How did you save up your trading capital?

J

JohnnyForex

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Hello guys,

I want to get started as a full-time daytrader and I`m curious how all you guys got started in the game.

After several years of study, I`m starting to gain an understanding of the markets, but I lack capital.

My plan at the moment is to save up roughly $25 000 for my initial trading account and on top of that I would need to put aside money for 6 months of living expenses.

I have thought about another approach and that is to keep my 9-5 job and actively trade the markets for 2 hours 4 days a week or so. If I`m able to grow my account I could gradually reduce my hours at my daily job and eventually trade full-time. This will be tough as my concentration will probably not be at the level it should be. And even though I would be trading only for 2 hours, I would need to put in time for post-analysis, performance analysis, plotting my metrics, etc.

It`s not that I fear working, since I will probably put in just as much daily work (more than 9-5) if I decide to save up all the capital first. I just fear that learning day trading part time would be too hard compared to being able to fully concentrate on it having first earned all of my stake.

I have also consider just saving up the living expenses for 6 months or so and then borrow what I need to start trading from the bank. I know this is not the ideal, but I think perhaps I could pull it off. I would of course need to be very strict in my trading plan. Example; Quit trading for the rest of the year if I loose 20/30% of borrowed capital, pay back the rest and get back to work while continuing to study.

What do you guys think?

Curious to hear how you got started in the game.

All the best,

Johnny
 
Really wouldn't borrow money for trading.

I think working and trading at the same time is the best approach, if it's possible for you to work 4 days a week, with longer hours, allowing you to do a full day trading.

Alternatively, trade the daily charts, look at the markets just once a day, put on your trades, and leave it.

Start as small as possible!
 
JohnnyForex said:
Hello guys,

I want to get started as a full-time daytrader and I`m curious how all you guys got started in the game.

After several years of study, I`m starting to gain an understanding of the markets, but I lack capital.

My plan at the moment is to save up roughly $25 000 for my initial trading account and on top of that I would need to put aside money for 6 months of living expenses.

I have thought about another approach and that is to keep my 9-5 job and actively trade the markets for 2 hours 4 days a week or so. If I`m able to grow my account I could gradually reduce my hours at my daily job and eventually trade full-time. This will be tough as my concentration will probably not be at the level it should be. And even though I would be trading only for 2 hours, I would need to put in time for post-analysis, performance analysis, plotting my metrics, etc.

It`s not that I fear working, since I will probably put in just as much daily work (more than 9-5) if I decide to save up all the capital first. I just fear that learning day trading part time would be too hard compared to being able to fully concentrate on it having first earned all of my stake.

I have also consider just saving up the living expenses for 6 months or so and then borrow what I need to start trading from the bank. I know this is not the ideal, but I think perhaps I could pull it off. I would of course need to be very strict in my trading plan. Example; Quit trading for the rest of the year if I loose 20/30% of borrowed capital, pay back the rest and get back to work while continuing to study.

What do you guys think?

Curious to hear how you got started in the game.

All the best,

Johnny
Click to expand...
For most people $25k would be undercapitalised, but only you know whether that is true for yourself. There are a few things you need to think about before you start:

1: How much debt do I have, what are the consequences of defaulting on that debt
2: Will my failure affect anyone elses life (wife, kids)
3: How much do I need to live on
4: What percentage of my capital do I need to return per annum to meet my living expenses

and the fifth one if probably the most crucial of all:

5: Do I have an edge in the market, a definable reason why I am going to succeed. To answer this you need to be deadly honest with yourself, because it's extremely easy to let your heart overrule your head.
 
JohnnyForex said:
What do you guys think?

Curious to hear how you got started in the game.

All the best,

Johnny
Click to expand...

When you quit to go full time, you can get away with 6 months or living expenses, but 1 year is much better. The reason is if you are unlucky and lose money for the first few months but then recover and make money the next few, you are back to even but your living expenses are mostly all gone, this will effect you.

You need to be correctly capitalised relative to your living expenses.

If you need $10K a year to live off then your starting capital can much smaller than someone who needs to make $50K a year to cover living expenses.
 
So, you dont think you can 'play' the forex markets unless you have 25,000? :rolleyes: What's your thoughts on someone loading/leaving in their various accounts as little as 5K every month, growing the accounts exponentially each month, then taking out their winnings at the end of the month (to leave 5K in), then investing their winnings in several currencies....etc. etc. etc...?.:)
 
Hotch,

Thanks very much! Great advice:)

I never though about trading full-time one day per week. I could even reschedule my work week so that I would have two week days off for full-time trading.

This is great Hotch. Need to seriously consider this approach.

Virtuos0,

Good questions. I`ll answer them loudly:

1) Only $8500 debt at the moment which I manage fine.
2) Nope. Fortunately I live on my own and have no kids or wife. I salute the struggling traders who need to deal with these added "complications" on top of what they`re already doing:)
3) I have not made a detailed budget yet, but am doing so in my business plan. I think $30 000 per year is a bare minimum.
4) With a $25 000 trading account, I would obviosly need to make a return of lot more than 100% per year in order to meet my living expenses. Taxes need to be taken into consideration and I also should be able to grow my account as well.
5) At the moment, I do not have a verified edge in the market and I would never dream of risking capital in the markets unless I have at least proved very good results in demotrading. And yeah, I know that demo is not the same as live;)

At this moment, my edge is that I have spent countless hours the last two years reading and studying markets. My bookshelf alone counts over 100 books and I have read, studied and taken notes from them all.

I hope to be able to build on this knowledge when I finally go live. And yes, I know that reading is only a small part of success, but in my opinion a good intellectual understanding is part of the foundation of a good trader.

donaldduke,

Thanks for your perspectives.

