Risk is subjective

When it comes to Trading risks, many bei kambing traders just think of risk/reward setups that are parroted a lot in books and workshops.

That's the black and white, 2 dimensional way of - either you are with me or against me - type of thinking.

Very mancho. Very left-brained. Very quantifiable.

Let me share my perspective from a retail trader who has transitioned from part-time to full-time trading.

You know what?

The biggest risk factor you haven't considered is YOU!

Let's start from outside in.

Your personal situation 

2 part-time traders with identical trading account size of $50K. And both have stable day jobs (stable is euphemism for career has hit the glass ceiling; hentak kaki).

One can earn and save $50K per year; the other $25K per year.

So if both blew out their trading accounts, one just need to lick his wounds for one year and he'll be back! The other has to wait 2 years; or return with a smaller and not so optimised trading account...

In case you didn't know, just like any new startup businesses, the no.1 reason for most business and trading failures is due to under-capitalisation...

Now what if I tell you that part-time trader who can earn and save $50K per year is married with full-time homemaker wife, has 2 school going kids, with housing mortgage, and is "blessed" with 2 sets of parents and parent-in-laws?

And that guy who earn and save $25K per year is single and staying with parents with no debts whatsoever?

How? Did your perspective just changed?

Now imgaine they both did well in trading part-time. Let's say their trading accounts are now $250K. So they decided to quit their day jobs and switch to trading full-time.

The family guy needs to make 20% a year from trading EVERY year just to maintain the same lifestyle as before.

That meant his trading will only compound and grow provided he makes more than 20% a year!!! 

One does not trade full-time just to hentak-kai...

The single guy just need 10% a year and anything more, his trading account will have chance to grow to a million.

Isn't that's why we traded in the first place? 

Who do you think is taking on too much risks by trading full-time?

What if I now say one of them got 1 year sabbatical from his day job?

If trading full-time does not work out got a ready job to return to, will that bring calmer peace of mind to our trading?

Or will burn all our bridges (破釜沉舟) incentivised us more?

Do you know what's reality? 

Full-time retail traders often depend on their wives for income support. That's why marry "right" is so important.

No, wife cannot be homemaker. (Unless the couple are parasites on their parents)

Not every woman so understanding like Taiwan film director Lee Ang's wife; she supported him in his 20s and 30s as a stay-at-home "bum" while Lee perfected his craft...  

That's why we need to make a clear distinction between institutional and retail traders - even if both are trading full-time. One got monthly salary; the other no kill no meat... 

Hence you find many full-time retail traders have "training" businesses on the side to help sustain themselves when they have drawdowns or to make their trading accounts whole again when they blew up. (Some of these retail traders are also known as remisiers)

Use common sense. If you never lose money trading, why on earth do you want to burn your evenings and weekends to teach others how to trade?

Is that your idea of financial freedom? Working more hours than your previous day job?

You - Or the Mind part

We can have 2 traders, with same trading account size, similar personal situation, trading the same vehicle - yet one is consistently profitable; the other struggling.

This is the - I not you; you not me - part.

Only we ourselves know oursevles best. 

It also depends on how "honest" we are to ourselves.

This is the grey, fuzzy, philosophical, and psychological part. You have to know why you get up in the mornings.

Trading is hard. The odds of success is no different from starting your own business. So why do it?

Because you heard from others it's simple? 

You were sold on the - If I can do it, so can you - spin?

Do you verify things for yourself? 

Can you think for yourself?

Risk is subjective

Now you know why I am not quick to pass judgement when I see others drink atas coffee.

Wink.