Trading full time - what do you think will happen?

[jersey10]

I am 29. I live in Brisbane. This is my story so far. I am looking for feedback / opinions of what you think may happen based on my plan to become a full time trader.

I have always been interested in the sharemarket and property investing. I purchased my first shares when i was 18 or 19 via managed funds and also purchased Telstra 2 shares which i still have. I bought my first property in 2005 and my second in 2007. Over the last 3 or 4 years i have become particularly interested in share trading and moreso in the last 4 months in trading full-time (some would say obsessed). I have done a share trading course 2 or 3 years ago which taught me about trends, stop losses, position sizing, brokers, chart patterns, support & resistance, moving averages, etc. I have read a lot on this forum, am currently reading Reminiscences of a Stock Operator and plan to read Trade Your Way To Financial Freedom and Nick Radge's book next (or the at least the first 50 pages everyone is going on about). I have recently become a monthly subscriber to The Chartist and also learn a lot there from the nightly analyses. I have changed from working 5 days per week to 4 days per week and plan to reduce my working hours more as I progress with my trading ability. The extra day I have I spend studying trading as much as I can.

My immediate plan is this: I have $40 000 trading capital and I plan to follow one recommendation from The Chartist at a time using the full $40 000 or as much of the $40 000 as position sizing allows. I will select one trade I believe is most likely to be profitable. I will continue to learn and develop my own trading plan (however I'm not even sure if this is necessary if Nick Radge is doing it for me, will I develop a better trading plan than him? What is the point? I may as well follow his analyses and just modify the trades [position size etc.] to my own circumstances). My next educational move would be to do The Chartist course and possibly some other trading courses throught the ATAA or the like. I am also considering doing a private consultation with Nick Radge as well. I have thought about doing a Masters of Business in Finance as I am interested in this area. However I am not sure if my efforts to become a full time trader would be better utilised on the aforementioned educational avenues.

My goal in the short term (the next 2 - 3 months) is to generate income from trading that will allow me to reduce my work hours more so I can devote more of my time to developing my trading.

My medium term goal (1 - 3 years) is to be trading full time and be able to pay myself a salary from that.

My long term goal is to be Nick Radge (lol).


I would like to get some feedback as to what you think will happen as a result of my plan to trade full-time.

Am I being too optimistic? Are there things I should be doing as part of my education I am not?

Thanks for reading. Would appreciate any feedback.


Jersey10.

 

[jersey10]

only on the asx games

 

[Trembling Hand]

Sorry deleted that question about have you traded yet.

And with $40,000 how much did you make. I would think trading stocks you simply will not be able to produce the returns to get any way near producing $ to live on.

 

[MRC & Co]

Hey Jersey,

I would strongly recommend decreasing that position size. 40k or 100% of capital on one play? Way too large! I would be using about 5k per play with that size trading account.

Are you planning on investing in futures, equities, options? And what is the timeframe you are looking at, intraday, position trading etc?

Masters is a waste of time IMHO if your goal is to trade full-time.

Remember, your #1 goal at first is to preserve your capital and stay in the game! Or this dream could be just that, a dream, within that 1-3 year timeframe!

It' refreshing to see someone dedicated and passionate about learning and willing to put it out there on the line. You remind me of myself.

Good luck mate and as many times as friends/family say "most traders loose" just remember my signature. Live your own life and over time, I am sure you will find your own niche as long as you preserve that capital base first.

I believe before any of those books you mentioned, you should read Nicks book and probably do his course (though I cannot comment on the later).

 

[nizar]

Generating an income from $40k within 2-3 months to be able to cut back your job is way too optimistic in my opinion.

Most traders need longer than this to become proficient.

Are you taking a discretionary approach or a quantitative approach (backtesting, etc) ?

Take your time jersey, the markets will always be there.

 

[jersey10]

Sorry deleted that question about have you traded yet.

And with $40,000 how much did you make. I would think trading stocks you simply will not be able to produce the returns to get any way near producing $ to live on.

