October marked two major milestones for me. The first I already wrote about in Part 7 was 1 year of profitability swing trading ES. The second milestone was 6 months profitability day trading ES and that’s the focus of this post.
Getting to 6 months profitability took me 2.5 years. Unfortunately most of the first 2 years was not very efficient as I spent lots of time on automated trading systems (that never worked more than a few months), indicators, multiple timeframes, setups that I found in forums & online, a trading coach who was a scam, etc. In January I started trading full time and that’s when I took several months “off” of trading in order to educate myself in topics such as market profile, support & resistance, order flow, etc. I believe one can get to profitability much quicker if they do not waste time like I did but that’s easier said then done. There is still a lot of screen time required and there are no shortcuts for that.
In Outliers: The Story of Success Malcom Gladwell explains the 10,000 hour rule. The rule basically says that in order to master something it takes 10,000 hours. He gives lots of examples from athletes to computer programmers and the magical number of 10,000 kept coming up. He is the first, as far as I know, to quantify something trader’s have known for a while. Traders call it “screen time”.
While it’s impossible to calculate exactly how many hours I’ve been trading, I can estimate it at approximately 50 hours/week. I actually think my average is a higher than that as I work on trading in the evenings & weekends and for a long time I dreamt about trading most nights. I must admit I was totally consumed by it. And when I read Outliers I realized that this was not only normal, it was what is required to make it to the top. So 50 hours/week * 48 weeks/year * 2.5 years = 6,000 hours. I started becoming profitable daytrading after 6,000 hours.
I remember when I moved to France and started my first job (first in France) working for an internet start-up. I had the great fortune of working with an outstanding developer/architect who was much better than I was, despite us having about the same age. I learned so much from him it was amazing. When the day was over I’d go home and explore Paris with my new French girlfriend. On the weekends my girlfriend & I would visit Paris and do stuff. On Monday morning I’d come in and my coworker would show me what he had done over the weekend. I’d ask him how & when he did it and he told me he was programming pretty much around the clock. He would sit on the couch with his wife and program on his notebook computer while she watched TV. And it was then that I realized that I could never compete with him. I just couldn’t keep up. It didn’t matter who was “better” or “smarter”, what mattered was that for every hour of experience I got, he got 2.
I really appreciated working with him. It was a true honor. I learned so much. Unfortunately our start-up went bust and we both moved on. I ended up working as a consultant for a few different companies. I kept learning and I did great work and put in place lots of processes & new technologies that have remained long after I had left each project. But nothing extravagant. If you asked someone about my professional work, you’d probably hear good things about me but probably nothing spectacular.
My former coworker, however, went on to write several books, join the elite Apache open-source team, created several Apache open-source projects used by thousands of people all over the world, gave presentations at key industry events in various countries, … I could go on and on but the guy is one of the best.
What’s amazing from this story is that 10 years ago we were both very close in knowledge & skills. He was better than I, no doubt about that, but I could keep up with him. But for every hour of experience I got, he got at least 2. So 10 years * 45 weeks/year * 40 hours/week = 18,000 hours. So while I got 18,000 hours over the past 10 years, he got 36,000! It wasn’t work for him because he truly enjoyed every minute of it. It was his passion and that is what makes someone “World Class”.
Now let’s relate this to trading. Is trading your passion? Are you on track to be world class? Because in trading you’re competing against world class traders. Traders who will put in more time than you, work harder than you, and who are smart than you, and who are just better than you period.
With 6 months profitability daytrading I think this first journey is complete. I told my wife last night “I don’t think I need to work evenings and weekends any more.” I’ve done that for almost 3 years now. But when one journey ends, a new one begins. This new journey will take me from a 1-2 lot trader to a 100 lot trader.
To find out how the next year went, see A look back on my journey – One year later.