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Trading/Daytrading for a living

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tech/a

tech/a

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I am very confident I could make a damn site more money by doing a couple of day trades every day than working for a living, but until I have proven this (maybe by taking a months leave to try)
Click to expand...

Hmm a conundrum and a contradiction in terms.
This in itself is an interesting topic.

Who thinks they could make a living trading?
How much would you need to start your trading business?
How much do you think you would need to make/year/month? (Dont forget you'll be taxed on Profit).
Why would you want to trade for a living? Is it necessary?
Are people under misconceptions (generally) when wishing to trade for a living?

Other than capitalisation what would be the main requirements in a business plan for trading?
Perhaps those that do can outline their business plan?

Sorry its off topic but perhaps could be a topic of its own if there was interest.
 
Re: What is a typical trading day like for u guys?

I agree with you tech/a - you've gone off topic ;)

The points you raised have already been discussed in other threads in this and other forums , so rather than reinvent the wheel in this thread maybe it would be better if you or anyone else interested in continuing the theme to maybe have a look at or continue the "My investment plan" thread or other similar threads in the Trading Strategies/Systems or other forums

cheers

bullmarket :)
 
Re: What is a typical trading day like for u guys?

Oh God!
 
Re: Trading / Daytrading for a living

This has been split off from another thread (So opening posts may seem strange :eek: )

Cheers
 
Re: Trading / Daytrading for a living

I am very confident I could make a damn site more money by doing a couple of day trades every day than working for a living, but until I have proven this (maybe by taking a months leave to try)
Click to expand...

Hmm a conundrum and a contradiction in terms.
This in itself is an interesting topic.

Who thinks they could make a living trading?
How much would you need to start your trading business?
How much do you think you would need to make/year/month? (Dont forget you'll be taxed on Profit).
Why would you want to trade for a living? Is it necessary?
Are people under misconceptions (generally) when wishing to trade for a living?

Other than capitalisation what would be the main requirements in a business plan for trading?
Perhaps those that do can outline their business plan?

Sorry its off topic but perhaps could be a topic of its own if there was interest.
Click to expand...

The actual numbers are really no different to normal trading. What may differ is the time frame for trades (eg daytrading)...depending on capitalisation, personality, cash reserves etc

From my point of view as one who is trading for a living already, it is "technically" the easiest business (or job) I've ever been involved in, and the reasons have been gone over a number of times. Providing the numbers have been worked out properly, this is not a hard business folks.

What can be EXTREMELY challenging and debilitating is the psychological aspects, which may cause people to deviate from their plan, make mistakes etc.

I liken it to "cold calling". Cold calling is dead easy, phone up people you don't know, spout your spiel, and either get told to F off or you get an appointment.

What could be more easy? But it's hard psychologically. I personally find it emotionally impossible to do. Other folks sit there all day and do it without a problem...the good ones make good money.

Same as trading for a living... and particularly daytrading. A lot of folks are just not emotionally equipped for it. Thats not a criticism, it's just personality traits. I find it emotionally easier trading and daytrading for a living than more conventional businesses, which I don't particularly enjoy.

But I know folks that love their conventional business and would never dream of tossing it in for trading... and have had many discussions with Tech/a and others on this topic. It all comes down to the individual.

To conclude, what porper says is pretty close. It's not hard to do, but you have to prove...to yourself.... whether it's possible or not.
 
Re: Trading / Daytrading for a living

wayneL said:
The actual numbers are really no different to normal trading. To conclude, what porper says is pretty close. It's not hard to do, but you have to prove...to yourself.... whether it's possible or not.
Click to expand...

That is exactly my point.As Wayne says trading for a living really is no different to trading part time, obviously the numbers change.As Nick radge states in his book Adaptive Analysis, if you have a positive expectancy, just trade more to make more money.

Now I am not advocating that we all go and tell our employers to bugger off and start day trading, that would be too easy, and tech has asked very valid questions about having a business plan, capitalisation etc and these would need to be discussed and put into place. The main concern for me would be to know with absolute confidence that I could make a living from this, and that is where I don't agree with Tech that you need a mechanical proven system that has been tested and back tested again.If you have proven over a period of time to be very profitable (years) and have the numbers in the right places (win/loss ratio etc) then to me that is as good as you can get in an ever changing marketplace.

I am open to being corrected as I am fairly new to all this, but this is how I see it now.

Probably stir a hornets nest with my very simplistic view, but why make non complicated issue complicated.
 
Re: What is a typical trading day like for u guys?

tech/a said:
Hmm a conundrum and a contradiction in terms.
This in itself is an interesting topic.

