Up until recently, trading was a job for the elite, accessible only to those who lived in London, Paris, New York, Tokyo or Hong Kong – where the world’s major stock exchanges are located. With this was associated the image of a certain glamourous lifestyle that many strived to have, and still do.
Nowadays, trading has become a lot more accessible and widespread. With a laptop and a trading account, anyone can enter the financial markets without physically entering these financial markets. Want to trade from your little home office in Torquay? No problem.
Is this a dream come true for those wanting to make a living as traders? It’s a little more complicated…
Online trading
Online trading platforms have made trading available to everyone, regardless of their experience, location and time zone. Trading data and trends are available to anyone with an Internet connection. The financial sector being regulated by relevant authorities, namely the Financial Conduct Authority (FCA) in the UK, whatever tools and information are out there are available to anyone: financial institutions, independent traders, and members of the public alike. With all this information in the public domain, individuals are now free to get into the world of trading if they are so inclined; to invest and speculate – both of which used to be reserved to banks and major institutions.
Learning on the job
As well as being available to anyone with access to basic technology, aspiring traders do not need any academic training in order to get started on the financial markets either. Most people learn on the job. In fact, the most famous traders we know of were self-taught.
On top of this, little to no personal capital is required to get started, and trading doesn’t even require you to make it your full-time job. Some trade alongside their day job, as a way to generate some extra income.
The BBC’s documentary “Traders: millions by the minute” reveals, among other things, just how accessible the trading sector is nowadays.
The appeal of living as a trader
Few jobs offer what trading has to offer. No two days are the same. The market is constantly changing. Traders need to keep abreast of the latest news which can be equally stressful and thrilling. Trading is influenced by so many factors: economy, politics, climate… On top of all this, many traders are self-employed which gives them even more control over their lives. The adrenaline that comes with trading is not for the faint of heart – it is one of the reasons why many traders take such pride in their job, and why so many others fantasize about having a trader’s lifestyle.
However, ambition and hunger for success alone will not help you reach your objectives. You need to find a way to balance this “nervous” energy with patience and level-headedness, both of which will help you make the right decisions at the right time. A delicate balance that not everyone knows how to master.
Careful considerations
Trading is by no means a dream job – at least, it is not for everyone.
Working as a full-time trader requires total devotion to the job. Logic, stamina and resistance to pressure are also a must. Few Wall Street traders stay beyond their thirties.
Many marvel at the profits that can be made from trading. But this is only the tip of the iceberg. It bears reminding that these pay-offs don’t just fall into your lap. Investing hundreds and thousands of pounds is no trivial matter and traders need knowledge, logic and composure to make such decisions. It goes without saying, but it bears reminding, that cashing in losses is common for all traders, however experienced.
Being a self-employed trader means being able to make a living without formal education in the field, being your own boss, choosing your own working hours (more or less) and making your own decisions. This was particularly attractive to many during the pandemic. However, the pressure to make the right decisions can be overwhelming – more than you may realise when you first take an interest in the world of trading.
The harsh reality of trading
As mentioned above, many professional and experienced traders suffer losses, some more devastating than others. It is not surprising, then, that amateur traders do too and in fact even more so. Here are a few figures you might be interested in before launching yourself into the trading world:
- It is estimated that 90% of traders (both new and seasoned investors) lose money.
- The US Securities and Exchange Commission (SEC) found that 70% of forex traders lose money every quarter, and traders will often lose 100% of their investment within 12 months.
- Similarly, almost 80% of eToro day traders lose money every year, the median loss being approximately 36%.
Basically, very few traders are profitable, even in the long term. It is therefore crucial that you do enough research about the realities of trading if you hope to be among the successful minority.
Is trading more available to amateurs than ever before? Absolutely. But availability does not guarantee success, far from it. So before you turn your trading fantasy into reality, make sure you are aware of the risks, and requirements for better odds for success.
