When to Quit Trading

Few days ago I received an email from a trader who has spent a lot of time trying to learn day trading. He asked:

“Is there any criteria to determine when to quit trying to learn day trading? … Is there any criteria when to decide if you just don’t have the skills to keep trying?”

It’s an interesting question because this person has not blown up his account. He is not even trading live yet. But he wants the answer to this very important question. Almost all of the stories we hear of people deciding to quit come from traders after they have blown up their account. This trader wants to prevent that from happening and he wants to make the right decision while he is still in the simulator.

I sincerely appreciate this genuine and fair question. It’s a very important point, because learning to trade takes considerable time and energy, and of course there’s also a financial cost involved. This person explained in his email:

“I spend 20 hours a week “training”. Eight hours a week on DAS sim and 5 hours on TradingSIM.com (usually on weekends). Then 1 hour a day reviewing my trades, watching other recaps and reading books. So I am taking it seriously. My 20 hours is pulled from sleep and spending time with my family so it is costly and I don’t just want to throw it away.”

He later continued in his email:

Honestly, I don’t know the answer, and I don’t actually think there is any solid answer to this trader’s dilemma. It depends in large part on a person’s life and situation as well as on their level of resilience and determination. If day trading interests you, you should definitely give it a fair shot, but also put some limit on how much energy, time and money you will initially invest in it. Like starting any other business, after a reasonable period of time has passed you need to review your situation and make the difficult go/no-go decision.

For the early stages of a business, investors and entrepreneurs often discuss a model of financial projection known as hockey stick revenue growth. Any new business or venture usually struggles to be profitable for a while before it takes off and becomes very profitable

Many businesses never take off and die, but that is ok for both the investors and entrepreneurs, for that is the risk of doing business. The hockey stick model is with us in a variety of aspects of life. For example, many people choose to take loans and use credit for their studies and degrees with the hope of paying the debt off later, when they graduate, and most of course do.

If you look at day trading as a business, and I hope you do, you should also expect to see a hockey stick type model. For sure, you will struggle at the beginning and lose some of your capital. It’s almost guaranteed since the learning curve for day trading is steep. But in time you will experience more and more good days and your results will become more and more consistent. Key is to stay in the game. Day trading is a marathon, not a sprint.

Having said this, there is no shame in failing as a trader. The real shame is in not pursuing your dreams. If you are passionate about trading and never try it, then you will live your life wondering what might have been. Life is too short not to embrace new challenges. To take on any challenge in life and then fail is very honorable. If you have the courage to take a chance and day trade, that decision will serve you well later in life. The next career change or challenge you accept might be the one that works out for you, and what you learn about yourself in the process will be invaluable.

All the best,

PS: I believe day trading is a long-term process. That is why we offer a lifetime membership, and I believe we are the only community offering a lifetime membership with just one payment. I understand people need time to master trading, and it is not always easy to pay monthly fees for a long period of time while learning. I believe that a one-time payment which guarantees you lifetime access to our community is the best and most cost-effective approach.