Who thinks they could make a living trading?
How much would you need to start your trading business?
How much do you think you would need to make/year/month? (Dont forget you'll be taxed on Profit).
Why would you want to trade for a living? Is it necessary?
Are people under misconceptions (generally) when wishing to trade for a living?

Other than capitalisation what would be the main requirements in a business plan for trading?
Perhaps those that do can outline their business plan?

Sorry its off topic but perhaps could be a topic of its own if there was interest.
Click to expand...


Good questions which I will try to answer honestly.


Who thinks they could make a living trading?


I am convinced I can make a living trading, even though I have loads still to learn, based on previous results and my trading plan.

How much would you need to start your trading business?


How long is a piece of string.With CFD's I think around $50,000 would be enough.

How much do you think you would need to make/year/month? (Dont forget you'll be taxed on Profit).


I think you would need to make enough at least to match your present lifestyle requirements or problems would certainly surface (especially Mrs Porper)

Why would you want to trade for a living? Is it necessary?


I suppose because people enjoy it, I certainly do, I also realise that it could after time get boring, you won't know this until you try.I think what you are getting at Tech is why would you need to trade everyday when you can make the same money investing.In my case I feel I can't make as much medium term, in fact I do both and short term trading (momentum trading) gives me greater rewards.

Are people under misconceptions (generally) when wishing to trade for a living?


I am certain people are under great misconceptions when thinking about trading for a living.It is up to us as individuals to make sure we are ready and able to be among the very small percentage that get it right.
 
Re: Trading / Daytrading for a living

Taken from todays "Age".

Why playing the average game pays


After 25 years as a stockbroker, I have sussed it. I have tried everything - traded warrants, traded crap, traded options, traded momentum, traded off charts, traded futures, having played the portfolio game, listened to everyone, listened to tips, believed fools, ignored geniuses, sweated at night, hidden losses from the wife, read everything and even having made some money, finally, I have sussed it.

There are four ways to make "easy" money, just four. But they are cast iron. Guaranteed to work. Here they are.

· Be born rich.

· Marry rich.

· Win the Lotto.

· Lie and cheat.

Failing this list of "easy" money makers, most of us will have to resort to the second list. Ways to "make" money (as opposed to "easy" money).

· Build a business.

· Build a career.

After this lot comes another list. How to "look after" your money. Finally:

· The stockmarket

As many of us can testify, if you try to beat the averages in the stockmarket you put your money and often your future in the hands of Lady Luck. Even the most hard working and sophisticated of investors will admit as much. Predicting the future is a difficult thing. It is not the place to make your "life's money".

Instead the stockmarket will, reasonably reliably, "look after" your money. The average return over the past 50 years is around 12 per cent a year. At that rate you'll double your money every six years and triple it every 10. Great stuff.

But try to "make" your life's money in the stockmarket, try to beat the 12 per cent average, try to transform yourself the way Warren Buffett did, and you are likely to be disappointed. Most of you will not become mega rich by playing the stockmarket. Yes some will, and some do, but the odds are that you won't. The ones that do are in a tiny minority. They are not the norm. The stockmarket is good for looking after your money, but when it comes to "making money" there are better investments of your time and energy.

I am a big fan of the Rich Dad, Poor Dad philosophy. If you've never read the book, get it today and read it over Easter. By page 30 you'll get the idea. The most exploitable resource in the world is people and their willingness to work for a certain (rather than variable) sum.

I remember being a stockbroker in the 1980s. As an institutional salesman we used to argue with the huge broking firm we were employed by about whether we should get paid 10 per cent of what we brought in, or 20 per cent (institutional sales). We claimed 20 per cent, the standard brush salesman's take. The broking house argued that because their franchise was so strong they could replace us with a monkey and 10 per cent was enough.

Let's be generous and take 20 per cent. As employees earning 20 per cent we could take home a lot. In fact some dealers were earning the firm multiple millions of pounds a year. This was the '80s remember. Stockbrokers had a very nice decade. But let's think about this.

If the employee was taking home 20 per cent then the broking house was taking home 80 per cent. In investment terms, the broking house was making a 400 per cent return on their investment in the employee. When the average annual return on the stockmarket is 12 per cent, you have to ask, who cares about the stockmarket, what's the better investment?

The best investment is in you, your business, your employees or your career. Get on with that.

Trying to squeeze more than the average out of the stockmarket is no career. The stockmarket is a tool, not a life, unless of course you are fortunate enough to work in it.

Marcus Padley is a stockbroker and the author of the daily stockmarket newsletter Marcus Today.
 
