If you want to become a trader, understand what a trader’s job actually is..
1 – A Trader’s Job
A trader’s job is to generate profits through trading, but many traders misunderstand it as “making money from the trade right in front of them.”
No matter how great a trader is, if they only get to trade once, that single trade could still be a loss. On the other hand, even a beginner trader could win a trade just once. We are not playing a game of seeing how much we can earn from a single trade. In this world that is heavily influenced by randomness, in order to keep growing our capital, we must shift from a “win-lose game” to a “probability game.”
Our job as traders is to understand the rules of the “probability game,” and to continuously repeat actions in accordance with those rules.
2 – Prepare a coin with an edge
Probability reveals its true nature only through a large sample size. In the case of a coin toss, the probability is 50%, but if you toss it just 10 times, it could come up heads 80% or even 20%. However, as the number of tosses increases to 100 or 1000 times, the result converges toward the true 50% probability. This is the Law of Large Numbers.
“The law of truly large numbers states: With a large enough sample, any outrageous thing is likely to happen.”
Frederick Mosteller
In other words, short-term losing streaks or winning streaks are already included within the expected statistics, and it is by continuing despite experiencing them that the 50% probability emerges. This understanding is extremely important. Our job as traders is to prepare a coin with an edge, keep tossing only that coin no matter what, and build a large sample size to extract the edge from that coin.
3 – Trader’s Perspective
From this perspective, a trader’s job consists of:
– Having a strategy and rules with an edge.
– Consistently following those rules.
And in order to smoothly carry out this job, the necessary preparations are:
– Testing and practicing through a large sample size to confirm whether the strategy truly has an edge.
– Determining a position size based on the strategy’s performance that allows for consistent adherence.
– Thinking in a long-term perspective and truly understanding what you are doing within a longer timeframe, so that you can continue to follow the rules consistently.
4 – Be aware of the environment
Once you understand your job, your scope of responsibility also becomes clear.
- You do not need to feel responsible for the win or loss right in front of you.
- Anything that happens after following the rules is a necessary outcome for that strategy.
- If you start to feel responsible and think “I have to do something,” your consistency will begin to crumble.
- Your job is to make thorough preparations in advance and, with a long-term perspective.
- Operate the prepared strategy by “consistently following the rules
This is the job of a trader. Can you now see how different it is from the “win-lose game” that many people imagine? This shift in perspective is only the beginning. Let’s thoroughly prepare what is necessary. In a “probability game,” preparation is extremely important — it’s no exaggeration to say that preparation is everything.