Who trades full-time?

[PurePA]

Re: Who trades fulltime?

Hi PurePA... are you a full time trader? If so what instrument do you trade and how long have you been doing it?

Also, what does PA stand for?

I’m currently not trading, but am going back to trading fulltime, next year. Before moving to Australia I was trading Options on US markets. Since moving here I haven’t been trading, I find it hard to trade US markets from Australia due to time zone difference. Meanwhile am looking around other markets in Asian zones to see what others trade to get a better idea whether I should go back to options or start trading something else. I’m reluctant to switch to something else, I’ve been with options since around 2002. I’ll need to decide by end of this year. PA stands for Price Action.

 

[DeepState]

Re: Who trades fulltime?

I’m currently not trading, but am going back to trading fulltime, next year. Before moving to Australia I was trading Options on US markets. Since moving here I haven’t been trading, I find it hard to trade US markets from Australia due to time zone difference. Meanwhile am looking around other markets in Asian zones to see what others trade to get a better idea whether I should go back to options or start trading something else. I’m reluctant to switch to something else, I’ve been with options since around 2002. I’ll need to decide by end of this year. PA stands for Price Action.

You mentioned you started with options in 2002. Were you investing/trading linear prior to this? You weren't asked directly, so my interpretation of your statements on full time trading require disambiguation. Although you plan to go back to full-time trading next year (why the wait?), were you full time throughout 2002 (or prior) to arrival in Oz...or otherwise? Thanks and welcome.

 

[beachlife]

Re: Who trades fulltime?

I’m currently not trading, but am going back to trading fulltime, next year. Before moving to Australia I was trading Options on US markets. Since moving here I haven’t been trading, I find it hard to trade US markets from Australia due to time zone difference. Meanwhile am looking around other markets in Asian zones to see what others trade to get a better idea whether I should go back to options or start trading something else. I’m reluctant to switch to something else, I’ve been with options since around 2002. I’ll need to decide by end of this year. PA stands for Price Action.

The aussie options market is a lot quieter now. OptionsXpress will allow you to open an account here and trade US options and futs, but have a look at cfd's. Leverage without the greeks.

 

[IFocus]

Re: Who trades fulltime?

Manual backtesting will cover all of these.



Only live trading will bring out real emotions and real reactions to them.

For some one starting the answers are nope and nope.

Without prolonging this discussion on this aspect the issue is heighten state of arousal and poor decision making that comes from it. In psychology terms this then leads on from that to poor cognitive behaviours centre around trading decision.

There isn't a profession in the world that doesn't train to address these issues.

Most will brush aside this reasoning apparently trading is different but the number that 95% of retail traders fail has been pretty close in my own experience even in a bull market its not far off the mark.

 

[tech/a]

Agree with the Galah

For a forum with supposedly full time traders on board there isn't a great deal of
" this is how it is for me"
Lots of theory as to how you should succeed.

I want to know how they budget for TAX.
How much they withdraw for living expenses.
How this affects their capitalization.
How their ability to obtain loans are affected.
What they trade.
What is their timeframe
How they analyze their day to day trading.
How long do they spend at the screen.
What sort of initial investment they began with.
What sort of on going capital base do they try to maintain.
Why they choose to trade for a living.

I think it a very important that people learn HOW to trade.
Trust me when you've reached 50 will be a very handy way to
Generate extra cash/manage your own super or invest for passive
Income. With retirement slipping further away and age putting up
Barriers from employers----you'll be glad you can! It maybe the
Only job you can get for yourself.

A very worth while legacy to pass down in your family!

 

[PurePA]

Re: Who trades fulltime?

The aussie options market is a lot quieter now. OptionsXpress will allow you to open an account here and trade US options and futs, but have a look at cfd's. Leverage without the greeks.

Thanks. Yeah, CFDs seem to be very good trading instrument for Australians, especially those with DMA and the leverage can be used to disperse risk through diversification and hedging.

 

[nulla nulla]

Agree with the Galah

For a forum with supposedly full time traders on board there isn't a great deal of
" this is how it is for me"
Lots of theory as to how you should succeed.

Many successful "live" traders don't post about their trading successes as they can't be bothered with the exposure to abuse and the clamoring for proof. Over the past 4-5 years I have gleaned a short list of the successful traders in this forum, simply from the quality of their posts. Some are trading smaller port folios in share size and value and some larger. Some are in currency, some in foreign indexes, some in futures and some in equities. Some use cfd shorts as a hedge against long trading and some just trade equities long. Some trade short term and some trade/invest for the long term. They may choose different markets/instruments but the successful traders all have common tools: Research, evaluation of risk/reward, cash management, self discipline and persistence. These are not qualities learned overnight but over many hours/days/months and years and you will still make mistakes along the way. The key is to recognize when your are wrong and act to stop any further losses.

I want to know how they budget for TAX.

Don't budget for tax, simply pay it as and when it falls due. if you are earning enough to incur tax, you are earning enough to pay it. Also weight your capital base to your SMSF. That way when you go to pension mode, your earnings are tax free.

How much they withdraw for living expenses.

Just under six figures per annum.

How this affects their capitalization.

The monthly draw down of living allowance from "Capital" doesn't impair the base capital. The draw down is less than the monthly capital return ensuring that the capital continues to grow. Worst case scenario is to have the capital grow at a rate only better than inflation or bank interest rates (after living expenses). Best case scenario is to have capital grow at a rate that out performs the fund managers (after living expenses).