Re: Trading / Daytrading for a living

The stockmarket is a tool, not a life,
Click to expand...

Amen.

You make money from trends and if your nimble with the right tools,---Outliers,---the constant search for and the consistent implementation of your profitable business---plan--- to compliment your lifestyle and make best use of your $$s for your future is the challenge for every trader.
When you get really good at it you can then grow not only your money but other peoples (banks lenders etc).

Thats when you get serious.
We do it with house 20% down then 80% or more on loan.
So why not the stock market?
 
Re: What is a typical trading day like for u guys?

hi techa,

i may be new to this site but i have been trading for the last seven years,
so as a part time trader we had lost a small fortune in the beginning,[$57,000]

but we clawed our way back, and we are holding our own very nicely now.

at the moment we are trading with around 30 to 50 thousand dollars,
and at the end of every three months or so we bring the profits home,
then we leave at least 30/50 thou behind to trade with,

having said all of that,

i will say that the 30/50 is not enough to go full time trading with,
because we still owe just under a $100,000 on our house,

so in order for us/me to go full time trading we will need at least $150,000 in our trading account,
to cover all of our $$$$$ needs at home.

or at least have the house paid out.

so going full time trading fol's is something that we all need to think about very carefully.

at this point in time my income from working is paying for the house,
and i am trying to see if my trading can hold all of our other needs together for at least 12 to 18 month's before i will chuck in my job.

well anyway that is the way we are trying to do it anyway.

good luck to all,

and trade wisely folks :D :D


tech/a said:
Hmm a conundrum and a contradiction in terms.
This in itself is an interesting topic.

Who thinks they could make a living trading?
How much would you need to start your trading business?
How much do you think you would need to make/year/month? (Dont forget you'll be taxed on Profit).
Why would you want to trade for a living? Is it necessary?
Are people under misconceptions (generally) when wishing to trade for a living?

Other than capitalisation what would be the main requirements in a business plan for trading?
Perhaps those that do can outline their business plan?

Sorry its off topic but perhaps could be a topic of its own if there was interest.
Click to expand...
 
Re: Trading / Daytrading for a living

I love my work and I love trading and I do both at the same time!! It is great!!
 
Re: Trading / Daytrading for a living

Who thinks they could make a living trading?
Generally I think the idea (fantasy, I think is a better word) that one could make a living trading is one that is sold to the masses. Very smart people with books/trading systems/brokerage services know that there is a huge pool of people who are unhappy with their present economic situation and as such a large potential customer base. That said, with enough capital and realistic expectations it is possible to trade for a living.


How much would you need to start your trading business? How much do you think you would need to make/year/month? (Dont forget you'll be taxed on Profit).
One must look at the long term returns of the market he wishes to trade, then make an intelligent decision based on his personal skill and track record. Say the market I wish to trade has averaged a 10% return over the long term. Based on my skill, I think that a worst case scenario is a 5% return, average return is 8%, and best case return is a 16% return. From this you can then determine how much you need in starting capital based on how much you need, before tax, to make in profits per year. For example (everything before tax):

1. I need $4,000/month or $48,000/year to replace my current job salary
2. Based on my worst, average and best case scenarios, I would need (48k/%return):
Worst = $960K
Average = $600K
Best = $300K

Obviously if my starting capital does not even get to 300K, then realistically I am not ready to start trading for a living. However if it did fall somewhere between the best and worst case figures, I must then decide if I can survive during the years when I perform at worst case level. For example

Say I have $500K capital. If I perform at worst case, then my return for the year is $25K. I have to ask myself if I can realistically survive with only $25K to sustain me for that year.

Important to note that the worst case scenario is still a positive return! I won't even go to what a worst case scenario with a negative return looks like.

Why would you want to trade for a living?
An extremely important question which I think one must answer before even starting to put together a business plan. Do you want to trade for a living because you are unhappy at your job? Do you think you are underpaid at your present employment situation and think you can do much better trading? Do you believe that by trading you will have more control over your time and more free time for other things? Is trading something you truly believe is right for you? "Know Yourself" has always been one of the most oft-repeated phrases when it comes to trading and for good reason. As in any decision in life, if the decision to trade for a living is not made after a thorough analysis of the facts and your personal circumstances, it would be very difficult to succeed.

