Time and money for your first year or two.

Hey everyone. I love your forum here. Tons of great info and insights. I'm new to this so I'm going to say things that don't make sense. That's what new guys are for; It's our job and we're damn good at it. And pardon the long windedness. Currently I'm reading a bunch of books, talking on forums and I want to develop great skill at swing trading and day trading. An aspiring trader needs time and money. Time to study, to learn, and money to cover expenses. Like equipment, rookie loosing streaks, research costs, normal living costs, etc. So, how do you maximize both at the same time? I'm sure other traders have figured out this problem better than I have, but here are the solutions I see so far.


1) I doubt this one will work. Hypothetically, it would be great to work for some company that is involved in trading, or maybe in the ball park. Meet knowledgeable people, learn a lot, broaden horizons etc. However, I have no back ground in finance or investing. My resume doesn’t looks appealing; my only strength is learning fast and being extremely motivated to understand the job well; learn everything possible about this topic. If i am wrong about this, if there are in deed such options, such jobs, please tell me. Until someone suggests otherwise, I'm considering this option a no go.

2) I expect this next option won't work, either. Work 3rd shift at a job you can study. Like a security guard. Eventually, start trading during day time. But, how long before you save up a trading account of 20k? Probably a long damn time. Some say accounts of 5k and below are pointless. Perhaps that is not fully true, perhaps there is some "angle" to trading which can squeak you by, generate a modest profit out of a 5k account, continue to work a full time job. Continue educating yourself about trading, save up, eventually accumulate a large enough savings to trade full time. Again, I doubt this 5k account "angle" exists, and if it does I don't know what it is. Do you?

3) This may sound odd but it's doable. Semi trucks. 35k to 50k your first year. There is a lot of down time where you are not driving. While driving, truckers wait for traffic to clear up, then listen to audio recordings. Truckers get degrees for online colleges this way or learn foreign languages. Save save save, learn learn learn. Make trades during down time. Eventually, stop being a driver; trade full time.

4) Maybe some combination. Such as first #2, then #3. Figure out what the whole strategy should be while working nights, (although I'm sure the plan will change) after that, if I'm 10K or 15K short of start up capital, go drive a truck until I save the rest.

Again, I'm new, and am sure other traders have confronted this issue, have thought up better ways to handle the first two years than I have. Any suggestions? Anything important I don't know about, that would change everything I've said here?

Thanks a million

Nice honest post.

Personally (and only from what I hear) I doubt working low level at a finance firm would teach anything about how to be a successful retail trader.

Surely any job that pays the bills, allows you to accumulate trading capital and leaves you enough down time to learn trading and practice will do? Driving, security etc. have notoriously long arduous shifts so you'd have to be damn keen and energetic to take on serious new challenges outside those jobs' hours.

You can spreadbet with £5k or less on almost any financial market - other members may suggest alternative ways forward on very limited captial. Bear in mind most traders will blow their first account, maybe one or two more after that, so starting small is in a way a sensible safety feature, not a handicap. Your first goal while learning the craft is controlling losses, not growing gains.

Hi jake g,
Welcome to T2W.

I think you're slightly over complicating the problem with your options. First off, learning the basics of trading won't cost you anything other than an investment of your time. There's a mountain of info' here on T2W - all of which you can devour for free. At some point, you'll want to turn theory into practice, which will involve getting a demo account and trading paper money. Most brokers offer demo accounts - again for free in most cases. If you're working full time, then your trading will have take place around your job. I strongly recommend that you make your job your No. 1 priority and put the majority of your focus and energy into that. If you do that and trading doesn't pan out for you in the way you hope it will then, with a bit of luck, you'll still have a good career that's advancing nicely. There are plenty of markets that you can swing trade so you don't need to be in front of your screens 24/7.

If you really want to day trade, this is harder, but still doable. When I started out in the early noughties, I was a landscape gardener. I came home around 5.00 - 6.00pm, showered, ate and then was in front of my PC to trade U.S. equities for the final two hour session of the day between 7.00 - 9.00pm. If you're wondering how I did - I did exactly what Tom outlined in his post above. I did okay to begin with, got overconfident, and blew £3.5k of a £5k account on a single trade! Scarily easily done - be warned!

Enjoy your journey!
Tim.

I don't know what your current situation is, but if you have enough time to read lots of books and post on forums, then you clearly have the learning sitch under control.

Over time you can probably spend less time learning the theory, and more time playing around in a demo account. After you feel you have got the hang of it, then you could move on to a real money account?

