Do I go for it ?

hopefull

Member
57 0
I find myself at a crossroads...and am sure many of you here may have experienced something similar in your own lives..

Some of you may know me from the Forex chatroom..

Yesterday evening I received a call from my employer of the past five years saying the company has gone bust.No money in the pot,major debts and the inland revenue are investigating the two partners for tax avoidance..bad news all round.So - job gone, no notice and even worse no salary this month (nice that he waited until the 27th to tell me this).

Here I am then...35 years old, having spent the past 13 years in IT Recruitment with no other work experience..and I have had enough of Sales.

I have been trading Forex for 4 months and am now producing consistent weekly gains.I am under no delusions in that I am still a newbie and chastise myself for sometimes making 'silly' trades.My plan was to trade for at least 12 months and get through the learning cure before considering what I am now forced to consider - to try and make a living doing it.

I have worked from home for the past 5 years so I am comfortable with the self motivation,discipline and the hours I am going to need to put in to have any real chance of making this work...

But what about my 'start up' capital - Well baring my soul now.I have about 8k sitting in the bank - which I will need to start drawing on from the 1st May and can probably eek this out over 3 months to pay the mortgage etc and day to day expenses.All other money is sitting in the family home which is worth about £600k with a £78k mortgage.

I need to net at least £2 500 pcm to get by (Wife not working + 2 young pre-school age children)..My first thought is to take 20k out of the house as start up capital for this venture but I am wrestling with myself..Am I mad..? I have only been trading mini contracts for 4 months.The pressure will be to much..it breaks the rules

However this situation has been forced on me..and like any other husband, wife, parent my first concern is to take care of my family, so I need to act.

Can anyone offer any thoughts or advice ?
 

jmreeve

Well-known member
432 13
It sounds like you are insufficiently capitalised and have significant commitments.

I would advise looking for another job but whilst you are doing this you can use the time to improve your trading by working on it full time.
 

TheBramble

Legendary member
8,394 1,170
Hopefull, you're sitting on over half-a-miilion pounds equity in your house.

Your trading system is producing a profit (although you are still making silly trades).

The I.T. Recruitment business is all you are experienced in, it is in the biggest doldrums for 10 years with no real basis for expecting recovery and your soul isn't into sales.

First: Go with your life's passions. It's the only way to be happy and successful.

Second: At 35 you've got plenty of time to make lots of mistakes and count the bruises.

Third: You are far from under-capitalised. Re-mortgage and use the released equity to provide (a) a sensible trading pot and (b) full cover for all your commitments for the next 12 months.

That way, you'll have no pressure. You simply carry in trading the way you are, with proper risk:reward and money management. Read these boards. And treat your trading as your new career.

As your trading capital (and confidence) increase, you simply stick to the rules.

The only trades that are 'silly' trades are the ones you make outside your system/strategy - win or lose - they're the only silly ones.

Losing trades are not silly trades - they are business expenses.

If at any time in that 12 month trial period you feel it isn't working out financially or psychologically, start looking for alternatives.

That's what I would do (and have done) in your position.

Others may urge greater caution and getting another day job. Also very sensible, but as you point out, your options and interest in that direction are limited.
 

waytogo

Active member
162 0
Hi hopefull

It's a tricky situation to be sure. You will almost certainly find that the pressure increases dramatically when you have to depend upon the income from trading and earn a certain amount just to get by, and that could seriously affect your ability to make cool, calm, sensible trading decisions. £2500 pcm = £4000 before tax = 20% of your mortgage trading capital a month (5% /week) - not impossible but if things go badly you might find that you do little better than break even.

The lure of trading for a living is a big one, but the markets are always there, and (as now) you can combine trading with another job as well.

Hope this helps

waytogo
 

ivorm

Well-known member
293 1
Hi Hopeful,

I'd go along with Bramble's advice.

You have a low mortgage compared to the value of your property. I'd be inclined to release some of the equity in your house to provide the capital you need to give trading a serious try. My advice, though, would be to take out more than 20K - maybe 40-50K would be more appropriate so that the pressure to earn money quickly will be taken off.

Go for it !!

Good luck whatever you decide to do.


Regards
 

oatman

Senior member
2,879 22
You've already recognised the "silly" trades so you're well on your way. I would try and get some work, even part time, so that you dont put additional pressure on yourself and carry on developing your trading when you can.
 

hopefull

Member
57 0
Firstly - thank you for the prompt reply's and advice..Its good to get a balanced and clinical view.

Jmreeve - A fair point and quite true....but the $64 000 question is what other job? (Obviously I am not expecting an answer to that).

I feel in my heart that my days of making endless number of calls and attending sales meetings etc. are behind me and although a young (if I may say so myself) looking 35 I am way past the grad/trainee hiring stage for a new profession.

I know that it isn't unusual to reach this stage after being in sales for many years, 'burn out' is not uncommon.I have also found that as I am getting older I am less willing to take all the c**p that get's thrown at you in this sector...so time to bow out gracefully with no regrets.

Bramble - Again you have hit the nail on the head especially with your third sentence...

..and yes my gut instinct is saying to push forward.In my experience if your heart isn't in selling - get out...and for some strange reason I am passionate about trading.
 

hopefull

Member
57 0
Wow, the replies are coming through thick and fast - thank you all for taking time out to share your thoughts.

wtg - good idea ..However I have been fortunate in having been able to work from home with my current (now previous) employer.Going to another firm is likely to mean the typical 8-6 hours + 45mins either side commute which will literally kill the trading.

iv - Again,good point and I need to put a business plan together with some cost analysis..20k may be just be cutting things to fine

Oatman - Yes, I was thinking along these lines..I am thinking of possible some evening or weekend work here..