Agree:)
 
Black Swan said:
So, you dont think you can 'play' the forex markets unless you have 25,000? :rolleyes: What's your thoughts on someone loading/leaving in their various accounts as little as 5K every month, growing the accounts exponentially each month, then taking out their winnings at the end of the month (to leave 5K in), then investing their winnings in several currencies....etc. etc. etc...?.:)
Click to expand...
Who are you asking? moi?
 
JohnnyForex said:
Hotch,

Thanks very much! Great advice:)

I never though about trading full-time one day per week. I could even reschedule my work week so that I would have two week days off for full-time trading.

This is great Hotch. Need to seriously consider this approach.

Virtuos0,

Good questions. I`ll answer them loudly:

1) Only $8500 debt at the moment which I manage fine.
2) Nope. Fortunately I live on my own and have no kids or wife. I salute the struggling traders who need to deal with these added "complications" on top of what they`re already doing:)
3) I have not made a detailed budget yet, but am doing so in my business plan. I think $30 000 per year is a bare minimum.
4) With a $25 000 trading account, I would obviosly need to make a return of lot more than 100% per year in order to meet my living expenses. Taxes need to be taken into consideration and I also should be able to grow my account as well.
5) At the moment, I do not have a verified edge in the market and I would never dream of risking capital in the markets unless I have at least proved very good results in demotrading. And yeah, I know that demo is not the same as live;)

At this moment, my edge is that I have spent countless hours the last two years reading and studying markets. My bookshelf alone counts over 100 books and I have read, studied and taken notes from them all.

I hope to be able to build on this knowledge when I finally go live. And yes, I know that reading is only a small part of success, but in my opinion a good intellectual understanding is part of the foundation of a good trader.

donaldduke,

Thanks for your perspectives.

Agree:)
Click to expand...
The fact that you have read extensively and created a business plan certainly allows me to think positively about your chances.

Your lack of financial and personal commitments are encouraging. However, personally I went fulltime when my necessary return was around 50% of my 'assets under management'. I would not have been comfortable with the leverage necessary, and hence the risks involved, of returning anything higher.

I forgot to mention, as part of your business plan I suggest you consider some kind of disaster management plan.
 
robster970 said:
Any particular reason?
Click to expand...

Leverage and liquidity among two:)

While liquidity is probably not the biggest concern for the size I`m starting with, it is comfortable knowing that I`m trading a market where I can easily size up when I`m ready to do so.

I have also read a lot about the S&P 500 index and have follow Steenbargers blog for a while where he details how he trades these indexes, so it would feel natural to start trading the ES contract compared to a completely unknown market.

But hey, I have not decided yet and am open to other suggestions.
 
JohnnyForex said:
Leverage and liquidity among two:)

While liquidity is probably not the biggest concern for the size I`m starting with, it is comfortable knowing that I`m trading a market where I can easily size up when I`m ready to do so.

I have also read a lot about the S&P 500 index and have follow Steenbargers blog for a while where he details how he trades these indexes, so it would feel natural to start trading the ES contract compared to a completely unknown market.

But hey, I have not decided yet and am open to other suggestions.
Click to expand...

It's a good contract to trade imho. I trade it exclusively as I decided some time ago that I would rather get good on one instrument than spread risk over a number of them. Most of the guys on here are forex monkies but there are a few of us that trade e-mini from what I can see. Getting 100% return per annum is possible but it's hard work.

Don't trade out of main market hours unless you know something is going to happen with nikkei that will cause a ripple effect from there, to ftse and then back to dow/s&p. Most of last weeks downturn was down to bad news from asia triggering uk and us markets to go south.
 
Black Swan said:
So, you dont think you can 'play' the forex markets unless you have 25,000? :rolleyes: What's your thoughts on someone loading/leaving in their various accounts as little as 5K every month, growing the accounts exponentially each month, then taking out their winnings at the end of the month (to leave 5K in), then investing their winnings in several currencies....etc. etc. etc...?.:)
Click to expand...

I don`t know any such individual. Are you referring to yourself?:)

I`m sure it`s possible, but I`m not there yet.

For me as an aspiring trader, I want to be properly capitalized when going live since it will increase my chances of making it ten times more than starting out with a 5K account.

With a 5K account, I would need to make quite a huge return (huge risk) to meet my objectives and the risk of ruin would be substantially bigger than with a 25K account.

It would suck to save up almost enough money, then lose it and have to start all over again.
 
virtuos0 said:
The fact that you have read extensively and created a business plan certainly allows me to think positively about your chances.

Your lack of financial and personal commitments are encouraging. However, personally I went fulltime when my necessary return was around 50% of my 'assets under management'. I would not have been comfortable with the leverage necessary, and hence the risks involved, of returning anything higher.

I forgot to mention, as part of your business plan I suggest you consider some kind of disaster management plan.
Click to expand...

Thanks for your perspectives.

How did you transition to doing this full-time? Do you enjoy being a full-time trader?:)
 
robster970 said:
It's a good contract to trade imho. I trade it exclusively as I decided some time ago that I would rather get good on one instrument than spread risk over a number of them. Most of the guys on here are forex monkies but there are a few of us that trade e-mini from what I can see. Getting 100% return per annum is possible but it's hard work.

Don't trade out of main market hours unless you know something is going to happen with nikkei that will cause a ripple effect from there, to ftse and then back to dow/s&p. Most of last weeks downturn was down to bad news from asia triggering uk and us markets to go south.
Click to expand...

I concur.

It makes sense to concentrate upon one contract as a day trader and the ES seems like a good choice. I really recommend that you check out Steenbargers blog if you have not already done so:)

Good trading!

Johnny
 
took a gamble based on my confidence and paid into a prop shop with access to great leverage. Best decision i have made!!!!
 
started trading micro lots then set myself a target, once i reached it i was allowed to increase a lot size.
 
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