In terms of funding this, I guess just keep doing whatever you are doing are saving on the side while you are learning?

I would highly recommend that you avoid thinking about starting down a day trading route altogether. Without vast experience of the markets, you are pretty much doomed to failure from the outset. You may get a few wins, but you'll most likely follow the same path as most and blow your account on one or two bad trades. I would recommend scaling into your timeframes, starting with the highest you have the patience for. If you follow a longer term trend following strategy (holding period of up to a few months or even longer), you can monitor your trades when you have the time and start to get a feel for how the market behaves without getting too caught up emotinally. If you truly have the bug, you can move in to some swing trading. Bear in mind though, that there are times when the best day traders and swing traders will be doing nothing - the market is not giving them the opportunities that they rely on, and they'll patiently wait for a setup that they know will work. This sort of thing only comes with years of experience, and if you jump right in to day trading, you won't have that edge, no matter how much you read and learn. As a trend trader, I'd also argue that it's easier, more reliable and can be just as profitable.

Oh, and you will not be able to earn a living from 5k - even the best trader in the world would struggle to make that work. Expect to lose or at best break even after a year. You may manage a 10% gain in your first year. If you're really **** hot, you'll be able to rely on 30%+ per year.

Also, you need to factor in commissions. When I started out, I was spread betting - it worked, but the broker made a ton of cash from me. I'd be giving him £10-£30 per trade (with a position size of around £100 per trade) - eventually, I managed to get enough together to start trading real stock through IB, and they charge just $2 per trade - suddenly I'm holding on to that profit, instead of giving it to the broker. I maybe enter/exit 10 trades a month, and the difference to my bottom line was enormous. If you plan on trading with a small amount via spread betting, and you are thinking of making trades more frequently, you might as well write the broker a cheque for 5k and have done with it!

Don't let any of this put you off. Trading has been one of the most rewarding activities that I ever got involved with. When you lose the 'I need to make money' itch, and start to focus on the challenge itself, it becomes immensely gratifying. In a twist of irony, you kind of need to lose the 'I need to make money' itch in order to do it successfully.

It can change your life, but I've yet to meet anyone who has become a successful trader through needing to make money.

Good luck - trade small, and if you're doing it right, you won't be able to pin your success on any one particular trade (took me a long time to get my head around that one!).

I can only comment from my own personal experience, but while I'd love to eventually make a living trading, I'm being realistic in my situation - I work a day job during market hours, need to provide a stable income for my family with health insurance, so I swing/position trade going for the bigger moves over weeks or months. Holding only a max of 4 or so stocks at any given time.

I mostly place orders pre-market and check them on the chart in the evening when I can sit back and be more objective. Too many times in the past I've made rushed decisions during trading hours only to see the price settle back down and close where I would have held onto it.

Good luck on your journey!

2) I expect this next option won't work, either. Work 3rd shift at a job you can study. Like a security guard. Eventually, start trading during day time. But, how long before you save up a trading account of 20k? Probably a long damn time. Some say accounts of 5k and below are pointless. Perhaps that is not fully true, perhaps there is some "angle" to trading which can squeak you by, generate a modest profit out of a 5k account, continue to work a full time job. Continue educating yourself about trading, save up, eventually accumulate a large enough savings to trade full time. Again, I doubt this 5k account "angle" exists, and if it does I don't know what it is. Do you?

Click to expand...

As is obvious to most, above, 'option' means a potential strategy. Below, 'option' means calls and puts. Which I don't know much about.

In terms of swing or position trading, I’m wondering if options can lower the barrier to entry. Suppose a trader is well educated, great judgment, has a nice track record. They don’t let their greed or fear cause them to do something stupid. But they have an account of 5k or less.

The fact that options grant you access to more shares than you have the money to buy, but, if it fails, you only loose the cost of the option, means smaller accounts could earn higher profits.

Am I understanding this correctly?

Update to my first question at the top.

I’m currently perusing option 4 while I read, take notes, and chew on what is covered in http://www.trade2win.com/boards/first-steps/89078-essentials-new-trading.html

Plus the further reading it recommends. Many thanks to timsk for writing it. And I no longer have my sights set on a particular timeframe or market. I’m going to learn the basics of each, first.

Do not over complicate things and start trading ASAP with an amount you are comfortable losing. Trading is very much practical and you will learn far more about yourself when you start. Learning about yourself and how to control your emotions whilst following your plan is paramount. Learn what you need in order to start trading then get trading!