From Newbie to Veteran: Journey of a Trader

This is difficult to answer because it all depends on the investor/trader. Trading and investing both work on the following premise: A particular security will either increase in value or decrease in value within “X” amount of time for the a number of reasons.

Knowing “X” will tell you if you are a trader or an investor. If you think “X” will occur in a very short time frame (minutes, hour or days), you should consider yourself a trader. If you think “X” will occur in a longer time frame (weeks, months, years), you should consider yourself an investor.
The above two scenarios are not mutually exclusive. A trader can be an investor and an investor can execute a few trades. The key is to know prior to making the trade. Personally, I consider myself a trader. I do not think I have the patience nor the tolerance to wait weeks or months to see if a trade is going my way. I usually trade on a 5 minute time frame and my average trade lasts about 7 minutes. On rare occasions I will enter a trade that I expect to last for hours. 

Whether or not you consider yourself a trader or an investor is not that important. What is important is how you approach each decision you make and not confuse the two.

Is trading an art or a science?
One crucial component of science is reproducibility. It is described as the ability of a test or experiment to be accurately reproduced, or replicated, by someone else working independently (Wikipedia.org, 2009).
The reality, though, is that if one novice trader sits next to an experienced one and mimics his trading patterns, somehow the success will not be duplicated.
Trading involves a lot of math and psychology. Each of these disciplines are well established in the scientific world, but knowing when and how to apply those rules requires a lot of intuition. That’s why I believe that trading is more of an art than a science. I would compare a trader more to a musician than a mathematician. 
Are great traders also artists at heart? Who is a better trader: a scientist or an artist? And should a trader forget about rules and only trade on intuition? As for the latter, I don’t think so. There are days when a trader is in the “zone” and all the trades seem to be profitable, but the majority of trading days will challenge the confidence of a trader. Rules and discipline are the only tools left to keep your emotions in check.
Knowing the rules of trading is easy. A couple of books and seminars will teach you all of it. It’s like poker or chess. It takes 10 minutes to know the rules, but a lifetime to master them. A good trader should spend a lifetime improving the craft and never be satisfied. The markets are not static; the moment we think we have it figured out, it is the moment we become irrelevant.
That’s why I think automatic trading systems cannot work over the long term. They need to be implanted with market models by their programmers. It can work for a short time, but due to the ever changing nature of the markets, a static model cannot survive. We are not at a point yet where the computer models are self adapting and become better at predicting behavior economics.
So, which one is better: Intuition or Systematic trading? Giving a universal answer would be contradictory. What ever works now for you, keep doing it. If your trading P/L is not as high as you hoped, then you should consider changing something.
Good luck in your trading.

I have been trading currencies for about 2 years with my ups and my downs. When I first started I thought it was my straight ticket to riches. What I did not realize is that the journey had multiple stops along the way. I still believe that a trader can live off his or her trading activities, but before it happens, the trader should expect many years of disappointments, small successes and great frustrations.


The act of trading is extremely simple. There are only two major actions: going long or short. If it’s that simple, then why do so many aspiring traders fail? I don’t think I have the definitive answer, but I know it must include a lack of understanding of the markets, the instruments being traded, and finally, a lack of understanding about ones self.


The markets and the instruments can be taught through books, DVDs, seminars and workshops. Unfortunately the most crucial part of trading, knowing yourself, is not easily taught. Malcolm Gladwell’s book, “Outliers: The Story of Success” touches on the idea that it takes time to master a skill. In his book, he promotes the idea that 10,000 hours of work are needed before something becomes second nature, as trading should be.


Ego has probably cost traders millions of dollars in bad trades this year. A certain amount of confidence is necessary when it comes to trading, but the moment a trader becomes overconfident, the market will teach the trader a lesson about humility. Trade the market you have and not the market you want or think you have in front of you. Make sure the reason why you don’t have a clear picture of the market is not caused by your unchecked emotions.

One of the reasons why I chose trading currencies over trading equity is the amount of information a trader is required to process in order to make an informed decision. In Equity trading a large percentage of the security price action is not due to the security itself but rather external factors such as overall market, industry reports etc…
As Forex traders, we are asked to think a bit more globally and follow the economy as a whole. A successful equity trader focuses on one industry, sometimes even only in one stock. A forex successful forex trader usually follow less then 5 pairs. 

In this trillion-dollar a day market, correlations between currencies and commodities are very helpful. No correlation can last indefinitely, but knowing how currencies react to one another can give the trader an edge.

Kathy Lien over at FX360.com wrote a great article titled The Strongest Forex Correlations. I invite every trader novice and veterans to read this article. She explained how Oil and Gold affect the Loonie, the Aussie and the Kiwi. How the US dollar and the Euro react to the S&P 500.
Knowing correlation will not make you a rich trader but it is one more tool we can put in our trading arsenal. Having the tools will make you prepared knowing when to use them will make you a successful trader.

Trading is a solitary activity. We traders are glued to a computer all day, looking at patterns, news or opportunities, searching for clues to give you an edge. With the advent of online trading, we have become even more secluded into our virtual trading rooms, surrounded by our gadgets and any electronics we think might give us an edge.

Twitter has been a godsend for traders. If we wanted to get a feel of the market in real time, our options were limited. We could

• Listen to the market commentators on TV. Unfortunately they are rarely giving you relevant insights you can actually use to make money. In the rare occasion they’ve got an expert on a specific subject, pretty soon, that expert becomes another pundit with vague broad views on the market and an opinion on almost everything.
• Read online groups and web forum, but the information was rarely reliable and mostly too late.

Twitter allowed traders to express their thoughts on the market in real time. I think StockTwits capitalized on that momentum and was able to deliver a virtual trading room by filtering out all the non-markets related tweets.

I’ve been using StockTwits for a while now and I think it’s great. It brought back the sense of Traders Community that online trading is lacking.

Any new traders out there, try it out. It will not make you rich nor smarter, but you will not feel as isolated.