Reality

My cousin broke the news to me yesterday that he's quitting trading and going back to work soon, after a friend recommended him a job. I was a little surprised but supported his decision since he is not getting anywhere after being a trader for 2 years.

He broke even on his seventh month of trading, that was quite remarkable for a newbie who didn't know a thing about trading, confused even over bid and offer in the beginning. Last year was good and he improved tremendously with consistent profit every month though on the average, still below his last drawn salary. He enjoyed the freedom of being a trader.

The last six month was lousy, he got hit a few times shaking his confidence. Volatility shrank and scalping became very tough with the coming of the Algos, his profit came down, so was mine. After some serious consideration, he felt that it's better to go back for a more stable income, CPF, year end bonuses and medical benefits.

I'm glad that he made money trading, didn't burn a big hole in his pocket like others we heard so often. He took a 2 year break from his career, gained plenty of experience as a financial futures trader and most important he has given himself a chance, an opportunity to become a trader after hearing so many glamorous stories of successful traders. There is no regret.

8022 just told me that he is quitting too and looking for a job. I admire his perseverance to stay on for another 5 years as a electronic trader after the trading floor closed in 2005. I can imagine his suffering without income for 5 years and using up his savings on daily expenditures for the family.

The hardest part for a trader is when they get too old to get re-employed, when they are in their late 40s and the only thing they know best is trading and not making money.

Reality sets in, only the best traders make it and that's less than 10%.

Scalping is getting very tough, very tiring especially when many of your opponents are powerful machines with plenty of muscle to push the market in their favour. The machines distort the scalpers with their speed in putting and pulling out orders, sometimes huge orders to bully the small traders. Trading hours are long now, thus making the lives of short term traders more miserable. Volatility reduces as the Exchanges extend the trading hours and traders trade more incurring more comm.

I spoke to my brother about the challenges we are facing now as an electronic trader in a non level playing field, where Exchanges are embracing Algo traders with open arms giving them better comm rebates and speed. Change! that's what we need to do. The machines are now the scalpers, they are like the FT (Foreign Talent) in our country, it's difficult to compete with them, we are now left with the crumbs.

I have to change the strategy of trading, that's what I'm slowly adapting, trying to avoid heavy scalping to reduce the comm. It's hard for an old dog to learn new tricks after 25 years as a scalper, it's a challenge.