Transitioning to a Fulltime Trader

[louistrader]

Hello,

I have been reading through the forums here and decided to make an account. I want to connect with other traders since as you all know, it is a very unique pursuit and it is very difficult to find others that can relate. I hope to provide good insights and promote good discussion here.

I think a good topic of discussion is your story of how you actually transitioned to becoming a fulltime trader. I imagine most members here have fulltime jobs and want to trade fulltime so it would be interesting to hear from those that actually resigned from their jobs to pursue trading.

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.

 

[jeffre4]

if i had 700,000 i wouldnt be doing this

 

[louistrader]

if i had 700,000 i wouldnt be doing this

Do you mean that if you had that much you would just invest in dividend stocks and retire? By several hundred thousand I mean anywhere from $200,000 to $900,000+. Do people do this fulltime with less than $100,000? This is what I want to hear. Everyone's perspective and hearing from people that resigned from safe jobs to pursue this and are living the dream (or nightmare!).

 

[CostaKapo]

Do you mean that if you had that much you would just invest in dividend stocks and retire? By several hundred thousand I mean anywhere from $200,000 to $900,000+. Do people do this fulltime with less than $100,000? This is what I want to hear. Everyone's perspective and hearing from people that resigned from safe jobs to pursue this and are living the dream (or nightmare!).

I work fulltime and trade limitedly because I am a registered rep and my firm has restrictions on trading volume. I will trade fulltime if within the parameters I have I am able to have a track record of 12+ months of at least 75,000 in profits.

 

[CostaKapo]

Do you mean that if you had that much you would just invest in dividend stocks and retire? By several hundred thousand I mean anywhere from $200,000 to $900,000+. Do people do this fulltime with less than $100,000? This is what I want to hear. Everyone's perspective and hearing from people that resigned from safe jobs to pursue this and are living the dream (or nightmare!).

I worked in a retail banking setting after undergrad and I encountered a man who traded e mini SP futures using trading indicators that were set up for him. He was a huge guy who had a brand new corvette and he would come in and wire 50 grand to Trade Navigator every other month.

I got the guts one day to ask him what he did for a living and he told me that he and his wife quit their jobs after their indicators were installed. He said they wake up at 9 sit on the couch put on the different financial stations and just press a button for the first 2 hours of the market, then the final two before close.

The guy was a siding contractor before he started trading fulltime. He had two residential properties with tenants whos rent covered their monthly obligations incase they didn't make any money that month.

I was currently in the middle of my master of science in finance, and I had just had a derivatives class so I asked him what indicators he used and what the system was. He couldn't tell me anything other than "MACD." other than that he had no clue.

It was at that moment I asked myself what I was doing with my life busting my butt for 12 dollars an hour lol

 

[louistrader]

I worked in a retail banking setting after undergrad and I encountered a man who traded e mini SP futures using trading indicators that were set up for him. He was a huge guy who had a brand new corvette and he would come in and wire 50 grand to Trade Navigator every other month.

I got the guts one day to ask him what he did for a living and he told me that he and his wife quit their jobs after their indicators were installed. He said they wake up at 9 sit on the couch put on the different financial stations and just press a button for the first 2 hours of the market, then the final two before close.

The guy was a siding contractor before he started trading fulltime. He had two residential properties with tenants whos rent covered their monthly obligations incase they didn't make any money that month.

I was currently in the middle of my master of science in finance, and I had just had a derivatives class so I asked him what indicators he used and what the system was. He couldn't tell me anything other than "MACD." other than that he had no clue.

It was at that moment I asked myself what I was doing with my life busting my butt for 12 dollars an hour lol

Thanks for sharing. I also worked in retail banking. Everyone that seems to do this has some sort of business, inheritance, etc.

I like your other post about building a 12+ month track recording of a certain dollar amount.

I am trying to find people where all (or almost all) of their income comes from trading. Someone that had a small account, built it up, quit their job and is living a life of freedom and prosperity. That's the dream, right?

 

[brewski1984]

I was currently in the middle of my master of science in finance, and I had just had a derivatives class so I asked him what indicators he used and what the system was. He couldn't tell me anything other than "MACD." other than that he had no clue.

How does some random guy make a living having no clue other than "MACD"? And if he was wiring 50k every other month to Trade Navigator, how can you not be sure he was just losing all the time?

 

[louistrader]

How does some random guy make a living having no clue other than "MACD"? And if he was wiring 50k every other month to Trade Navigator, how can you not be sure he was just losing all the time?

Good points. I worked in retail banks too and I encountered some traders. I tried getting them to give me some guidance and none of them ever wanted to take the time to help me. It's also a little difficult to ask when there are coworkers around. From experience, anyone wiring money means they got a margin call. Otherwise they would just do the transfer online. He was either losing all of the time like you said or just didn't want to share the information. It sounds as if it were both because he could have at least given the MACD settings. It's only 3 numbers.

 

[brewski1984]

Yeah and it makes no difference what 3 numbers they were because there are no 3 numbers that would work anyway lol

 

[CostaKapo]

How does some random guy make a living having no clue other than "MACD"? And if he was wiring 50k every other month to Trade Navigator, how can you not be sure he was just losing all the time?

The way I look at it - what reason would he have to lie about it? Why make up a story about being a siding contractor? It's true, I only performed maybe 5,6 wires as I wasn't at the bank long so he could have easily just lost 200,000-300,000 grand, but siding contractors don't have that kind of money.

Maybe he didn't want to explain it to me because he didn't want to tell me what service he used.

Sure it is possible that the guy was full of it, and given my experience in trading as well as my current capacity at one of the largest AM firms in the country I would be inclined to think he was making it up, but again I fall back on what possible reason would he have to make that up to a 24 year old personal banker at a branch?

Regardless - It is not out of the realm of possibilities no matter how ridiculous it sounds. :clover:

 

[CostaKapo]

Thanks for sharing. I also worked in retail banking. Everyone that seems to do this has some sort of business, inheritance, etc.

I like your other post about building a 12+ month track recording of a certain dollar amount.

I am trying to find people where all (or almost all) of their income comes from trading. Someone that had a small account, built it up, quit their job and is living a life of freedom and prosperity. That's the dream, right?

Yes it sure is. If you'd like I do have a journal in the journal's section. Since June I have been able to turn 2800 into 7000 doing only credit spreads. I often have max risk exposed in order to get the premium I am looking for so hopefully I get to the capital requirements I am wanting so I can trade more appropriately and hopefully I get there before a black swan.

 

[louistrader]

Yes it sure is. If you'd like I do have a journal in the journal's section. Since June I have been able to turn 2800 into 7000 doing only credit spreads. I often have max risk exposed in order to get the premium I am looking for so hopefully I get to the capital requirements I am wanting so I can trade more appropriately and hopefully I get there before a black swan.

Thank you. I will look at your journal. Your ROI is excellent.

 

[MajorMagnuM]

yeah and it makes no difference what 3 numbers they were because there are no 3 numbers that would work anyway lol

5,34,5

 

[louistrader]

I am currently in simulation and am backtesting a system. So far things are looking good, but it is too premature to say definitively.

 

[TroyT]

if i had 700,000 i wouldnt be doing this

I hope we're talking about 700,000 bars of gold.

Unless you're counting down the number of years you have left on two hands, it's only a matter of time before you go hungry.

 

[TroyT]

What was "the" thing that made you take the plunge?

- was young, had saved 2 years worth of living expense, had the confidence that I could get my old job back

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?

- nope.just the confidence that I could get another job pretty easily if things went bad

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?

- 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.

What would you tell yourself in the past with what you know now?

- 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]

 

[CostaKapo]

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.

 

[louistrader]

- 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]

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.

 

[LongTermInvester]

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!