Context: The following is the response to the question “what is it like making millions in trading?”. The question was posted in a forum and was answered by a former institutional trader who later went solo and made millions. Here is is his answer:

Starting With Only $5k

I started with $5k and turned it into millions in a short amount of time. I watched dozens of others do the same.

It is certainly exhilarating. The first time you come in and feel like you have an edge… such confidence. The first time you make $1,000 in a day, $10,000, $100,000… $1 million. Something few people understand is the possibility that is out there, how artificial the salaried limits are that most people think in, and I fell into learning otherwise.

What Making Big Money Feels Like

At first it feels like that number in your account gives you security, whether financially or personally or socially. It doesn’t. It allows you to be what you really want to be, with fewer restraints… and that has as many negatives as positives.

Since I was part of a group, we celebrated together. The first time you had a six-figure day you would take everyone else out for a “lobster fight,” an intentionally overpriced meal. One time a guy took home $1,000 of crab in a doggie bag. A lot of the guys thought that making what is small-time money out of trillion-dollar markets meant that we knew better about everything than everyone else. Haha.

I remember the first time one of my trades was put up on ZeroHedge. They were absolutely clueless about what was really going on… but still, lots of the traders liked the conspiracy theories.

Spending The Money

Spending some of the money was world-changing for me. I am deeply inquisitive and love to learn new things, and money opens new doors. I learned all about fine food, wine, clothes, etc. Most of that is great to spend money on as a learning experience but after a few years loses its luster.

I took lessons on an endless string of subjects — languages, voice, philosophy, art history, etc. Travel is wonderful. I must have gone to five countries per year, during the “off-season.” I still love to travel, though now there is no need to drop coin when I am out… I just love the adventure. (Of course, it helps that money can always bail me out.)

Some guys picked up bad habits involving fast cars, women, and drugs. Nothing was ever enough. A lot of them were fleeced for years then left when their money ran out, or sued for common law divorce. It’s tough when you can’t commit to anyone or anything other than yourself.

Some family-oriented guys bought fancy houses… most of them ran into a rough patch trading. Some are selling life insurance. Others invested in real estate or bought franchises in chain businesses and found managers. They spend almost nothing and take care of their families with deep commitment.

Charitable Acts

One guy heard about the earthquake in Haiti and couldn’t sleep all night. The next day he chartered a plane to the DR, bought a cargo truck, filled it up with supplies, and dropped everything off at a Haitian orphanage he had a pre-existing relationship with. He did the same thing every day for weeks.

And when people tell him how selfish and evil libertarians like him are, he doesn’t say anything. What a class act. He inspired me to give away a lot of my money, too, and I can tell you that seeing the kids who now have opportunity and scholarships feels a hundred times better than seeing the dollar amount of a nice house sitting on your screen.

Trading Performance

The thing about electronic trading is that its effects are not very tangible. In my worst year I doubled my account (which was already sizeable by then), but my heart was no longer in it, and I left after one more year. I liked the challenge of “beating the market.”

Once I figured out some ways to do it, I liked seeing the profits on the screen. But each time it became less exciting and more expected, and while I had met several different levels of challenges in my career there weren’t any new ones I wanted to tackle, so I quit.

I still maintain a “black box,” a computerized system that trades for me, but it is pretty hands-off. Now I have started a business that solves problems for interesting people. That is a lot more compelling long-term.

You start to wonder about some higher-end finance stuff. How much do I put into trusts for my kids, and how to I make that money a blessing rather than a training ground for sloth and narcissism? Other stuff involving when and how to make charitable gifts, investments, etc.

Successful Traders Are Very Rare

People ask a lot of questions about what you do, especially on the rare occasion that you imply you are successful. Everybody has met accountants and carpenters and social workers and lawyers… but successful traders are very rare. So they will talk to you about it as long as you will answer.

I have had several beautiful women give me their phone numbers or even proposition me directly, even while my wife was with me.

They will also ask what you think about some stock or market trend, and you decide whether to avoid the question or explain that trading success means picking what you know and becoming an expert at only that, which people have trouble understanding.

Or worse, they bring up the latest media talking points, which always involve a deep ignorance of the basic concepts they invoke. But usually they just want to hear stories, endless stories.

The Wall Street Guy

Okay, one story. This Wall Street sales guy comes out to see us. He takes us out to a bar filled with d-bags and cougars, and tells us to get whatever we like. He is there to reassure us that the problems with his service will be fixed. Later on, he calls his family to tell them he loves them — the first reassuring thing I had seen.

He puts down the phone and immediately asks our waitress to sleep with him. She says no, this is her 21st birthday, and her mother is taking her out. He says that there is space in his room for three. Ick. So I let the guy get super-drunk and start ordering rounds of $450/glass scotch for the table.

He’s so wasted that he has me calculate the tip for him… $12k tab, $6k tip. I told the girl sorry on our way out. The guy’s boss calls the next week and I tell him, look, if his wife can’t trust him for 30 seconds then his reassurances to clients are hollow.

Fix every problem within four weeks or we will never do business with you again. And it worked, haha.

Most People Who Make A Lot Of Money Trading Don’t Love Trading

The main thing is, most people who make a lot of money trading don’t love trading. Those who do will make a lot of money the rest of their lives. But those who are in it for the money will burn out. When people ask about careers with lots of earning potential I always worry that if the job is only a means to money they will either burn out or become terrible people.

Me, I loved the challenges presented by trading, and enjoyed the money, but there was no life-long commitment because once I had solved the problems I wanted to solve no mission, vision, or purpose remained.

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