have a missile lock on me at all times. One slip up and I am history.

So, I found a well established trading firm out in Vegas. They offer training for a reasonable fee. I have to become a member of the firm and I have to have a license. The training is five weeks full time split up into two week blocks. I have tons of vacation saved up. The firm does have a remote trading program. I do not have to quit my job to try this. Starting out I will only be trading market on open and market on close strategies. This is about an hour and a half a day. My company does have a flex time policy although I am not about to tell them what I am doing with it.

Factors in my favor.

I am being trained by established professionals, not some whiz bang internet trading academy.

I am not shooting on scared money. It is money I have saved up and set aside for this purpose. It is not all the money I have and I am not depending on trading to pay the bills. The buy in is 25k and I have two barrels.

The reality of the odds of success. The stock markets have been around for hundreds of years and these numbers have remained the same for all of that time.

Over 90% of the people who try to day trade will be busted flat in 90 days. That is solid as the laws of physics.

The attrition rate at the firm I am joining is 50% of the new people are gone in one year. The rate continues to be 50% for every year after that until 3 years. After 3 years they do not lose anyone. So out of a beginning group of 100 there will be 2 or 3 left after 3 years. 3 years seems to be the magic number for traders. If you survive that long, you made it. The is another phenomenon that blows out traders in the 3 to 5 year period. I don't know much about it. I'll worry about that later.

Am I going to be one of those guys? I don't know but I am going to find out. There is a saying in the markets. "Only the game can teach you the game and it will not spare the rod while it is doing it."

Qtec
01-28-2010, 07:18 AM
Congratulations C. Good luck.

Q

eg8r
01-28-2010, 09:33 AM
Good luck. I definitely suggest you make sure your new endeavor is not a conflict of interest (gotta love command media) with your current company. The worst thing that could happen is to lose your butt in the market and lose your "day" job on top of that. I really hope it works out for you though.

eg8r

Chopstick
01-28-2010, 09:45 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Qtec</div><div class="ubbcode-body">Congratulations C. Good luck.

Q </div></div>

Thanks Brother Q. /forums/images/%%GRAEMLIN_URL%%/laugh.gif

Chopstick
01-28-2010, 09:59 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: eg8r</div><div class="ubbcode-body">Good luck. I definitely suggest you make sure your new endeavor is not a conflict of interest (gotta love command media) with your current company. The worst thing that could happen is to lose your butt in the market and lose your "day" job on top of that. I really hope it works out for you though.

eg8r </div></div>

No conflict of interest but that does remind me of an excellent point. I need to pull our customer list. Almost all of our customers have their financial systems under our control. I have root authority over all of them. It could be a SEC "insider trading" violation because it is possible for me to look at their numbers before they are released to the public.

I had better make sure I never go near any of their stocks. The SEC would never believe that I never thought about it because I just passed a test certifying the fact that I do know about it. Holy Crap. I could go to jail and get millions in fines behind that, not to mention getting barred for life from the securities industry.

Thanks for reminding me.

Deeman3
01-28-2010, 10:12 AM
Chopstick,

A BIG Congratulations on yor achievment. You are right about day traders, I tried and you have to be at it 100%, plus have a great game, which i didn't. /forums/images/%%GRAEMLIN_URL%%/smile.gif

I hope you are wildly successful and I compliment your courage at doing this at 56. Hey, it's better than waiting until you are too old to mix it up with 'em.

Great Move, brother.

eg8r
01-28-2010, 10:41 AM
Staying away from their stocks is a very wise decision.

Good luck.

eg8r

Chopstick
01-28-2010, 10:44 AM
Thanks Deeman. I'm off to Vegas for two weeks training. Gambling doesn't interest me so it is a boring town to me. Any suggestions on places to hang out?

eg8r
01-28-2010, 10:50 AM
Slot Car City. /forums/images/%%GRAEMLIN_URL%%/smile.gif It is a blast.

eg8r

Sid_Vicious
01-28-2010, 02:59 PM
I'm unclear as to your trading format. Not day trading, I understand that, but if $25k is invested today, are you looking for some gain threshold, or are you looking to be some kind of long trader? I've watched some stocks which are good rolling average picks over the yearly charts, but you may get in a downturn and have to wait for the return back. Most likely you will see 5-15% in days or weeks many times.

As far as the conflict of interest and SEC, I kinda doubt your little $25K is going to be of much interest. I lived under restrictions where I used to work, blackout windows, and I KNOW some people there moved stocks around in the wrong times. Some people just have to brag. You want my real opinion! The totally law abiding people are the ones who feed the profits to the sharks. There are simple ways to slide under the radar, if your morals can stand it. Timid, overly legal minded investors are suckers. I was one. I don't trade anything today,,,all my money is tied up in living. sid

Deeman3
01-28-2010, 03:08 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Chopstick</div><div class="ubbcode-body">Thanks Deeman. I'm off to Vegas for two weeks training. Gambling doesn't interest me so it is a boring town to me. Any suggestions on places to hang out? </div></div>

<span style="color: #FF0000">I don't know if Mary Kenniston still has a pool hall there but she always made a pool player feel welcome.

