There’s been discussion around trading for a living going on in the Currensee forum area. It’s not the first, of course, and it certainly won’t be the last. A recent informal pool on BabyPips indicated that more than half the folks there have it in mind to replace their jobs with trading (it also indicates that something like 75% plan on making at least 50% per year on average, so take it however you like). I’ve written on this subject before in my own blog in the post Trading for a Living vs. Trading for Wealth Building, and others as well.
The question “Should I quit my job and trade full-time?” is one that was answered by several experienced traders and market pros in the recently published New Trader FAQs book. A common thought from those answers is that trading for a living requires two things:
- Having enough capital to produce returns large enough to pay our expenses, plus pay for your outgoings for some period of time without having to rely on income generated from your trading;
- Having the proven ability to make money consistently from the markets.
To the first point, think on this: consider the scenario where you need to make $5000 per month to cover all your expenses and provide for some savings. If you can consistently make 10% per month (no mean feat!), then using 5% gives you a very good safety cushion in case of an off month or whatever. In order to make your monthly expenses on a 5% rate of return you would need $100,000 in base capital. And that doesn’t account for the cushion suggested in case of a string of tough months.
As for the second point, one of the FAQ contributors has this to say:
To become a full time trader is at least a 3 year apprenticeship, and you must be prepared for some serious tests of character along the way. You will place trades and have some wins, some losses and some break evens, finding the difference between these three outcomes is what makes or breaks a wannabe trader. Some traders will discover the difference and then go on to prepare a solid foundation of rules and requirements to ultimately become a consistent winner. Others will desperately try to devise a plan and will fail, while the final and most common outcome will be to simply give up after losing too much money and being unable to determine why.
If this sounds like I’m suggesting you shelf your dreams of trading for a living, I wouldn’t go quite so far. I would, however, caution you to really think through things before making that kind of move. It’s not just about the money. It’s not just about getting out of having to work for The Man. There are other issues like quality of life to be considered. I have told people on many occasions how I’ve long known that trading full-time for a living is not for me. I trade to grow my assets and do so on a part-time basis because there are so many other things in my life I enjoy doing, and my salary suits my needs and comes with a minimum of stress (usually).
Just some food for thought. Feel free to discuss!
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.