The money and freedom that comes from being a professional trader attract investors and speculators from all over the world.
It’s not surprising. Not only can you start trading at any point in your life, but you can also do it from anywhere you want. You could trade at home, from an exotic island, in a remote part of the woods, at a fancy spa, somewhere between shiny skyscrapers or wherever rocks your boat.
I won’t post any pictures of traders sitting in Bali, flashing a Rolex. There are plenty of such profiles on Instagram.
People usually start trading as a hobby. Who doesn’t dream of making a living doing what they enjoy? It applies to almost every hobby.
If you play poker, you dream of being a professional player, quitting your day job and travelling the world, maybe going all-in once in a while.
If you enjoy playing golf at the weekends with your friends, you’ve probably thought of how great it would be to play for a living, teeing off with Tiger Woods at the Augusta National.
Doing something you enjoy and getting paid for it is the ultimate career flex. As Mark Twain said: “Find a job you enjoy doing and you will never have to work a day in your life.”
Making a living by trading from home is the ultimate dream of every trader. That dream became a reality for many during the Covid-19 lockdown.
At the time, markets plunged, creating good trading opportunities. Millions of people gave it a try. For many, there wasn’t much of choice — they either watched Netflix, did yoga, baked bread or traded the markets.
After Covid-19, the markets experienced a bull run and many traders made serious money. That created the illusion that trading from home for a living was simple.
During a bull market, almost everybody makes money. It takes a bear market to reveal who is able to withstand the heat.
As famous investor Warren Buffett said: “Only when the tide goes out, do you discover who’s been swimming naked.”
Thinking that you can trade professionally after surfing the post-pandemic bull market is a bit of a stretch. You need a lot of knowledge and experience to be a professional trader.
In 2020 and 2021, almost everything was going up. Most traders felt like King Midas, who was famous for turning everything he touched into gold.
The year 2022, instead, is showing us that trading is not easy. Even professional traders are struggling and most of them are at a loss year to date.
So, how hard is it to trade from home? It’s fairly easy, you just need an internet connection. How hard is it to pursue trading as a successful career? Well, that’s more complicated.
To make a career out of trading, you need to skillfully navigate through different markets, assets and cycles
Tomasz Wisniewski,
Axiory Intelligence
Making consistent returns requires knowledge and experience, but it’s also very challenging from a psychological point of view.
Mastering your mind is the key to success, but novice traders constantly neglect the psychological factor. That’s because your mind and approach work differently when you trade with small sums as a hobby and when you have a secure, alternative source of income every month.
Things change when you trade for a living and have to make profits to pay the bills. That’s when the pressure builds.
If you want to make a career out of trading, you need to know to trade in all kinds of markets because buying when everything is gung-ho is not rocket science.
To make a career out of trading, you need to skillfully navigate through different markets, assets and cycles. This includes times of high inflation, deflation, quantitative easing, interest rate increases and cuts, wars and global pandemics.
You need to read books, watch tutorials and videos, and top it up with a trader’s psyche. That will make you ready for professional trading.
Tomasz Wisniewski is the director and chief executive of Axiory Intelligence
Essentials
The flights
Emirates and Etihad fly direct from the UAE to Geneva from Dh2,845 return, including taxes. The flight takes 6 hours.
The package
Clinique La Prairie offers a variety of programmes. A six-night Master Detox costs from 14,900 Swiss francs (Dh57,655), including all food, accommodation and a set schedule of medical consultations and spa treatments.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
