This post is courtesy of Simon Goodchild posted originally in my Facebook trading group. Reprinted here with his permission.
THE SUPERMAN THERUM I often hear that one should not trade unless one has sufficient capital to trade, and it’s true most traders are under-capitalized, but there’s absolutely no reason a trader can’t start with $5,000. In fact it’s hardly advisable to begin with more; my dad often tried (unsuccessfully, as it transpired) to warn me off drugs by saying people on acid had thrown themselves to their deaths from rooftops believing they could fly, “Why didn’t they try taking off from the ground first?” he’d say. If you’re already successful enough to have 100k or a million lying around which you can afford to spunk on the markets, why bother?
If you’re already rich and you want more, wouldn’t this indicate that you’re a greedy person, and isn’t greed the #1 cause of failure in trading? It’s like saying I’d like to get into retail so I’ll save up to buy a six story department store on Madison Avenue. Don’t these people start off small and build their capital up? Richard Branson started out selling records out the back of a van. The health club tycoon Duncan Bannatyne began his empire by laying out £400 on an ice cream van. If you can’t build capital from a small account you won’t build capital in a large account either.
Instead of looking to the markets to the lifestyle you want, you need to find a life you can stand right now. This is the real key to trading: relative happiness in real time and the ability to live with yourself as you are – most people foolishly attach material possessions and a skill set (hello, what do you do?) to their identity in the absence of any true substance. If you hate your life as it is then change it for something more tolerable, if you hate yourself this means you’re trapped inside a closed perceptual loop probably due to toxic messages you received in childhood and money will only exacerbate these problems, you may well get there but you’ll end up worse off in the long run – rich guy thinks becoming a recluse is the key to happiness with no awareness that humanity is a collective consciousness and cutting yourself off leads to psychological and emotional starvation.
We’re herd animals, learn how to survive within that herd – if you’re having problems now how the heck do you expect to survive in the market? It’s a big stampede! Long story short: crap job? Get a better one, even if the money’s worse. Brainwashed? Wake up and get un-brainwashed. Only when we’ve reconciled ourselves to ourselves and done our best to become excellent people can we initiate our 10 year plan to become excellent traders. And start out small, forget the money – the last kiss is the only thing you’ll be taking with you.
My response: The problems start when someone with a small account tries to trade for a living or someone starts trading a big account when they do not know what they are doing.