Transitioning to a Fulltime Trader

This is a discussion on Transitioning to a Fulltime Trader within the Home Trader forums, part of the Trading Career category; Originally Posted by louistrader I am currently in simulation and am backtesting a system. So far things are looking good, ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Oct 27, 2014, 3:43pm   #17
 
CostaKapo's Avatar
Joined Aug 2013
Quote:
Originally Posted by louistrader View Post
I am currently in simulation and am backtesting a system. So far things are looking good, but it is too premature to say definitively.
Here is another question I would pose to you Louis - how much monthly/quarterly/ annually would you need to make to be comfortable as a full time trader? If you currently work full time 40 hours a week in a regular m-f job - lets use median income 50,000 a year you would on average need to have monthly returns of about 3900$ to replace the income you received working. You would probably want to retain even more until you reach a tax status of "Trader in Securities" I think 338 annual trades? (Someone correct me if I am wrong)

This is not tax advice

If you trade define profits and losses it would be eas(ier) to preplan for the transition to full time trader.
__________________
"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for." - Robert Kiyosaki

Last edited by CostaKapo; Oct 27, 2014 at 3:48pm.
CostaKapo is offline   Reply With Quote
Old Oct 28, 2014, 3:13am   #18
Joined Oct 2014
louistrader started this thread
Quote:
Originally Posted by TroyT View Post
- was young, had saved 2 years worth of living expense, had the confidence that I could get my old job back
- nope.just the confidence that I could get another job pretty easily if things went bad
- it's different for everyone depending on style, expectations, market etc. What is more important is how long you can last without making any money.
- get a mentor or coach who is living it and getting the results that you want to reproduce and practice, practice, practice. Figuring it out yourself and the school of hard knocks is totally overrated.
[/QUOTE]

Thank you for your post, TroyT.

I have the living expenses part down, but I don't have the confidence and proper game plan yet. If I were to quit my job today, I would feel like I was throwing myself to the wolves and lose it all.

Your last comment is also very good; the school of hard knocks is very overrated. At the same time, those that claim to give you their system seems to be very subjective and not definitive.
louistrader is offline   Reply With Quote
Old Oct 28, 2014, 3:39am   #19
Joined Oct 2014
louistrader started this thread
Quote:
Originally Posted by CostaKapo View Post
Here is another question I would pose to you Louis - how much monthly/quarterly/ annually would you need to make to be comfortable as a full time trader? If you currently work full time 40 hours a week in a regular m-f job - lets use median income 50,000 a year you would on average need to have monthly returns of about 3900$ to replace the income you received working. You would probably want to retain even more until you reach a tax status of "Trader in Securities" I think 338 annual trades? (Someone correct me if I am wrong)

This is not tax advice

If you trade define profits and losses it would be eas(ier) to preplan for the transition to full time trader.
CostaKapo,

The main reason I, like I imagine everyone else, want to trade is for both money and lifestyle (more time freedom). At the same time, I do not want to be a trader that is just skating by (or broke!).

My primary goals are:

1. For day trading: I'd like to profit $200-$400 per day.
2. For an option portfolio (credit spreads, calendars, debit spreads, etc.): I'd like to profit $1,000-$3,000 per month (5-15% per month).
3. For a dividend portfolio: I'd like to profit anywhere from 5-15% per year.

If I could achieve this, I would quit my job tomorrow.

My main issue right now is figuring out my day trading entry and exit. In analyzing the way that I think, I am more mechanical than discretionary; while I can use discretion, I believe it turns me into a gambler versus someone that is following a process.

Edit: my learning curve with day trading is also steeper due to being at work during the day so I am trying to figure out if I am trading price or an indicator.
louistrader is offline   Reply With Quote
Old Nov 7, 2014, 11:57am   #20
Joined Nov 2014
I went into full time trading before with £50k and found that it was really not enough. This is my view after the end of a lot of hard day trading:

1) The best fund managers in the world are lucky to be hitting 10% year in, year out. Yep sure there are 40%+ funds and traders saying they are tripling their accounts in a month. But take out the leverage and look at the realistic average return over the long term, not a few good short term trades. 10% per year is pretty damn good for most fund managers.
2) Are you as good as a 10% a year fund manager? Probably not but let's say you are. Now think about the money you need....£500k being £50k a year. Not a great wage but not bad, however that's with £500k behind you. Most people don't have that.

What I found is that there are small groups of day traders who hit it big. They came up heads on the coin flip and win and they happened to do this 20x in a row with leverage. £5k -> £250k? Sure no problem. Now with all the people day trading out there will you come across these stories, of course you will. Same as in the casino there will be somebody who doesn't lose a hand of blackjack for half hour straight. But over the long term the averages always come back into play, the house always wins.

Now if you have a true edge and can exploit it repeatedly then you can do this with a smaller amount of money. But most edges are short term or are not really there at all, just small sample sizes of say a 100 trades make people think they are a winner. Can you do it for 1000 trades, 10,000 trades?

I've now switched to long term trading having realised, unless you are lucky, there is no short term fix. Not what most people want to hear but that's my two pence as depressing as it sounds!
LongTermInvester is offline   Reply With Quote
Thanks! The following members like this post: punjabi
Old Nov 10, 2014, 1:34am   #21
Joined Oct 2014
louistrader started this thread
Quote:
Originally Posted by LongTermInvester View Post
I went into full time trading before with £50k and found that it was really not enough. This is my view after the end of a lot of hard day trading:

1) The best fund managers in the world are lucky to be hitting 10% year in, year out. Yep sure there are 40%+ funds and traders saying they are tripling their accounts in a month. But take out the leverage and look at the realistic average return over the long term, not a few good short term trades. 10% per year is pretty damn good for most fund managers.
2) Are you as good as a 10% a year fund manager? Probably not but let's say you are. Now think about the money you need....£500k being £50k a year. Not a great wage but not bad, however that's with £500k behind you. Most people don't have that.