Are people under misconceptions (generally) when wishing to trade for a living?
A resounding yes. The industry promotes trading as "the last frontier". "Live and work anywhere in the world! Control your own hours!" Some even go as far as showing fantastic returns and needing only a few minutes per day to do it. What can we expect Mr Joe average, who has never traded before, to think then? Perhaps he has started imagining what life would be like living next to the beach, powering up his laptop while having a beer, to check how much money he has made. Ok maybe that is a bit extreme. Perhaps a more realistic fantasy is one where he doesn't have to work the same number of hours as in his current job, and yet make more money. This after reading a few books and attending a few seminars.

Please let me clarify that I do think that trading for a living is very possible, and that there are people who already have achieved this. I answer these questions from the perspective of a person who has recently been introduced to the market, who has seen the fantastic returns, and who has started going through some literature on the basics of trading (or perhaps even joined this forum) and may have started trading a little bit to test the waters. My answers are not meant to be discouraging, but rather as a reality check against the blue-sky propaganda usually produced by the industry. Note also that I assume that whatever starting capital allocated for trading remains the same, ie during good years no additional capital is added to the starting capital and during bad years no funds are withdrawn to supplement the shortfall for living expenses.
 
Re: Trading / Daytrading for a living

dennisll, Good post. I generaly agree with most of the things you have written but surely if you wanted you could attain your goals with less starting capital. I have noticed from some of the threads around the forum that alot of people seem to be afraid of the big bad word LEVERAGE. I wouldnt say it is risk free (but what is) but with the right trading plan and risk management it is nothing to be afraid of. As someone has already said we do it with our homes, why not with the stock market? I can buy a house on no deposit if I have the equity in another property, thats more than 100:1 leverage but people dont seem to have a problem with it because its a house. Have a plan, use guarenteed stops if you have to, but dont be afraid of leverage, it is just another tool to help attain your goals faster.

As for trading full time, I know several people who do it. What they did was after making consistant returns for a few years in all kinds of markets they quit their jobs to trade full time. One person always keeps a minimum of 1 years wages in a seperate bank account should he have a bad year. Another lives of the money she made last year so if she has a bad year she will just return to work until her capital is built back up.

Scott
 
Re: Trading / Daytrading for a living

hi dennisll, you make some good points in your post, but I think that your being a bit too negative about it- what kind of trader(full or part time) thinks that 10% is going to put food on the table?
You will find that most people who do trade as their primary income would find that to be fairly silly. 10% isn't much better than fixed interest, and shouldn't be used as any sort of benchmark. If someone was relying on 10% a month to pay themselves then they may run into problems sometimes.
I definately agree with what your saying about it being promoted as an easy way to make a living by the industry, but then again, anyone who listens to that when there is obviously a vested interest in the issue is pretty silly to start with.
 
Re: Trading / Daytrading for a living

dennisll said:
Who thinks they could make a living trading?
Generally I think the idea (fantasy, I think is a better word) that one could make a living trading is one that is sold to the masses. Very smart people with books/trading systems/brokerage services know that there is a huge pool of people who are unhappy with their present economic situation and as such a large potential customer base. That said, with enough capital and realistic expectations it is possible to trade for a living.


How much would you need to start your trading business? How much do you think you would need to make/year/month? (Dont forget you'll be taxed on Profit).
One must look at the long term returns of the market he wishes to trade, then make an intelligent decision based on his personal skill and track record. Say the market I wish to trade has averaged a 10% return over the long term. Based on my skill, I think that a worst case scenario is a 5% return, average return is 8%, and best case return is a 16% return. From this you can then determine how much you need in starting capital based on how much you need, before tax, to make in profits per year. For example (everything before tax):

1. I need $4,000/month or $48,000/year to replace my current job salary
2. Based on my worst, average and best case scenarios, I would need (48k/%return):
Worst = $960K
Average = $600K
Best = $300K

Obviously if my starting capital does not even get to 300K, then realistically I am not ready to start trading for a living. However if it did fall somewhere between the best and worst case figures, I must then decide if I can survive during the years when I perform at worst case level. For example

Say I have $500K capital. If I perform at worst case, then my return for the year is $25K. I have to ask myself if I can realistically survive with only $25K to sustain me for that year.

Important to note that the worst case scenario is still a positive return! I won't even go to what a worst case scenario with a negative return looks like.

Why would you want to trade for a living?
An extremely important question which I think one must answer before even starting to put together a business plan. Do you want to trade for a living because you are unhappy at your job? Do you think you are underpaid at your present employment situation and think you can do much better trading? Do you believe that by trading you will have more control over your time and more free time for other things? Is trading something you truly believe is right for you? "Know Yourself" has always been one of the most oft-repeated phrases when it comes to trading and for good reason. As in any decision in life, if the decision to trade for a living is not made after a thorough analysis of the facts and your personal circumstances, it would be very difficult to succeed.