Certainly not enough to live off. Agreed. I have read in other threads you would need a lot more than 40 000 capital base to produce returns to comfortably live off and if i end up being any good hopefully i could get to that in the future. I do think realistically I could make 50% over the course of 12 months on $40 000.

Are you saying you would trade something other than stocks to produce a greater return from $40 000 starting capital?

 

[jersey10]

Hey Jersey,

I would strongly recommend decreasing that position size. 40k or 100% of capital on one play? Way too large! I would be using about 5k per play with that size trading account.

Are you planning on investing in futures, equities, options? And what is the timeframe you are looking at, intraday, position trading etc?

Masters is a waste of time IMHO if your goal is to trade full-time.

Remember, your #1 goal at first is to preserve your capital and stay in the game! Or this dream could be just that, a dream, within that 1-3 year timeframe!

It' refreshing to see someone dedicated and passionate about learning and willing to put it out there on the line. You remind me of myself.

Good luck mate and as many times as friends/family say "most traders loose" just remember my signature. Live your own life and over time, I am sure you will find your own niche as long as you preserve that capital base first.

I beleive before any of those books you mentioned, you should read Nicks book and probably do his course (though I cannot comment on the later).

Planning on trading equities at this stage, but after reading about forex a bit particularly on this forum I would like to trade that at some stage. Know next to nothing about it at the moment however.

I would be interested in knowing why you believe a masters would be such a waste of time.

thanks for feedback.

Jersey10

 

[Trembling Hand]

I do think realistically I could make 50% over the course of 12 months on $40 000.

Why? You haven't even traded yet. You haven't even had a positive month.

Lets just say you do make $20,000 in a year how much of that are you going to lose on tax, data & computer, Admin, books, subscriptions etc. You will have about $10,000. And I would say this is best case for a beginner.

 

[jersey10]

Generating an income from $40k within 2-3 months to be able to cut back your job is way too optimistic in my opinion.

Most traders need longer than this to become proficient.

Are you taking a discretionary approach or a quantitative approach (backtesting, etc) ?

Take your time jersey, the markets will always be there.

If i could make 50% on that $40 000 over a twelve month period (i.e. $20 000) that would enable me to take the next step down to work 3 days per week and concentrate on trading for an extra day of the week.

Most certainly it is a discretionary approach at this stage.

 

[mayk]

Many people come here and ask the same question.

Why don't you take this a step further and on a weekly basis inform us of your success/ failure etc. Then this will be an evidance to people that either it can be done or they are dreaming.

I know it is off topic, but the good point is, you are going to start from scratch in trading and that may help others to learn.

By analyzing your technique and explaing them to most newbies (my self included), you will learn alot and might one day become Nick ( who ever that is )

Good night and good luck!

 

[MRC & Co]

Planning on trading equities at this stage, but after reading about forex a bit particularly on this forum I would like to trade that at some stage. Know next to nothing about it at the moment however.

I would be interested in knowing why you believe a masters would be such a waste of time.

thanks for feedback.

Jersey10

Hey Jersey,

Basically, you need to learn a few things.

What instrument(s) suit your personality, whether that be futures, options, equities or a combination of these and perhaps others.

Then in which market you are going to trade them (S&P, Gold, Crude, Wheat etc) and on what timeframe (intraday, swing trade, position trade, trend following etc).

Following, you will need to know which set-ups are best used for the various markets and over various timeframes, inclusive of whether it is a trending or choppy day. Lastly, a plan to execute each set-up and the rest of your trading aspects, max drawdown, rules when to trade and when not to trade, keeping track of results of each set-up or when perhaps emotions got in the way and the results.

This is best learnt by researching information specific to trading and through the real deal. You will not gain this from most academia (no offence to the industry, I have 2 degrees myself).

Cheers

 

[brty]

Hi,

I'm going to go out on a limb here and suggest that you need to forget about trading for quite a while Jersey.

Reason being that you hold Telstra2 that you bought, what 9 years ago, and are still sitting on a 40% loss.

In my way of thinking, if you cannot accept a past loss and move on, you are not ready for trading. The classic from losing traders is that the keep their losers because they pay good dividends.

