Part 2: Obvious but thoughtful questions to ask a trader
Being a trader is like being a businessman and an athlete, this is the statue that sums it up perfectly. Erwin Wurm "Big Kastenmann" @ the Standard Hotel, NYC
1. How steady is an income for a Trader?
Income for a full time trader is almost all based on trading success or losses. Unfortunately, income is not stable and is based on profits made as a trader, which is fairly unpredictable and unstable, for good and for bad! Although when managing other peoples money, traders may be paid a management fee and a performance fee, based on how much they make for their investors.
2. What are the working hours a trader has during a regular week?
This depends on what markets a trader is trading in, it could be day, it could be night. 24 hours a day markets are open somewhere on the planet to trade something. So a trader could work as much or as little as they like.
3. Do trader’s ever have vacations?
Weekends are vacations for traders! Of course, traders can take vacations when they please. Markets can generally be quiet because of worldwide holidays like Christmas or New Years. This is when markets are not so exciting so a trader can get a break.
4. Is a trader trained or self taught?
There is no precise path for a trader. Some traders could be trained, or learn the ropes by themselves. It can certainly be beneficial to be trained, so that common pitfalls can be avoided early. Although I believe that a self taught trader usually learns lessons harder and faster, making them better traders for the future.
5. What is the best education a trader can have?
I believe, that having large, painful losses early in a traders career can result in the best outcome for the education of a trader. Especially when the losses come out of the traders own pocket! Risk management is the most essential ingredient in any traders skill set. Recognizing a high probability opportunity for a successful trade with large profit and protection of only having a small loss if the trader is wrong is something that takes time and experience. Trading is like a sport, and the markets are the playing field, so experienced traders can use their skills to put probability on their side to ensure they have a greater chance of being lucky with a successful trading outcome.
6. Do traders do travelling relating to trading?
Generally traders have all the tools they need sifting through economic or market data, research reports, charts etc from their computers. So there is no need for traders to travel. Although some traders like to travel and touch and feel the businesses or commodities that they are trading in. I have heard a story of coffee bean traders that have travelled to South America to examine crops of coffee beans to see how stockpiles and growth of the beans are going. This allowed them to try to further examine the supply status of the crops to make buy or sell decisions on global coffee markets.
7. How long have you been trading?
Since the age of 15.
8. What were your first steps in the trading world?
My Dad got me involved in trading shares of small mining companies in Australia, I started with very small size trades and enjoyed it very much.
9. What do you dislike about trading?
Losing money. That simple.
10. What trading strategy do you prefer over others?
I have my own strategy which I have developed over the years. I execute a approach to economic analysis which seeks to profit from positive and negative economic cycles. I call this strategy the “Aimed Investment Cycle” and I seek to buy the right asset class and market (either stocks, bonds, commodities) based on global economic growth and inflation indicators. I built this strategy which is a reflection of my own personality and what I have learnt as a trader and investor over the years. It is obviously really important to have a strategy that you know, trust, believe in, which has good risk management which can protect your losses and ensure large profits when your strategy works.
11. How much time does it take to become a profitable trader?
Like anything, you can get as much out of it as you want to put in. Someone who is successful over a career puts in a huge amount of hours and work to understand and prepare and execute their trades to be profitable as often as possible. There is no sure fire way to being profitable, you could work all year as a trader and still lose money, or you could trade for one day and make a huge profit. It is a truly tricky game and the ups and downs can be extraordinary!
12. What is your favourite market to trade?
My favourite market to trade are futures markets, they are open almost 24 hours a day, and they can move very fast and based on a huge amount of factors. Futures markets can be in stocks, bonds, commodities, currencies. The worlds most popular futures contract is the US equity S&P 500 market. It is essentially a 24 hour 5 days a week trading price of the value of the US stock market.
13. Have you ever considered quitting trading for a standard job?
Once or twice! Sometimes after a losing trade or two you start to get concerned about where the next profit will come from! It is unsettling at times. That is why it is so important to have a repeatable trading strategy you believe in with good risk management, so that you can protect yourself when things are not going your way, and do really well when things go to plan with profitable trades.
14. How do your family and friends react towards your job?
Trading is always pretty mysterious. Because a trader can buy or sell whatever they like, and do not have to tell anyone else what they are doing.
Media perceptions of traders always seems to focus on the extremes, the big wins, or the huge losses. So quite often friends or family can think of trading as gambling. Sometimes to friends, I explain that its not too dissimilar to any business, say a shoe shop owner, they see a new style of shoes that they like, so they buy lots of them, expecting their customers to like them and buy them all. Sometimes this works out for the shoe salesmen, who ends up selling all the shoes, and other times the poor shoe salesman is left with the shoes in his shop, can’t sell them for love nor money, and makes a loss!
About: Daniel Weston the Australian, who has journeyed his way through investment markets and sizeable funds, is breaking down the industry for young budding individuals looking to tackle the finance world head on. With over a decade of experience in financial markets Daniel introduces a young dynamic mix into a very serious industry!
Connect with Daniel on Twitter or visit danielweston.com for more information.