Last fall, Jim and I exchanged the introductory, get to know you, emails about the dangers of being an active trader.

More specifically, his semi-reluctant admission that he had day traded AIG for a quick profit caught my eye since the majority of personal finance bloggers consider active traders to be the blasphemers of the financial world. Thus began the (temporary) downward spiral of Jim’s blogging productivity after we exchanged multiple conversations about trading Yahoo, General Motors, and a few other stocks I suggested he should avoid.

Several days ago, Jim asked for a brief synopsis of what it’s like to be a fulltime trader. I hope you enjoy the post, but moreover, I hope that I convince you that becoming a professional trader is a horrible idea!

Never Admit to Being a Trader

Being a trader in today’s anti-Wall Street environment currently ranks somewhere between a shady criminal defense attorney and a circus employee with a pooper scooper.

Why?

Because the general public believes we’re the creeps that exacerbated the stock market crash of 2008. Even worse, some traders actually profited from the crash by shorting the market on the way down. So not only did traders help cause the problem, but we made money buying UltraShort ETFs that yielded double the normal return as the value of your Roth IRAs were chopped in half (mine included).

In other words, if you’re looking for a self-rewarding career where the court of public opinion values your services – look elsewhere.

What it’s Like Being a Trader

I would say that life as a trader, or at least my particular trading style, is analogous to an old quote about being a wartime pilot:

Hours and hours of sheer boredom punctuated by moments of stark panic. – Hanger Flying, Lt. Col Alfred J. DAmario

I can’t imagine anything being more terrifying than war, and in no way am I suggesting that trading is analogous to going into battle, but the prolonged periods of doing prep work and having the patience to sit idle on the sidelines can be incredibly difficult. Once you make your move, the boredom quickly dissipates because it’s at that time your adrenal glands kick in because the roller coaster has just left the station.

Here is an example of the daily grind:

• 0730hrs: Get up, get moving, flip on CNBC and/or Bloomberg to make sure the world didn’t come to an end between the hours of 0100hrs and 0730hrs. Take the dog for a walk and eat Cheerios at my desk.
• 0930hrs: Sit on my hands for the first 30 minutes of trading. Absorb as much market action as possible. Allow the overnight news to be digested. Volatility is a double edged sword and cuts deep if swinging the wrong way.
• 1000hrs: Maybe execute one or two trades. Immediately setup audio alerts and precautionary stop loss orders. If a stock hits a buy or sell price, I want to be alerted and protected ASAP. When I screw up, a Beavis & Butthead MP3 will automatically call me a “dumbass” for making a bad trade. This happens frequently.
• 1230hrs: Walk the mutt again, nuke some leftovers, and go back to the monotony. Continue looking for newsworthy events or charts setting up for a move.
• 1430hrs: Action picks up as the big money traders are back from lunch, out of their meetings, and settle in to make their final trades. Be prepared to sell positions if target prices were met, or the macroeconomic picture for the market as a whole appears bearish.
• 1600hrs: Write down the trades in my logbook that were opened or closed out. Review what went right or wrong.

That’s about it. Probably not what you were expecting… right?

Unlike most active traders, I try to keep the number of open trades as low as possible so I can minimize the white noise as much as possible.

This guest post was written by Matt of SteadfastFinances.com. He is a full time, independent trader with some extra time on my hands!