Starting From Zeros: How To Succeed in Trading Without Spending a Penny

From the huge amount of products and marketing available online you would thing that succeeding in trading is something that requires you to get an arsenal of seminars, tuitions and software products than can “guarantee” your success. However – although not all products are bad and some can indeed be immensely useful – there is a possibility to achieve the status of “successful trader” without having to spend a single penny in trading education products or aids. With enough work targeted at the right areas one can – without a doubt – become successful through personal merit without aid from any successful traders or any external educational products. But how can you do this? How can you become successful without spending any dough?

Trust me, it won’t be easy, it will be extremely hard. If you want to become a successful trader without the help of anyone or any type of product then you need to start by realizing what you need to learn, what time you will need to learn this and what tools you can use to learn without the need to purchase anything. I will divide this learning process into three areas and I will focus on how to become a successful algorithmic trader since this is where I have achieved success and therefore the area in which I feel my advice would be most useful. I will now describe these three areas and some of the tools I believe could be successfully used to master them.

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1. The area of basic knowledge. If you want your trading career to be a success you need to build your house on the rock and not on the sand, you need to make sure you have strong basis for the knowledge to come or you will not be able to achieve success since you won’t have any criteria to distinguish between good/bad ideas and you will lack the necessary tools to implement your future experiments. In algorithmic trading I believe the two most important areas of basic knowledge to be programming and statistics. Without this knowledge you will NOT make it on your own as an algorithmic trader. I would also strongly discourage the gathering of information online as online information is not audited, peer reviewed or adequately verified. In order to get your basic knowledge I advice you to go the classic route: go to a library, read and go through a text book on basic statistics (do all exercises) and do the same for a C/C++ programming book. This will probably take you one to two years, at least this is the time it usually takes me to go through a whole textbook doing all the proposed exercises and problems (but perhaps I am too slow!).

2. The area of experimentation. If you have got your basic knowledge – and trust me, you will need ALL of it – you are now ready to begin what I call “experimentation”. Within this area your first priority will be to read algorithmic trading literature books (I suggested a selection here a while ago) and both duplicate some of the ideas proposed (those which interest you) and implement your own ideas based on their suggestions. The idea of the experimentation phase is for you to build software and tools to carry out the analysis of trading problems, coupling this with a move towards the available algorithmic trading literature and the development of your own ideas. Since you already know basic statistics and programming you can get a good idea through experimentation over what makes it or doesn’t make it in trading.  This phase usually takes 3 to 4 years depending but it is a very important area of development because it encompasses the first encounter between your basic knowledge and your intended application (trading).

3. The area of application. Now that you have gathered basic knowledge and on top of that you’ve been able to implement trading systems and evaluation tools it is now the moment to start your journey into the application of that knowledge into trading. This implies that you will move your experimental successes to the trading platform you want to use and you will use them to gather information about the market which you previously didn’t have. This part of the development process is critical as constant analysis, vigilance and comparison are a must. Every experimental idea which was a success needs to be tested and then its reason for success or failure needs to be compared. Here you need to put some money into trading accounts (cent ones) while you evaluate your trading ideas. Of course if you wanted to succeed in trading you needed to put your money somewhere! After this area is developed you will have the necessary practical trading skills and you will be a successful trader. The basic development of this area takes – in my experience – at least 3-4 years.

Of course, the above makes it sound like a linear black & white process but in reality it will not be like this. Once you move into the second area of development you will still fall back to area one whenever it is necessary for you to learn some new concepts/techniques and once you move into area three you will constantly move back into two to learn more about the systems you develop or to come up with new tools. Yes, this path of development is long and it involves a very personal commitment to trading success which will most likely take up a good 2-3 hours a day of your life for the next 7-10 years. So yes, you can become a successful trader without any investments in education provided that you have a public library which you can access (I bet most have no problem here) and the necessary time to do so.

Overall becoming a trader on your own is a longer path but probably a much more solid one than relying on any help as you will “own” every piece of knowledge you develop and therefore everything will be clearer and you will develop a “thick coat” against marketing plots and such other distractions that generally make retail traders fail continuously. If you would like to learn more about my work in automated trading and the education path I offer for people wanting to become algorithmic traders please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach towards automated trading in general . I hope you enjoyed this article ! :o)

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9 Responses to “Starting From Zeros: How To Succeed in Trading Without Spending a Penny”

  1. Franco says:

    Daniel, any C++ books you would reccomend? I thought of staying with C# but I think long term mastering C++ is the best option.

    • admin says:

      Hi Franco,

      Thank you for your comment :o) I personally like “C++ How To Program” by Paul and Harvey Deitel for me it was easy to go through and teaches all the basic and necessary concepts to master the language. Of course I mentioned C/C++ because I believe this to be the most wide-spread language but certainly the same success could be achieved by learning another language such as FreePascal. I hope this helps :o)

      Best Regards,

      Daniel

      • Franco says:

        Thanks Daniel,

        The reason why I think base languages like C++ is a must for traders is because of the speed of execution. I know C# and VB.net but the speed is horrible when it comes down to numerical calculations, IO of data etc. Or maybe I’m not an efficient programmer ?

