They say "The first $1,000,000 is the hardest to earn". Not if you are a day trader!
I was sitting there, minding my own business, when I saw a Tweet made by a Trader about reaching a milestone of $1,000,000 trading profits in just under 3 years of trading. He had a well-written Tweet and I thought "hmmmm", I had never thought about that $1,000,000 milestone. I wondered where I was at.
I opened up my profit and loss spread sheet, where at the end of each trading day, I simply entered my P&L and my volume traded. I then charted the accumulative P&L off the data.
I looked at the daily chart and saw that I was just shy of the 1 million dollar mark. From memory, I was at about $960k in total profit.
For the first time, actually sat back and had a good look at my P&L spreadsheet. I had also been trading for just under 3 years at that point, but I had never really looked at the total profits. I remember when I was first embarking on day trading at a prop firm, I said to myself, "all I want is to be able to make a living, doing something I love and I will be happy". As cliché as it sounds, that was all I ever really wanted. I never did it with a goal for have an abundance of cash; I wanted to trade because, for some reason I just loved it. Now, somehow, the big milestone of the first 1 millions dollars was within reach. I had just come off about a $120k profit month, and I was feeling pretty confident that the next $60k would roll on in like the summer that was upon us. "Wow" I thought, soon I'd be sipping that sweet champagne on a beach, working from my laptop in no time! After all, as they say, "the first million dollars is the hardest" to make, so from now on I was on easy street... right!? How wrong was I?!
I think it took me a good 3 months to make that last $60k, and I wished I'd never seen that damn tweet! It was the slowest 3 months P/L and in consistency that I had had since the start of my trading career. But I eventually surpassed it. (Chart below) I had finally made it as a trader... or had I?
What I had failed to realise, and what I had failed to learn, during my relatively short career, was that it's not the amount of money you can make. It's how you keep it, and how well you can adapt when that money stops flowing in. It's how you maximise your success during the 'ups', and minimise your losses during the 'downs'. You start to see inconsistency creeping in. What you were doing, now doesn't work that well; the market may become illiquid, the overnight gaps might not work, the match bots position you on the wrong side. In trading, there are so many ways to make money, but when times are tough, it can seem impossible to find even one!
These tough times as a Trader is what makes or breaks a Trader. It gives them invaluable experience that you just cannot teach; only Mother Market can. The more times you have them, the more times you see it, the more you experience it, acknowledge it, live it, and there more you get back up and over come it, the stronger and more resilient you will be as a Trader. You begin to see it sooner, take the necessary steps sooner to help yourself, you learn to identify your own self 'red alert' procedure. Those inner alarm bells ring earlier and louder than they did when you first endured your sustained period of under-performance or big draw down.
The first million might be the easiest, or it might be the hardest. One thing is certain; it will be your 'only', if you cannot learn to lose well. Embrace those times and use them wisely; they are invaluable learning gold nuggets. Turn that negative into a positive!
Its a personal game and a hard one at that. So remember, the first 1 million is a non-topic. Its a GREAT achievement and milestone to reach, without a doubt, but its what you do tomorrow, and the next day, that makes you a successful, long-term day Trader.
Every million dollars in my experience comes with a caveat. A harsh reality that the next million dollars is not only NOT guaranteed, but if you do get there, it could have well been twice as hard and have taken take twice as long to achieve than the last. You cannot get complacent or too confident.
I will leave you with this quote that I have seen on twitter a few times, and I have experienced both. "The stock market is full of people who are humble and those that are to be humbled."
Stay humble Traders.