I have no Name, just call me "Speculator"

Some trade for a living, I trade to get rich. The trading is a too risky business and the success rate is too low to rely on it for a living. Unless you have an equity of a few millions, you need to achieve to be able to live from trading a performance of 30-40% at least per year, I don't say it's impossible: you just need to beat on a regular basis the average annual performance of Soros or Buffet or any legendary investor. More importantly, you don't let the performance compound in your trading account if you need to withdraw money from it to eat: if you withdraw 10,000 quid now, assuming you have the outstanding (but required) performance of 30% per year, you'll have roughly 138,000 quid less in your trading account in 10 years (ahhh the power of compounded interests...). Let’s be realistic Fellow Traders, if you want to spend your day trading or investing for your own account, you need to have a source of regular income to feed you and give you a roof.

One way to try to achieve this is to become a money manager: the regular income is then called the management fees. To me once again, it’s a task for Tom Cruise in Mission Impossible as you need for this at least: trading experience, a good track record, marketing skills, strong relationships, a lot of contacts and/or a billionaire aunt in Australia, but that’s not the point here. The point is, as you manage other people’s money, your trading is influenced by these other people as you're liable for the losses you make with their money (at least, you should feel liable...) and you need to report them any of your view and position as you need to make sure they don't run away with their money… I am one of these guys whose trading is altered when it’s for someone else and mainly, I’d been working like a slave, closing trading rooms at night, fighting, spending days, nights and weekends in front of my screens, crawling, shoe shining and so on for too long for the sake of the “Client” to be willingly responsible of its money now.

This year I did some good trades on my personal account and felt sometimes like a Lord of Trading: I notably bet on the Quantitative Easing in Switzerland with a long EURCHF position before the SNB intervened and then the one of the US with a long T-bill position before the FED decided to buy back its treasuries, while I was bearish at the beginning of the year I managed to build a decent stock position from scratch over the year, I managed to catch the rally a bit late but early enough to make decent profits, I made a killing of my gold position, I had some profits on swing strategies on the EURGBP and I enjoyed good rides on the EURUSD on its way up and then lately on its way down. Of course, I had some bad stuffs too and at the very opposite, I felt sometimes like the dumbest of the novice traders: I notably tried to catch the knife shorting the beginning of the rally, and got often hurt by the noise: thrown out from my position while I was right at the end but the main bad stuffs were mainly costs of opportunities rather than losses this year. What’s my annual performance? Well I don’t know yet, I need to spend some time bean counting and I am waiting for the statement from the Asset Manager who manages my stock position too. Maybe, I’ll let you know in a further post, but no one (including myself) cares about the performance figure, that’s my own money, I have no client to report to and nothing to sell and more importantly, my main professional achievement in 2009 doesn’t lie in my trading or in my banking account: I’m very proud to announce that in 2009, I finally won my Freedom and I found an exit from the professional trading after more than 12 years of loyal service (I should write slavery, but actually it was pretty fun) with a decent regular income to secure a living for my family and me and will focus (almost) full time from now on on trading and investing to get rich as a Speculator. I'll have no name, just call me "Speculator".

No need to say that the probability to get rich as a speculator is very low, particularly if you keep in mind that the "lesser rich" level starts at £15 million of assets... It's from far the most difficult professional challenge I've faced so far but I'd say there's a kind of statistical arbitrage to the extent that I believe in my very own personal case that my odds of success are higher as a Speculator than if I was an entrepreneur and if I stayed in the rat race as an employee. In the latter case, in which case they are literally of zero, not that I've something against the rate race, you would be impressed how I've run happily in that race, but that's a fact: you won't get rich working for someone else, in the best case, you can make the owner of your company rich, you can have a title, a good salary, big bonuses, an office with a view, even a gorgeous secretary but you won't get rich.  That's the rule of the capitalist game: if you want to get rich, you need to own things and use leverage, I don't refer to the leverage granted by your bank or your broker, but I mean the work of others. When you purchase a stock, you're the owner of a company and you can have up to hundreds of thousands people waking up every morning to go and work hard for you, as I (and probably you)  have done for all these years, MBA not required.

I recently read a book on George Soros, the author noticed that during all his career as a speculator, Soros has not spent one single day in jail in a similar tone as if he wrote: "Look at this guy, he's the world champion of ski and he has NEVER fallen".  Now we're at the point: is speculation a crime? I would give the same answer as a money counterfeiter at his own trial who argued, according to the relative of a friend of mine who's judge: "You know, forging money is a real job, it's quite cumbersome..." So is speculation: cumbersome, boring, painful, ungrateful, stressful, it requires hours and hours spent reading articles, research papers, news, staring at blinking figures and colored charts on a screen (or six of them): it's a real job. What's the use of speculators? When we're long we help funding some companies, when we're short, we... well, I'm not sure what we are doing when we are short, let's say we help other speculators to help funding some companies...

You've been following the blog of Sauros, the investment banker, now you will follow the blog of Sauros, the Speculator. And you can expect it to last for a while: as the Investment banker managed to survive to several crisis, boom and bust cycles, merges, lay off waves and other political battles, the Speculator will focus on the survival of his equity. I'm not one of those guys who wake up a morning, decide that they will trade for a living, purchase a book that claims that's very easy and you can make it while sleeping, trade their whole equity with a huge leverage after a few months of training (if any) and ultimately find a less expensive hobby as they go broke. I am convinced the millions flow in your trading account after you have done your homework, followed the steps one by one and developed the skills, experience and education to make out from the markets your first tens grants, but that's precisely when you reached this million that the main obstacle to riches is found as the temptation to take your profits at that stage and not to risk what you've earned so far should be the strongest. But we're far from this dilemma and the way is still long as the Journey only begins.

First things last: Happy new year Fellow Traders!

------------------------------------
Comment this post at the Hand of Scalpuman, the trading forums