If you think you are ready for trading, why are you still holding this loser??? Are you married to the position???

bye

brty

 

[MRC & Co]

Come on, he is probably just reading about accepting past losses now. Does not mean he cannot trade. Though obviously has to learn about position sizing, whilst Nicks analysis will help with the set-up and plan.

Not to mention, if he now wants to trade and realises it's best to cut the dogs loose, but beleives his long-termer is fundamentally undervalued, why not hold it? You can trade and have an investment portfolio at the same time.

 

[Kauri]

Go for it mate.. sounds like you know what you want and how to go about it, and have the right attitude...
I wouldn't try to cherry pick Nick's service... unless you are on a Forum most people have more losers than winners, strange as it may seem,.. it is the management of them that makes the profit.. play his whole field with good risk control and take the opportunity to learn.. and not only from the setups..
Forget the degrees, the couple I have haven't helped me at all, admittedly they are both in the second degree.. oops..Itha... don't come after me.. :couch


Cheers
...........kauri

 

[mayk]

unless you are on a Forum

LOL

 

[barney]

Hi J,
Some good advice from the lads. None from me, other than don't put any more cash into a spec than you are prepared to lose. If you are trying for 50% p.a. return you may be tempted to try speccies .... 50% is a tough assignment on "regular" stocks .....

Two degrees you guys !!! ............ What are you skiting about .........
I've got 360 degrees ......... and I use all of them everyday :viking:

 

[stevo]

50% profit is achievable... as is a 50% loss. Since only one stock is traded at a time the possible outcomes over a year will vary considerably depending on stock selection. One or two big winners could make the difference, as could one or 2 big disasters.

The problem is most people begin counting the winners before they even start and tend to downplay the just as strong possibility of losses. So you visualise yourself sitting on $60,000 at the end of one year, but think about only having $20,000 left as well.

If you make 100% on your first trade will you put the whole $80,000 on the next trade? If you lose $15,000 on your first trade will you replenish your trading capital and do the next trade at $40,000? Or will you go forward with only $25,000? I can throw heads 5 times in a row quite easily - 5 losses in a row is very achievable.

Personally I would be much more comfortable with 4 to 5 positions - then you have the opportunity of going with the winning trades and cutting the losers.

You could easily be fooled into thinking that you have some innate skill when it comes to trading but really you were just lucky.

Good luck

stevo

 

[Nick Radge]

The rule of thumb I suggest is trading should make 3x your current annual income before you decide to take the plunge to full time. This is mainly because there are associated costs, equity gains aren't usually linear and there is substantial pressure to meet living expenses.

Also don't forget that many full time traders are simply slaves to their screens rather than a boss. There is a guy who lives up the road from me who made $1m last year, but spends 7am - 7pm at his screen. I played golf with him a few months ago and he spent 60% of the game on the phone. Can't say I see the point.

 

[tech/a]

I will continue to learn and develop my own trading plan (however I'm not even sure if this is necessary if Nick Radge is doing it for me, will I develop a better trading plan than him?

Seems youve already started.

My immediate plan is this: I have $40 000 trading capital and I plan to follow one recommendation from The Chartist at a time using the full $40 000 or as much of the $40 000 as position sizing allows. I will select one trade I believe is most likely to be profitable.

$40k---not enough.

Radge himself suggsts you need to return 3 x your expected "Wage" if trading fulltime.

So lets say $75k a year thats $225,000

My next point how well do you think a business would do with $40k start up capital---It wont be a market leader in the near future.

So back to $40k
To return 200K with 500K you'll need at 40%p/a return
That in itself is no mean feat to most.
500% on 40K---impossible ---except for TH.

Radge WILL teach you how to trade profitably.
Rather than taking the fish.
Learn HOW to fish!

 

[Trembling Hand]

Also don't forget that many full time traders are simply slaves to their screens rather than a boss.

Funny that. To get to the top of trading as a profession takes the same effort as an elite sports person or musician or artist. Don't kill the dream. Doesn't it just take a couple of chart set ups and some balls and in no time your driving around in a Ferrari :car: :brille: