Independent Trader – The Good, The Bad and The Ugly

By | August 22, 2014

Independent Trader – The Good, The Bad and The Ugly

I always try to encourage people that are thinking of going into this business for themselves. I tell them: “Think that you might become more successful than you ever dreamed, because that’s what happened to me.” I have the freedom I always wanted, both financially and structurally. I can go on vacation at any moment. – Marty Schwartz interview in Market Wizards

Let’s start with the good things first:

  • As an independent trader, you are your own boss. Other people’s opinions of you don’t affect your bottom line. It’s just between you and the market.
  • You have a personal freedom that isn’t present in many jobs. The only person you have to ask for permission to take time off is yourself.
  • You’re not tied down to a specific place. You can trade from almost anywhere in the world.
  • There is no commute or dress code. If that doesn’t sound important, consider that you get at least one extra hour every day to do what you love.
  • You don’t have to waste time with staff meetings or business meetings.
  • Unlike most other ‘traditional’ jobs, you get the chance to do what you really like.
  • It’s never boring. As Jesse Livermore said it in his book, speculation is the most uniformly fascinating game in the world.

So far it may sound that to be an independent trader is an easy way to get rich with no real effort. That’s a big misconception, propagated by some shady characters who sell trading services and products. The truth is that trading is a challenging career choice which won’t be  suitable for  everyone.

The bad things:

  • Your success will be in direct ratio to your own efforts. No one is going to pay you for just coasting from 9 till 5.
  • Few will respect or understand what you’re doing. To add insult to the injury, the truly foolish people will say that they could also be independent traders if they decided so. That’s like saying to a doctor that  you could start operating next week, if you’d put your mind to it.
  • Working in isolation
  • Depending on how active the markets you trade are, there will be very long work days and odd hours.

The ugly things:

  • You need money to make money. If you think you can be an independent trader with a $500 account, you’re just deluding yourself
  • Not knowing what you’re doing is fatal. There’s no one to blame for that losing trade left open which wiped your account.
  • You don’t have a regular monthly income. The 80/20 principle applies, so you’ll make most of your income in 20% of your time.

I hope this offers a perspective on the pros and cons of being an independent trader.