I am more than prepared to take a lower paying PT job to support me initially - I know nothing in life worth having comes easy !
 

jmreeve

Well-known member
432 13
hopefull-

I was in a techy job and the company was not doing so well so decided to go it on my own.

However, when I did this I had no commitments, owned my house and had a decent amount of trading capital in the bank.

I also do not depend only on trading but also started a small company and write software.
 

mutantcar

Active member
123 0
hopefull,

You have my sympathies, though I wish I was sitting on £500k of equity, though I don't have your commitments. I'm facing a similar decision myself, but very different circumstances.

Have you considered selling the house, and moving to a cheaper one, possibly in a cheaper part of the country, though you don't say where you are located.

You could get a cracking house in some parts for £200k, use a conservative amount to develop your trading, invest the rest as safely as possible, reduce living expenses as much as possible?

Could be a lot worse off - good luck anyway.
 

Buk

Established member
615 6
excellent advice all thru the thread (specially Brambles!!)....we've all been there hopefull. Your psychological approach, coupled with your trading plan & strict MM will put you leaps ahead on your desired path to a long term career in your chosen occupation....you're starting a new 'business' that's all, and like all new businesses, as long as you approach it with due diligance & in depth research, you have as much chance of success as any other!.....doesn't seem too much wrong with your 'approach' by your recent trades (in the fx room)....and good trading y'day by the way ;)

just keep on doing what you're doing mate!!.....if you really 'want it' & you go in with your eyes wide open, that's all you can ask of yourself!....stick to YOUR rules!

ps: you're also NOT on your own, this board offers a good sounding platform for bouncing idea's/obtaining advice & opinions....use it as a "business advice centre" ;)
 
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ChowClown

Senior member
2,732 56
...blimey, I read this hopefull and it describes my situation almost exactly, same age, same size/age family, large equity in the house etc - I'm still plodding on though in a relatively secure/profitable IT Rec business, but the passion is with trading -some great advice above and I really hope you make it. Keep us posted with how you get on - I for one will be very interested in following your progress.

Good luck!
 

SOCRATES

Veteren member
4,966 136
Dear Hopeful, do NOT go for it. I will explain the reasons why.
Currencies are very dangerous because of their unexpected volatility. Hear me out. You have been involved in currencies for 4 months you say. 4 months is not enough for you to have given yourself the opportunity to experience every variety of market condition possible. You need to give yourself time to mature.
By this I mean to mature in your approach to unexpected opposite scenarios that have a nasty habit of developing rapidly.
This is the most important and difficult part of trading and it comes from having a string of meaninful experiences, you have to give yourself time to have these experiences ~ you cannot have them all at once. It is only after you have had experiences repeatedly that you will force yourself to learn, that is one reason why you need time. There is another reason. You place emphasis on hope. Hope is an emotion. Emotions do not help you to reason.
In fact, they are instrumental in impairing or even destroying the ability to reason, just at the time when the faculty of reasoning, or if you like, the application of reasoned judgement is most needed. This leads us to the third factor, which is the imposition of pressure, whether real or perceived. you cannot afford to be under pressure of any sort in this game. The emotions attached to and caused by pressure will disable you. You ought NOT to take any money out of the house for this venture, to the contrary, you should be looking to clear out your mortgage instead, and then to proceed with safeguards along the route you wish to follow, not hindered by worries, which are emotions of the worst sort. I can understand your posture, but I do not advise you to proceed in the direction you suggest because also of your cash flow requirements, the resulting ratios would be disadvantageous, strangling actually, having the net result of instead of helping you to go forwards, to actually achieve the opposite result. This is dreadful if it is imposed upon you if you have no choice but unpardonable if it is self imposed.
 

ivorm

Well-known member
293 1
you cannot afford to be under pressure of any sort in this game

I often hear this said , but I don't understand it.

Surely the only way you can trade for a living and not be under any pressure is if you have enough money to live indefinitely without needing to earn any money from trading. In that case, why bother trading anyway ?

If you have decided to trade full-time, then I don't see how there cannot be some pressure on you.

Just my thoughts ........
 
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trendsignal UK

Member
53 1
Whatever you do

I'm not going to give you any advice either way. in terms of "do it" and "don't do it". Ultimately only you can make that decision.

The one thing I would do is write down a proper business plan. Discuss the ramifications with your wife of taking £100k or so out of the house as a trading pot. Why £100k? Because £20k is simply not enough trading capital. Add to that £25k to live for a few months and you are at £45k anyway.

Its easy to say "you'd still have a small mortgage" but to me £178k would not be small - especially with no way (other than trading) of paying it back.

Scared money never wins. I'm not saying you will be scared, just that emotionally its a different feeling when you kick it off full time.

The other main thing (and I speak as someone who has a mega understanding wife) is to make sure your wife is totally aware of the risks etc. in what you are doing.

It may be for example that she dreams of a little cafe somewhere by the coast etc. I know of one couple that did just that. She wanted a cafe, he wanted to trade. They sold their $1m house and moved to cheap property on the coast. She has a cafe, he trades. Both happy, and I think he trades better because he knows that they will get an income from the cafe. I only say this because in my experience you will need an understanding and supportive partner.

Either way, give yourself a couple of weeks off. Being made redundant is traumatic (whatever you may feel etc.). Do not leap into anything. Go and sign on the dole. Consider ALL your options. Make no decisions now. You almost certainly have many more options than you think you have. I once trained for 3 months as a plumber after a particularly horrid City job. It taught me I have options, and after 3 months at the local college I knew that I was not going to be a plumber, and my wife understood how much I loved trading. Still a valuable insight though, both into myself and to the lives of other people.

Apologies if this is a bit of a ramble, I have a lot of thoughts on this. I have seen so many people try and fail.

If you decide to trade full time, then my best wishes go with you. If not, then they still go with you!!
 
 
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