Understand the Job – Trading Paradox

There is a paradox within trading itself but when using common knowledge that applies to other jobs there is also a paradox about trading as a job. I want to talk mostly about the latter because I can summarize the prior quite quickly. With little thought you will realize that when some traders have their entry triggers to sell others will have entry triggers to buy and both can be profitable overall if they have a solid trading plan. Even that sounds like a paradoxical statement!

If the above wasn’t true then the market would move in one direction at a time and be very easy to read. This should help you in accepting the fact that you will not win every trade you take. This understanding will also help you accept the fact that to be successful you just need a trading method that wins more than it loses, and not everything. This could be via simple win/loss percentages or good risk/reward, or as I prefer, both. You can read more about the elements to developing a successful trading plan in my other articles, in this article I want to move on to other paradox that I feel is good to understand before you even start the journey that is ”˜learning how to trade’.

In every other job you will usually hear and agree with things like ”˜you get out of it what you put in’ and ”˜the more hours you work the more money you will make’. Where these statements are very true with a normal job they are only half true with trading. I won’t argue with the fact that when you are learning how to trade you will need to put in a lot of hours, but you will not make more money at that time for doing so. Just to confuse matters even further; later on the more hours you put in the less you will probably make due to over-trading and amateur mistakes. How contradictory is all that!

A regular job will pay an hourly wage so the statements I made above apply in an easy to understand fashion. You put more hours in and you make more money. If you are self-employed and running your own business, providing you chose a good product or service to offer that is in demand, you will certainly get out of it what you put in. With trading though you must separate the learning from the actual trading, and the amateur level trading from the professional level trading. For the learning and demo trading phase you will need to put in a lot of time and effort without getting any financial gain back. When you move on to the actual trading you will still be an amateur level trader. Providing you have a proper trading plan you will be able to make money but the tendency will be to keep putting in the same amount of hours as when you were learning / demo trading. The chances of overtrading and making amateur mistakes increase which in turn will decrease your profits. Once you have been through all of the emotional lessons and various phases of an amateur trader you will be able to call yourself a professional. It is at that time only you will be able to spend as much or little time as you want and still make similar gains due to your trading discipline that developed in the process.