Cost Of Living!!!!

[jamesgerrard]

Thanks for reading this,

I am a prop trader in the Schatz. Recently started (2 lots at mo). My biggest constraint is supporting my living costs whilst trading. I believe it is realistic to not count on having any money to take out for 6 months to a year. Hopefully I can turn a plus P&L before this but I am realistic from knowing other prop traders.

My question is how have people got around this, savings, living of partner………I don’t have enough savings to last a year and the last thing I want is my personnel financial situation to impact my trading psychology. Has anybody got any clever ideas on how to fund yourself during this period, I cant imagine any banks are going to loan to a Prop trade!

I love trading and feel through time and a lot of hard work I will turn a profitable P&L the thought of my personnel constraints stopping me is a real sickener.

Any ideas welcome

Thanks guys
James

 

[Rhody Trader]

You're thinking to trade for a living but you have yet to even develop a profitable trading strategy?

 

[jamesgerrard]

Hi John,

I do have a number of strategies, but I know that putting them into practise and turning them into a profit even if you have back tested etc is very different, paper trading and back testing does not automatically produce profitable trading, I was a trader (not prop in a previous life).

My question was around funding, to gain ideas and learn from others exp in how they managed the (usually extensive) period where you turn a P&L that is profitbale and you can live off. How did they survive it, does everyone have huge savings, I dont know.

 

[Rhody Trader]

The ideal situation (to my mind, anyway) is to have a sufficient trading stake such that your expected returns (based on some idea of how your strategy is likely to perform) exceeds your cost of living by some predefined amount. For example, if you're average expected monthly return is 2% and your monthly living expenses (including health insurance and all that other stuff your employer tends to cover) is $3,000, you would want a trading stake of something like $200,000 to provide some cushion (2% of $200,000 = $4,000 per month).

If you're starting off with the prospect of a negative return for some period of time, you need to take the size of the trading stake you would require to achieve the returns you require ($200k for example), then add to it your cost of living for that period of time ($3k/mo), plus the amount of losses you might suffer. Say we're talking 6 months, during which time you might lose 1%/mo on average. You would want something like $230k to start ($200k + $18k for living + $12k approx for losses).

Obviously, you'd want to adjust based on your expected rates of return - hopefully determined conservatively, not optimistically. You definitely don't want to be trading $10k for exactly the reasons you mentioned. The strain of having to make like 30%/mo each and every month without fail isn't a pleasant prospect.

 

[Mr.J-Arthur]

The costs of living can be expensive...but if you live in a small town like myself, everything is cheap.
You can live off of 100$ per day and even less. The goal is to consistently make 100$ or better a day, letting some of your winners run.

I'm trading for a living and it's hard. Especially when you're under-capitalized. I'm somewhat profitable, so trading full time will either break you or help you go bust full of cash. I trade with less than 10k!!! So far, so good

It's a strain, but for some of us, it will eventually pay off. Go for it man. Get your family to loan you some $$ and make sure to pay them interest on the loan!

 

[brutusdog]

get a bar job, only do the evening shifts, you probably get free food and drink and a bit of cash to keep you afloat, also the outside chance there will be some hot a$$ chicks in the bar!

 

[Rhody Trader]

The costs of living can be expensive...but if you live in a small town like myself, everything is cheap.
You can live off of 100$ per day and even less. The goal is to consistently make 100$ or better a day, letting some of your winners run.

I'm trading for a living and it's hard. Especially when you're under-capitalized. I'm somewhat profitable, so trading full time will either break you or help you go bust full of cash. I trade with less than 10k!!! So far, so good

It's a strain, but for some of us, it will eventually pay off. Go for it man. Get your family to loan you some $$ and make sure to pay them interest on the loan!

The problem is that if you're just making what you need to live on (assuming you can keep it going) and not growing your capital meaningfully then you're just on a treadmill. You won't get anywhere, and at some point something will probably happen to put you under some serious strain (unexpected bill, bad spell of results, etc.). To be able to stick at the trading for a living thing long-term you need to be consistently taking out of the market well more than you need to live on.

 

[luckyd1976]

The problem is that if you're just making what you need to live on (assuming you can keep it going) and not growing your capital meaningfully then you're just on a treadmill. You won't get anywhere, and at some point something will probably happen to put you under some serious strain (unexpected bill, bad spell of results, etc.). To be able to stick at the trading for a living thing long-term you need to be consistently taking out of the market well more than you need to live on.

Rhody brings up a good point. I personally think everyone should have 2-3 proven Strategies/techniques in their arsenal before they even FT trade for a living.

Capitalization helps you thru when you have 1 strategy. Diversification is the key in KEEPING this as a career. (DTrade, ShortTerm-MidTerm, Lterm)

Family emergencies, Bad run on strategies, and/or life getting in the way of trading will always be there.

 

[TomTom]

Come on then tell us how much ££$$ it costs you to work there ?
Prop Firms only sponser sucsessfull people, if you dont deliver you will not last 3 months mever mind 6 months.

Get some knollage first then play for broke and show them how its done.

read my post about job offer from prop firm .