Trading is about Risk & Capital.

A Career in Trading

Reader Nirav asks:
My question on this post is that can’t we pursue a trading as a profession? because your last line of this post says A career in trading will not give you stability. Is that mean that one must have some source of stable income other than trading?

On the same theme, Manish says:

it was a little bit disheartning to hear from u that career in trading will not give u stability. many people including me who r full time traders are trying to earn a living out of trading by learning technical analysis. r u suggesting that we take up a job with stable income & take up trading as a side activity altogether.

My Notes: 
Writing a reply is taking a lot of time. Funny. I am staring a the screen, not quite focussing on the subject. I wonder why. Usually, I write non-stop.

Ok. Trading is all about risk. No risk, no gain. Now, risk will be controlled, since I assume that most traders are sane and sensible. But it is still there. How do you meet the risks involved in trading? Answer is simple: with your capital. Therefore, trading assumes the availability of capital, the more the better. Technical Analysis is the means to preserve and increase the money, it does not create money out of nothing. Also remember there is a learning curve in trading – years (not months!).

I think you have got the idea. Budding traders with capital – fine, become a trader. Newcomers without sufficient money – please keep trading as a hobby.

A Clarification:
Reader men writes : Mr. Sudarshan, could you please explain how your trade went out today. On CNBC you gave a buy with a sl around 4982 which would have got triggered, you may have gone long at a lower level, would you have exited around 4980 level if you went long?

My Notes: On CNBC, on Friday morning, when asked about the possible trades for the day, I suggested that traders may go long with a stop below 4980 which was then the initial few minutes’ low. Such a trade would have been stopped out almost immediately. We did not trade at all on Friday since volatility had risen to unacceptable levels (systems did not give any signals). It is important to understand the difference between what may be done (by any trader) and what should be done by you.