Thursday, September 10, 2009

Deciding to Give Up Trading

I recently heard from a reader who decided to stop trading, because he wasn't making money at it over time and because it was taking a toll on his well-being. He indicated that he found it sad that he couldn't find success as a trader and that he felt something missing since leaving the markets.

If research is correct, the majority of traders ultimately find themselves in a similar position. It is with trading as with sports or the arts: many people participate, but few are able to craft an ongoing livelihood from their talents. Trading for a living takes much more than people realize.

Still, leaving the trading arena can feel like giving up. It can feel like a failure.

To me, it is like leaving a relationship that hasn't been working out. It is difficult to say goodbye, but the loss paves the way for finding the right partner. Before you marry anything--a person or a career--it makes sense to ensure that the choice is right for you.

When I spent a portion of 2003-2004 as a full-time trader, I made some money, but found that the daily daytrading grind wasn't for me. To my surprise, I intensely missed the stimulation of working with people as a psychologist and teacher. Here I was, personally and financially ready to pursue something I loved--and I found out it wasn't really fulfilling for me in itself.

So I learned to trade the morning hours and got the opportunity to apply my greatest interests in psychology to work with traders on a full-time basis. Out of that came my second career as a trading coach, this blog, and my recent books.

Had I not "failed" as a full-time trader, I would have never found my full-time niche.

Many times we fail at something--work or a relationship--because something else better fits our interests, values, skills, and talents. The key is embracing the "failure" to learn from it: to figure out where our greatest strengths lie.

If a path is true, it's probably one that you're already walking, though you may not realize it. It is so much a part of you, that it lives itself through you in some shape, manner, or form already. In losing a full-time trading career, you may just find yourself.


GD said...

I'm on my two year trading and I haven't recover my investment/capital but I am not giving up for trading is a long term endeavor. It takes time to learn how to trade. I consider my losses as a "tuition fee", it's like going to school. My reason I'm still trading despite my losses because I only trade in small "shares", not trying to make money first instead learning the process. Once I learn the process (of trading), that's the time I can/look to recover my effort. Your post gives some importance about my struggles too.

Seth said...

Don't give up!

I think that the more objective you can be with your trading plan along with the discipline to execute that plan, the better your chances of making a living in trading. I know that sounds like a broad statement, but there are times when I've found myself caught up in the emotion of trading. When the stimulus of Bloomberg radio, CNCBC, and watching the tape works against your strategies, it takes courage to stick with your plan and allow your plan to play out. I can't tell you how many trades I exited early and at a loss, because the news "spooked" me. In most cases, had I followed my strategy to conclusion, I would have made profitable trades.

So, don't give up. Start with setting a clearly defined trading plan, and more importantly, discipline yourself to let your plan play out.

Sigamani said...

Well said Doctor! This is true in every aspect of life. We should learn to embrace failure. Since you are good at psychology, I have a question here w.r.t failure.

Let us consider 2 persons of same caliber in a field, one got an opportunity (say some events in life) and latched on to it to find success in life. The other one didn't get any opportunity in that field and tried to look for opportunity in some other fields (lets say trading) considering that he is a failure in the first one. As a psychologist do you feel the other guy is doing the right thing or his failure in the first one (also the noticeable success of the other guy) had forced him to look into options which are not suited for him?


Dre said...

Great article Dr. Brett
thanks for sharing this.

Charles said...

"Figuring out what you want out of life is the hard part. Achieving it, by comparison, is the easy part."
(quote I read recently)


Scott said...

I've been trading for 6 years and just recently made the jump to trading for a living using day trading strategies. I've often considered giving up, but I've come to realize that every day is a lesson that makes me a better trader.

It's like any other job, it takes time to get through that "awkward learning phase" before you become comfortable and adept at what you do.

I've just recently taken a night job to supplement my income and to provide the human interaction that trading often lacks. Although I'd love to be able to make gobs of money trading right off the bat, I realize like anything it will take lots of time and effort to become proficient.

I'm excited about what my trading will look like in a few years. There's no harm in taking a break or regrouping after some losses. But like anything in life, I think it is extremely important to pursue a dream with dedication and do whatever it takes to make it happen.

Prabhu said...

Hi Dr.,

Here in India there is a saying which translates into English as "Search for what you lost, where you lost it, and there might be a better chance of finding it!"

I am doing just that, of course now equipped with your book "The Daily Trading Coach", and with all the experiences the market has put me through!


LawDam said...

I can't believe you put this up for morning trading. I come to your site for help not talk of failure. How many traders did you mess-up this morning?
You may have a nice story, when you gave up, but I am willing to bet that most do not.

Adam said...

When one door closes, another opens...

Do we define trading success as strictly financial? I have yet to be successful in piling up mountains of cash, but I have been successful in becoming a better trader over time, by analyzing my mistakes and the emotional or technical errors that led to them. If we make becoming better traders "the goal" then the financial rewards will come in due time.
Yet, if we judge our success based upon how big our account is, then that is hollow, and will set many of us up for failure.

Nathan Stewart said...

"I consider my losses as a "tuition fee""

The market is a crazy teacher.. She offers no graduation date and no diploma. So long as you are willing to pay a tuition she will keep taking it.

Kevin H said...

It took me about 3 years to get comfortable with what I am doing.

Trent said...

I've done all types of trading over the past 4-5 years - and have more than paid my fair share of "tuition". You gotta do (and trade) what feels best to you. I tried day trading as well and it just didn't work for me. I took a deeper look into myself and read a book by someone named Brett Steenbarger and worked on matching my psychology with my trading style.

I now have something that works for me. It's not replacing my job - YET - but at least I feel that I'm on the right path and starting to reap some of the rewards of my tuition. With time, work and the better honing of my skills I will quit my job and be able to trade in a relaxing way for me.

zircon-212 said...

How many people frequent sites like this or other less psychologically helpful ones looking for the Holy Grail that will finally turn them into 'successful' traders. My guess is that for many the phrase of the first cut is the best cut holds true and encouragement from others that success is just around the corner is highly irresponsible. Actually having and honoring a personal stoploss would allow individuals unable to progress their trading skills to move on with other endeavors. The question is where do you place the stop loss to avoid being taken out by noise. I think it is very unfair for people to say don't give up which I equate to traders hoping the market rallies when you are long and wrong sucking wind or vice versa on the short side. In this business there are only 2 hopes with regard to trading...Bob and NO hope. Beware of overstaying your welcome

Jack said...

Fear of failure makes for an unpleasant and stressful experience while trading (and if you don't enjoy it, what is the bloody point?). On the other hand, embracing failure makes one free to truly succeed, in whatever area one is meant to operate in.

Great post, Doc.

cmescalper said...

Losing money in trading is the best thing that can happen to people here.
i heard some people made money from the start but then made 1 stupid mistake and lost it all in a matter of days.