From Beginning to End: A Successful Trader's Journey
If you dream about becoming a trader, learn from Angela Zhou's story.
How I Got Interested in Trading
In 1998, I finished college in South Florida with a major in business. I kept thinking about what I would like to do next, and worked as a waitress in a sushi restaurant to support myself.
The old Chinese traditions taught me to work hard and save for rainy days and I had managed to put an initial investment of $15,000 into a mutual fund. One day, I received my statement and was surprised to see a 12% return for the year—an $1,800 gain. With great joy I told my best friend about it. He answered unemotionally, “Do you know you could have made 5-10 times that if you invested in stocks instead?”
What? Really? I suddenly became curious about this new discovery. The next day, my friend started showing me reams of information from his 17 subscriptions, pointing out that Investor’s Business Daily (IBD) was his favorite.
He also showed me the financial TV channel CNBC that he watched daily.
Newborn Calves Don't Fear Tigers aka My Trading Start
I eagerly opened an online brokerage account with an initial deposit of $2,000. One day, I saw that a stock called The Sharper Image had moved in one day from $8 to $20 on the news it would open online stores. I wrote down its ticker and kept this price move in mind. A few days later it went back down to $9 so I immediately bought 200 shares. A few days after that it shot up to $21 on the same news. I sold it and doubled my initial $2,000 investment.
Unbelievable! I had made a 100% profit in a few days; it was much better and much easier than having my money in a slow-growing mutual fund. The next day I got out of my mutual fund and sent all the money into my E*TRADE account, which then totaled about $20,000.
I began to buy every trading book out there and read them over and over. I followed IBD diligently, learning about stock fundamentals, and I traded most of the high flyers of the day—mainly based on my gut feeling and instinct.
Then something strange happened. The price behavior of most stocks began to change.
How I Developed Mental Toughness
I remember holding 100 shares of a stock with a 70-point gain. Two days later, I came back to my desk after lunch and it started tanking on some negative news.
My heart stopped beating and my hands were shaking and sweating. I was freezing, and I couldn’t move my fingers as I watched it rapidly drop below my buy point. Luckily, the stock opened up 20 points the next day, so I sold immediately for a $2,000 gain. But something wasn’t right.
Another morning, as soon as CNBC announced an enterprise software company I held had accounting issues, the stock dropped 100 points in 10 minutes, and I dumped my 200 shares for a huge loss. Those wild days taught me to be able to endure big-time volatility and also made me mentally tough.
Similar incidents with extremely volatile price moves started happening a lot by late 1999. This was a time when everyone was talking about stocks and acting like experts, which caused me to become alert and cautious about being long in stocks. I started shorting some high flyers.
I shorted Yahoo (YHOO) at its exact all-time high of $500, or $125 post-split adjusted price ( it dropped as low as $4 later). I shorted CMGI at exactly it’s all-time high of $300 ( it hit below $1 a year later ). But although my entries were good, I only caught partial gains on those shorts.
From mid-1998 to the end of 2000, despite a roller coaster ride, my initial trading funds went up over 800% for a $150,000 gain. Being a young female immigrant who used to make only $25,000 a year working part-time while studying for school, I was very happy with the profit.
Finding a Mentor and Learning Technical Analysis
Like life, my trading journey was not all smooth sailing. A bear market started from September of 2000 to March of 2003, when I found that trading historic leaders was not working well. I made money, and then gave it back, and repeated the process. It became evident that I needed to improve my trading skills and to find a mentor if I wanted to be successful in trading.
I paid $1,800 for course materials about day trading from a website, but it didn’t work for me at all. I had to work other jobs outside of trading to make some income, but I didn’t give up my passion for trading.
Then one day in 2004, I was browsing through a trading magazine at the bookstore and read an amazing success story about a former pool contractor who became a multi-millionaire by turning $11,000 into $42 million in 18 months. His name was Dan Zanger. Learning about his astonishing story made me so inspired and excited, it was as if I found the miracle, and I knew he would be my mentor!
Achievement and More Challenges Ahead
I started trading full-time again in 2006. By going through that learning curve of repeatedly losing and winning, my trades finally became more consistent and more profitable. I combined Dan’s trading method with my own style, one which fit my personality. By 2008, the hard work paid off. I turned my $50,000 trading fund into well over $1 million in profit by trading market leaders.
Over the years my trading journey has had many ups and downs. But I am a trader who likes to pick myself up after a fall, who aims high after winning, who loves to keep learning, and who always strives to get better. Trading is my career now and my passion in life.
Photo Credit: Getty Images/Raphye Alexius/Image Source