The other day Orli posted a list of links to an array of recent blog posts. They are definitely worth at least reviewing. One of the entries that caught my attention was 5 Points on When to Go Pro. A lot of Forex traders have aspirations to trade for a living, at least as they get started. This blog entry brings up some important things to think about as you contemplate quitting your day job. Here’s the list:
- Have at least a year of profitable trading
- Make sure you are already able to making enough money to live on each month
- Plan for scaling up to trading in larger size
- Have a cushion to guard against a rough patch
- Have an alternate plan in case things with trading don’t work out?
One could perhaps challenge the first two points in terms of how much of a demonstration of success should be in place, in either direction. I think the other three points are all very good ones. There are a few other things I’d bring up in terms of important considerations for trading for a living. Having read the points made by the author of the 5 Points post, though, I have one question that I think needs to be answered:
If you’re making good money from your trading as a part-timer, why go full-time?
The reason I ask this question is a simple one. If you are a successful part-time trader, especially one who is already making enough to live on (#2 in the list), why would you want to change anything? If you have a regular source of income (job) you don’t hate, you’re better of holding to the course. You’ll end up much further ahead financial in the long run than if you dump that income. And if you don’t like your job, then you have the advantage of trading income to allow you to find something else you actually do enjoy.
There are, of course, times when shifting to full-time trading makes a lot of sense. Topping that list is a situation where you have a trading approach that would benefit from more frequent action. For example, if you are a Forex day trader who makes good money during only a couple hours a day, then spending more time trading (assuming the conditions in the added hours suit your approach) is likely going to mean a rise in your profits. It’s a question of increasing your opportunities.
My overall point is that before you start thinking about the finer points of trading full-time and what that means, you should think about whether your type of trading would actually benefit from spending more hours in front of the screen.
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.