        The plus side of C#/VB.net is GUI programming is extremely easy. Sure Visual C++ is just as easy but you lose a great portion of the speed compared to using base C++.

        Any thoughts?

  2. Brian says:

    I did some testing recently and found C# approximately 1/16th the speed of C++ for equivalent calculations. And, for backtesting, that will indeed speed up test runs.

    Despite that, I think C# is ideally suited to financial programming because it is so good at handling large lists of data without the programmer worrying about all the underlying memory management. C# leads itself to quicker development and less bugs.

    I’m not knocking C++, which is very important if you intend to be a full-time programmer, but C# would probably give you far more bang for everything else financial.

    • Franco says:

      Hey Brian,

      Interesting, thanks for sharing your results! I think what I will do in the future is write all the hardcore calculations in a C++ DLL, and use C# for the GUI and other benefits like LINQ.

    • Franco says:

      Brian, I just developed my first DLL in Code::Blocks with the pre-installed compiler, and the speed is blazing fast.

      I executed a billion loop with a complex mathematical equation (the equation was executed a billion times) in less than 0.1 seconds.

      The same calculation took me 30 seconds in C#.

      Must say I can work with this, all calculations are built in C++ DLL’s, and the rest is done in C#. Make my life a lot easier

      • Brian says:

        I think you may want to check to confirm that your calculations were not being optimized out by the compiler.

        On a 3 GHz processor with 4 cores, you could theoretically compute 12 billion instructions in one second, or 1.2 billion instructions per tenth of a second. That would mean each of your calculations would each have to occur in one clock cycle and the rest of the machine would have come to a halt during the process.

        I’m not saying it’s impossible, but it might be worth double checking.

    • Brian says:

      I updated my C++ vs. C# performance test to be more apples to apples. It is now a single thread 800 million simple math computation test. I got very repeatable results: C++ was 31% faster than C#.

  3. knowledge to success says:

    Hey There Mechanicalforex,
    I take your point, Back in the days when my dad was growing up college was only designed for people who wanted to be professionals i.e. people aiming for PhD’s or a special license such as a medical license; Or to qualify for an exam such as the bar.

    Other than that everyone went to trade school or did an internship, there were also institutes that gave you certificates and training if you wanted to go into IT or Mechanics. These schools were cheap and you were guaranteed to pass since the professors/mentors worked with you. They would never make you pay and then tell you to work on your own like college professors do.
    Also, back in my father’s day a degree wasn’t mandatory to get a job. According to the type of job all you needed was experience, a license or a certifiable.

    Now in 2012 EVERYONE has this weird concept that a degree proves someone intelligence. For example my father worked with an oil company called Petrotrin in the Caribbean for 20+ years. He has all his certs, but when he applied to BP they didnt even look at his resume because he didnt attend college. Instead they hired fresh graduates with engineering degrees because of that stupid concept that college students are smart.

    Let me just show you how stupid that concept or theory is.
    1) I am a sophomore at my state university and I was NEVER asked for Id while taking exams. This means any fool can pay his nerdy frinds to do his exams or assignments up until his junior year. Sure he will graduate with honors but how can any employer be sure that he did all his work on his own?
    2) The whole concept of paying someone for a piece of paper is just stupid when you could learn it on your own for free. Basically you are paying for an accredited institute to vouch for you. Anyone can learn something at home, but colleges want you to pay them so they can give you a piece of paper after 4 years. Besides that they will make you do unnecessary classes hoping you will fail them so you can pay more money to retake them……sounds like a scam to me. And lets not forget those professors who are on their ‘power trips’ and fail you since you didn’t do the work how THEY wanted you to do it. I wrote an essay in the wrong font and got a zero when I was a freshman!

    Now I am trying to figure who started this trend and scam. Could it be the government brainwashing us? Is the population growing too fast so we have to make it difficult for everyone to succeed? Do we want the rich to stay rich and the poor to stay poor?…IDK, but there has to be a reason why 90% employers want you to have a degree. Hell some dont even care what kind of degree you have so that just shows how suspect the system is.

    So what does this tell you? It tells me that a high school diploma is worthless. So Since Big Brother wants to screw you and force you to get a degree then you should screw him. This is how you do it: Dont send your kid to high school because as you can see, a degree is more important. Instead home school them and just let them do the GED like I did. Do the SAT as well, and those two diplomas make you eligible for most state universes. If everyone does this then high schools would be empty.
    This will mind f*ck the government and eventually they will flip the switch and say that a high school diploma is more important than a degree.
    BTW great blogpost

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