Charlie, the one guy I would never, ever worry about snooping out a fun place in Vegas would be you, right behind Bill Clinton.

Have a blast. I'll tell DeeWoman you will save her a bar stool! /forums/images/%%GRAEMLIN_URL%%/smile.gif

</span>

Gayle in MD
01-29-2010, 05:19 AM
Best Of luck C. Might be a good idea to speak with an attorney first...

G.

Chopstick
01-29-2010, 03:00 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Sid_Vicious</div><div class="ubbcode-body">I'm unclear as to your trading format. Not day trading, I understand that, but if $25k is invested today, are you looking for some gain threshold, or are you looking to be some kind of long trader? I've watched some stocks which are good rolling average picks over the yearly charts, but you may get in a downturn and have to wait for the return back. Most likely you will see 5-15% in days or weeks many times.

As far as the conflict of interest and SEC, I kinda doubt your little $25K is going to be of much interest. I lived under restrictions where I used to work, blackout windows, and I KNOW some people there moved stocks around in the wrong times. Some people just have to brag. You want my real opinion! The totally law abiding people are the ones who feed the profits to the sharks. There are simple ways to slide under the radar, if your morals can stand it. Timid, overly legal minded investors are suckers. I was one. I don't trade anything today,,,all my money is tied up in living. sid </div></div>

It is day trading. No positions will be held overnight. Specifically, it is statistical arbitrage. The 25K is not an investment in the same sense as a retail account. I am a limited partner in the firm. I will be trading their money but I am still responsible for any losses. The firm wants you to have some skin in the game. In a retail account, for 25k I can get a 4 to 1 margin or 100K for a day trade. At the firm I will be leveraged up to one million or more.

My initial limits are 5000 shares long or short in any one stock and 10,000 shares aggregate. Any stock, any price, and any strategy I chose. I am allowed no more than 10% of my total account value in profit or loss per day.

The strategies I have chosen are market on open, market on close and pair trades. The easiest concept to understand, and the most difficult to master, is the pair trade. No one can out guess market direction. With this strategy you don't have to. There are certain pairs of stocks, Home Depot and Lowes for example, that move together. As the general market moves up or down both Home Depot and Lowes will move up and down together.

However, the market is not perfect. It has imperfections and inefficiencies. Every now and then Home Depot and Lowes will deviate from one another. Historical data shows that when these deviations occur market forces will almost always push them back into line with one another. If Home depot is outperforming Lowes on a particular day, the spread between will widen. The play it to short the out performer and buy the under performer. When the market pushes them back together in their normal relationship, you close out the pair. You don't care which way the market goes because both of them will go up or down together. It is possible to have a pair blow out on you, meaning that one stock will run away from the other. It comes with the territory.

You are only looking to pick up a dime on a trade. That doesn't sound like much but .10 X 5,000 shares, 5 trading days a week = $100,000 a year. There is a saying at the firm. There are five dimes in a day. Meaning there are five periods during the day when certain strategies make it possible to make a dime.

If you see Spiderman, tell him I passed. I haven't had a chance to talk to him in a while.

Chopstick
01-29-2010, 03:42 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Gayle in MD</div><div class="ubbcode-body">Best Of luck C. Might be a good idea to speak with an attorney first...

G. </div></div>

Thanks. I notified the firms compliance officer. I haven't heard anything back. Plus, speak of the devil, my primary customer just sent out a formal security policy document today stating that any market sensitive financial data will be encrypted and not allowed on the general network where I work. So, I have that and the fact that I made full disclosure and will not trade in their stock. I think I'm covered.

I really did not expect to hear from you since it is my ambition to become one of those eevil Wall Street fat cats. Actually that is not my ambition but I wouldn't turn it down if it happened. I am just looking for some income to be able to take care of myself when I get older.

I am however going to be working with a direct order terminal plugged right into the heart of the anti-christ, Goldman-Sachs. Remember that prop desk at Goldman that Obama keeps talking about. Yep, Obama has his shotgun pointed directly at me. Even a tiny tax would put me out of business before I even got started. I am not working for Goldman but we trade through their system.

There are only 5,000 licensed proprietary traders who trade for their own account in the USA. There are more traders than that but they are mainly just taking orders from customers and placing them. Well Monday morning 8 am eastern time, there's gonna be 5,001.

Gayle in MD
01-31-2010, 07:37 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">I really did not expect to hear from you since it is my ambition to become one of those eevil Wall Street fat cats. </div></div>

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Re: Becoming a professional stock trader. </div></div>

Operative word, "professional"....

Those who brought down our economy, were not professionals, IMO. They were crooks. IMO, they should ALL (The CEO's who were at the top during the scams) be in jail. The Government should be convicting them, and taking every penny they bilked Americans out of, before they resigned and headed for their gated, electronically protected, residences.

Again, good luck.

G.