What I found is that there are small groups of day traders who hit it big. They came up heads on the coin flip and win and they happened to do this 20x in a row with leverage. £5k -> £250k? Sure no problem. Now with all the people day trading out there will you come across these stories, of course you will. Same as in the casino there will be somebody who doesn't lose a hand of blackjack for half hour straight. But over the long term the averages always come back into play, the house always wins.

Now if you have a true edge and can exploit it repeatedly then you can do this with a smaller amount of money. But most edges are short term or are not really there at all, just small sample sizes of say a 100 trades make people think they are a winner. Can you do it for 1000 trades, 10,000 trades?

I've now switched to long term trading having realised, unless you are lucky, there is no short term fix. Not what most people want to hear but that's my two pence as depressing as it sounds!
LongTermInvester, thank you for your feedback.

For the most part I agree with everything you said. The only thing that is frustrating but hopeful is that I know there are people out there, from home, that are trading for a living where it gives them more flexibility with time and money. If no one is succeeding at it, why are we all wasting our lives studying it and spending money on it (courses and losses)? I ask myself that regularly.
louistrader is offline   Reply With Quote
Old Nov 10, 2014, 4:59am   #22
 
verial's Avatar
Joined Nov 2014
Quote:
Originally Posted by louistrader View Post
LongTermInvester, thank you for your feedback.

For the most part I agree with everything you said. The only thing that is frustrating but hopeful is that I know there are people out there, from home, that are trading for a living where it gives them more flexibility with time and money. If no one is succeeding at it, why are we all wasting our lives studying it and spending money on it (courses and losses)? I ask myself that regularly.
The contradiction of full-time trading is two-fold:

First, you money to start. You can't go from $0 to $1,000,000 trading. You have to start with some other sort of income. Thus, you'll have to start with some sort of job or income source, making "trading as a full-time job" impossible at the beginning.

Second, you need enough money to live on before you can make enough money to live on. That is, if you need $3,000 a month to live on, and your trading strategy generates 30% per month, you'll need $10,000 in your account to start with. But you'll actually need more, because if you have a bad month, it will take you a long time to get back up to that amount that can generate your "standard of living" money. Thus, before you can live off your trades, you need a lot of money. But if you have a lot of money, is your monthly expenditure really only $3,000? Doesn't your standard of living increase along with your net worth?
verial is offline Coach/Trainer   Reply With Quote
Old Nov 10, 2014, 6:21am   #23
Joined Oct 2014
louistrader started this thread
Quote:
Originally Posted by verial View Post
The contradiction of full-time trading is two-fold:

First, you money to start. You can't go from $0 to $1,000,000 trading. You have to start with some other sort of income. Thus, you'll have to start with some sort of job or income source, making "trading as a full-time job" impossible at the beginning.

Second, you need enough money to live on before you can make enough money to live on. That is, if you need $3,000 a month to live on, and your trading strategy generates 30% per month, you'll need $10,000 in your account to start with. But you'll actually need more, because if you have a bad month, it will take you a long time to get back up to that amount that can generate your "standard of living" money. Thus, before you can live off your trades, you need a lot of money. But if you have a lot of money, is your monthly expenditure really only $3,000? Doesn't your standard of living increase along with your net worth?
I adjust my standard of living to my income versus net worth, but otherwise I completely agree.

The point of this thread is to see if there is someone out there that went from working an "average job" to trading fulltime. My perception of this entire space is that it's a tight-lipped secret society where only those that have relatives or close friends that already do this (how did they learn?) actually make it and/or people that have flexible schedules like real estate agents, doctors with their own practice, family business owners and retired people. Most others seem to make their money selling courses. I haven't really seen many, if any, stories where people go from working a regular job to doing this fulltime.
louistrader is offline   Reply With Quote
Old Nov 11, 2014, 11:15am   #24
 
lloydbee's Avatar
Joined Jun 2009
Quote:
Originally Posted by louistrader View Post
Hello,

Some of the things I am curious about:
  1. What was "the" thing that made you take the plunge?
  2. Did you have someone else with income in the household such as a partner or parents? If not, what was your thinking like going into this?
  3. Without getting too specific, can you give others an idea of your account size? Do you need to have several hundred thousand or more to actually do this fulltime?
  4. What would you tell yourself in the past with what you know now?
  5. Any other advice, stories, etc.

Thank you all for reading and responding.
1) BP burning in the Gulf of Mexico and the belief in myself that I could get enough of an understanding to be able to succeed at trading in Options.
2) No other forms of incoming income.
3) Starting capital was under $10k, No I do not need several hundred thousand to make a liveable living.
4) Stay home, stop travelling, live within the account gains means and accumulate a lot more.
__________________
It's A Risky Business
lloydbee is offline   Reply With Quote
Thanks! The following members like this post: Mr.Grey
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Trader-Dante trader training for spread betting is he any good? Proof not words! Truth Seeker Educational Resources 256 Apr 22, 2013 3:50am
Transitioning from early success to profitable full time trader CaptainAmerica Trading Journals 10 Sep 14, 2011 6:02pm
IBD summer internship to trading fulltime for BB switch London sonic2 Trading Firms 0 Sep 19, 2010 12:01am

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)