Would You Get Hired as a Professional Trader?

Hey all, John L10 here!

I want to start out right away with, being a professional trader according to the actual legal definition does not have to be your goal, many stay-at-home traders are simply very happy to be in the retail category. With that said, as a measure of exercise. If you dusted off your resume and walked into the trading division of some of the biggest firms in the world with your trading statistics, would they even give you the time of day? Let’s find out.

Aside from formal education and securities licenses, we will just consider actual trading performance. The manager at your potential new trading desk will look at your stats and quickly know if you manage risk properly or not.

Would you be surprised if I told you that they wouldn’t care about your biggest winners? Or how much money you made last month? The key metric that you will be evaluated on is your overall risk-adjusted return and bench-marked performance. Since most retail traders don’t properly bench mark their portfolio, the only thing you can really judge is risk. The manager will consider, did the trader properly manage their capital or not? It’s very simple.

Traders should be respected by how well they protect their cash and the risk they took to generated their gains. Equally important, as a professional trader you will be judged by how consistent you are, and I am not just talking about the last few months, but years. Preferably in different market conditions, using different strategies. Those two metrics are what will be judged while they decide whether or not your resume should go in the trash.

At Warrior Trading, I strive for people to focus on the metrics above. Getting them to care more about their risk than the potential gains.

With that said, here is my performance for the month of August, 2017

August has been interesting mostly because similar to July, last month, I have been trading more mid to large cap stocks. I don’t have an exact figure but I would say 80% of my gains were from higher priced stocks in August. A lot more than July. I have traded small cap stocks when a good setup has presented itself, but for the most, I have been trying to practice and really try to excel at both strategies. It’s possible but you need to dedicate the time to learn instead of pretending to be an expert, and I am by no means an expert! Many traders know that I often have questions in the Inner Circle and talk freely with other traders who choose the mid-large cap strategy for themselves. It’s a great place to get more attention than the main Warrior Trading chat room due to how active and busy it can get.

I generally allow Mike, the resident moderator of large cap names make the calls in the main room by not stepping on his toes, as well as Jr. moderator Roberto, who both have been trading the higher priced names longer than I have. Though I will still call out setups I feel confident in or guide other traders along with short but helpful commentary.

I will talk briefly about a mistake I made this month. I have usually avoided pre-market trading for the last few years but I took pre-market trades at least 5 times this month, normally I do it 5 times all year! Only twice did it work out well for me and the rest I had to spend time getting out of the hole. It’s just not worth it unless the setup is screaming at me. Low liquidity and not being able to bail out quickly are the main reasons. Another issue is right before the open the stock usually has a violent move in either direction and I don’t like being caught in that. When you have a position in a stock pre-market, even a small one, it takes up mental capital and I have found that it ends up becoming a big distraction as well.

Let’s remember that trading can be an opportunity that gives you more time to the things you really want in the day. It could be spending it with family or building up another business. For me, an almost $20,000 month of trading profits gets added to the rest of my total income and I can tell you the combined amount is substantial. I am not saying this to brag, I am saying it to inspire. Please don’t look at other traders and think that you need to make $100,000 in a month with trading, these people, especially on social media (cough, Twitter) should not be your role models. Notice the trend, the majority of them are very young and inexperienced with not just trading but finance in general. Your goal should be consistent steady gains while managing risk and diversifying your income over time. I can’t say it enough, that is how you get to financial freedom.

I have to give a big shout out to Ross, who leads the small-cap strategy and has done a very good job protecting his capital from the beginning of the year. He like many other traders may take a loss but still, his portfolio grinds higher. Unlike other traders I have seen who have had huge blow outs, reversing their entire gains from when trading was easy, he has had only a small loss one month. This is the sign of a trader who manages overall risk, even if the small cap strategy may be seen as a risky one to novice traders.

No matter what stage or level you are at as a trader, I hope this article was useful to you. Thanks for reading, stay humble and see you in chat.

P.S. if you are a Texas-based trader and were affected by the hurricane Harvey, I feel for you! As I am writing this I learned that Warrior Trading has donated $30,000 for relief efforts and that makes me really proud to be in this community.