Subscribe Feed (RSS)Trading for a living? My take.
February 6th, 2007 by eyal | Filed under Personal development, Trading Plan. |
Print This Post
There have a been a few posts on movethemarkets.com about becoming a trader and trading for a living. This, together with some improved results over the last few weeks made me think about going fulltime. I think I need to determine for myself what would it take for me to go that route. I know there’s never going to be any guarantee to this sort of thing but there are some steps that one can take in order to feel more comfortable doing that. For example:
X months worth of living expenses secured?
Y months profitable trading performance?
Z amount of $ made per month?
an arsenal of more than one market edge in case one disappears?
Anything else?
Some might ask why quit the day job if you can do both. Well I can do both, but just barely, while sacrificing a lot of other things such as general mental and physical wellbeing and slower speed of getting better at trading. Besides, I far more enjoy trading and trading research than my day job. So for the first time ever I feel I actually don’t HAVE TO have a day job and I might do nicely just on trading. Anyways just throwing my 2c into the discussion.
I’d also consider:
1. Your AVERAGE monthly expenses, divided by your AVERAGE monthly trading income.
If number is larger than one, it’s probable you can make it, altough it’s a bit risky.
2. Your MAXIMUM monthly expenses (including unexpected events), divided by your MINIMUM monthly trading income.
If this is larger than one, you have very large safety margins. This criteria may be a bit too harsh though, since it does not allow even one weak month.
—
I believe requiring something between 1 and 2 is reasonable. In addition, the pscycological stress may be different without a day job. There may be no way to estimate how it will, or will not, effect your trading. So if a “test period” of say, six months to one year is possible, it will probably give you a better indication.
correction: smaller than one, of course, not larger…
Hey Carlton :-) Nice to see you comment here. Those are valid points. I’m in a safe zone on both items. The psychological stress is what bothers me in terms of the effect it will have on performance. That’s the reason I’m now keeping both trading and day job so that I can build a cushion of savings that will ease the stress a bit.
It’s a big step Eyal and I wish you luck. I am on the verge of going back to a day job from trading full-time but I am thankful that I have given it a fair shot. I believe the biggest factor to consider is whether you have adequate capital (easily underestimated) so that you can ride out the storms which will inevitably come. Having a day job or a part-time job is invaluable in that it provides you with a regular income stream and it gives you contact with others; full time day trading is a very solitary activity, and in this solitude and boredom we are more easily exploited by our gremlins. All the best.
Caravaggio, yeah it is a big step. Trying not to rush into it. Working on making sure I’m in the best position I can before making the jump. But it’s just a matter of time. Thanks for your words of advice.
Btw, Caravaggio I really like your blog, the candid view and looking at the challenges straight in the eye. You seem to have immense psychological resilience getting back in the game.
Thanks re the blog compliment eyal. I am just trying to stay honest to myself, and the blog really helps.
I look forward to your ‘great leap’. Armed with adequate capital and an approach with a positive expectancy, I believe you have the odds stacked in your favour. Regardless of whether we fail or succeed, the transition poses a great many challenges and opportunities which are all a part of lifes journey, and these can be enriching if we choose to learn from them. Good luck.
congratulations eyal!
Thank you John.