Are people under misconceptions (generally) when wishing to trade for a living?
A resounding yes. The industry promotes trading as "the last frontier". "Live and work anywhere in the world! Control your own hours!" Some even go as far as showing fantastic returns and needing only a few minutes per day to do it. What can we expect Mr Joe average, who has never traded before, to think then? Perhaps he has started imagining what life would be like living next to the beach, powering up his laptop while having a beer, to check how much money he has made. Ok maybe that is a bit extreme. Perhaps a more realistic fantasy is one where he doesn't have to work the same number of hours as in his current job, and yet make more money. This after reading a few books and attending a few seminars.

Please let me clarify that I do think that trading for a living is very possible, and that there are people who already have achieved this. I answer these questions from the perspective of a person who has recently been introduced to the market, who has seen the fantastic returns, and who has started going through some literature on the basics of trading (or perhaps even joined this forum) and may have started trading a little bit to test the waters. My answers are not meant to be discouraging, but rather as a reality check against the blue-sky propaganda usually produced by the industry. Note also that I assume that whatever starting capital allocated for trading remains the same, ie during good years no additional capital is added to the starting capital and during bad years no funds are withdrawn to supplement the shortfall for living expenses.
Click to expand...

Nice post, excellent in fact...

But dont forget, as Scott mentioned, people that trade for a living are ALREADY pro before they quit their jobs, of course a negative year will hurt but with careful stock selection and stringent risk management which comes after several years of experience, it shouldnt be a disaster
 
Re: Trading / Daytrading for a living

yes :iagree: as well - nice post dennisII

in addition I think everyone starting out should have tattood on the back of their hands, so that they can see it when punching in buy/sell orders, that anecdotal evidence says that less than 10% of traders make a decent profit in the long run :eek: - not to be discouraged from setting themselves up to trade but to remind them of the time and effort it takes to be consistantly successful in the long run :)

bullmarket :)
 
Re: Trading / Daytrading for a living

Thank you for your kind responses.

Strw23, I agree that Leverage is a fantastic tool for wealth accumulation and can be used in conjunction with a trading strategy. Perhaps a new thread showing how Leverage can be used with risk controls would be beneficial?

Professor frink, I did not mean to sound negative so I apoligize if that was the tone of my post. 10% return may appear to be small, but if the average return of the market one has chosen is 10%, I think it is logical to expect that an average trader's return will be around that figure as well, plus or minus some percentage points depending on his skill level. Top traders may be looking at say 2x or 3x that amount. I did say that I was looking from a new trader's point of view which is why I chose to be conservative.

From another perspective, I would consider 5% as a risk-free return (throw all my money in a high yielding online savings account). A 10% return would be double that and would be much more attractive.

Nizar, if a pro decides to trade for a living I have no worries at all since he is a pro and would know exactly what to do in different circumstances. It is the beginner or amateur trader that I thought of when I wrote my post, especially since it is usually these people who do fantasize about trading for a living.

Bullmarket, was it 10% of traders? I thought it was less actually. Hopefully as we learn more through this forum we can nudge that up to 11% :D

I remember reading old issues of Shares magazine where they followed the progress of a contest winner who tried trading for a living for a year (or was it six months?). A great real-world example and something I would recommend everyone who wishes to eventually trade for a living read.
 
Re: Trading / Daytrading for a living

dennisll said:
Thank you for your kind responses.

Strw23, I agree that Leverage is a fantastic tool for wealth accumulation and can be used in conjunction with a trading strategy. Perhaps a new thread showing how Leverage can be used with risk controls would be beneficial?

Professor frink, I did not mean to sound negative so I apoligize if that was the tone of my post. 10% return may appear to be small, but if the average return of the market one has chosen is 10%, I think it is logical to expect that an average trader's return will be around that figure as well, plus or minus some percentage points depending on his skill level. Top traders may be looking at say 2x or 3x that amount. I did say that I was looking from a new trader's point of view which is why I chose to be conservative.
Click to expand...

hey dennis, no apology needed! I should have changed the word negative for conservative, so I'll do that in this post. You'll probably find that more full time traders are trading other instruments- futures,options, etc, that make returns above the 10% you mentioned look very low- look at what wayne gets up to- he mentions in another thread the sort of returns you can achieve daytrading futures.
From a beginners position your goal of 10% is getting more realistic, but they are the last people who should be considering full time trading, and I would have a guess that most people who start trading realise this quite quickly(god I hope I'm right about that part) :)
 

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