How their ability to obtain loans are affected.

Since going full time with share trading as our prime source of income, obtaining "loans" is an issue. Our bank doesn't see income from dividends and capital gains (on buying/selling shares) as acceptable income for the purpose of determining "regular" income for the purpose of evaluating our capacity to pay back a loan. Gotta laugh.

What they trade.

Shares listed with the ASX200. We watch for liquid shares, shares with volatility and a regular tradable spread.

What is their timeframe .

From same day to several months. Dividends and/or capital gains. Shorter term is better thasn longer term as the opportunity to reinvest/turnover capital is key.

How they analyze their day to day trading.

Daily excel/Lotus123 spread sheets that cover current positions, settlement dates (buy/sell payment) cash at bank and progressive performance. Also spreadsheets for each equity that we trade, an ongoing spreadsheet recording all trades in that share (buy/sell and dividends) to monitor our performance trading that share. This also helps evaluate market participation in that share and cut loose any share that underperforms or doesn't meet desirable risk/return levels.

How long do they spend at the screen.

Roughly from 9:00am to 4:30pm although we do walk away from the screens from time to time, go out to lunch, shopping or a movie when the market is giving us the sh@#$. You also spend time while away from the screens researching, reading reports, reading the newspapers, watching business programs on TV and being alert for the release of statistics etc.

What sort of initial investment they began with.

$2,000.00 in 1996. Invested in Burns Philp at $0.13 per share.

What sort of on going capital base do they try to maintain.

Why they choose to trade for a living.

Because we realized that trading full time represented the best return on our equity and time, than running a business or working for someone else.

I think it a very important that people learn HOW to trade.
Trust me when you've reached 50 will be a very handy way to
Generate extra cash/manage your own super or invest for passive
Income. With retirement "getting closer and closer" and age putting up
Barriers from employers----you'll be glad you can! It maybe the
Only job you can get for yourself.

A very worth while legacy to pass down in your family!

My bold, couldn't agree with you more. Start putting in the hours now, watch and learn. As per TH "learn to recognize your mother in the crowd" and start testing your observations with live trading. Don't panic! And as always, do your own research and good luck.

 

[PurePA]

Re: Who trades fulltime?

You mentioned you started with options in 2002. Were you investing/trading linear prior to this?

Investing yes, but not trading. Been with options for about a decade since 2002, paid my tuition the hard way, just like everyone else . . . because options are very deceptive.

You weren't asked directly, so my interpretation of your statements on full time trading require disambiguation. Although you plan to go back to full-time trading next year (why the wait?), were you full time throughout 2002 (or prior) to arrival in Oz...or otherwise? Thanks and welcome.

From 2002 till arrival, at one stage addicted to it, I swear to God, it can be addictive, it is like a 3 dimensional chess and I just felled in love with options.

Why the wait? As I’ve indicated before:
A) the time zone difference is a pain in the butt, especially since doing spreads on Weeklies is what jacks up the returns, but with Weeklies one needs to be keep them on a very tight leash so it requires close monitoring. Doing spreads on monthly expirations and having a contingency orders in seems OK on a first sight, but during flash crashes it will do more harm than good. Will we have another flash crash? It is always a possibility.

B) inner conflict whether I should trade options or not since the time zone difference will remain a perpetual challenge when trading US markets

C) ASIC margin requirements screwed things up for many active option traders more details can be found at
https://www.aussiestockforums.com/forums/showthread.php?t=28564

and

https://www.aussiestockforums.com/forums/showthread.php?t=28523

D) relocating to Australia brought up with it other number of other unforeseen and unexpected challenges (of personal nature) and I had and still to some extent have other priorities in my life that need to be resolved first.

E) Having access to CFDs is something worthwhile of a serious consideration, and am thinking about using CFDs on US stocks for CANSLIM as it would be not require too much management, and would definitely eliminate many hassles with options.

The funny thing is that some traders in US would love to have access to CFDs or they get up early to trade London FX sesions, while on the other hand some traders in Australia would love to have the advantages that US traders have. The trading landscape had changed a lot over the last couple of years, and so many new opportunities exists, and we're all so lucky to have access to all kinds of markets and trading platforms.

 

[barney]

Since going full time with share trading as our prime source of income, obtaining "loans" is an issue. Our bank doesn't see income from dividends and capital gains (on buying/selling shares) as acceptable income for the purpose of determining "regular" income for the purpose of evaluating our capacity to pay back a loan. Gotta laugh.

Lol ... I like that

You are obviously doing well Nulla ... well done!

 

[DeepState]

Re: Who trades fulltime?

C) ASIC margin requirements screwed things up for many active option traders

IG Markets, apparently Australia and the World's largest CFD Provider, offers the ability to sell outright. Example for Stoxx 50:



They do not allow offsets for combos. Everything is viewed as a set of single legs.

I am trading as an individual for this account with domestic domicile.

Thanks for the response to the questions. Again, welcome.

 

[minwa]

Re: Who trades fulltime?

E) Having access to CFDs is something worthwhile of a serious consideration, and am thinking about using CFDs on US stocks for CANSLIM as it would be not require too much management, and would definitely eliminate many hassles with options.

Hassles with options ? If you think they are a hassle then obviously you don't understand much of it, stick to trading stocks buddy.

Also CANSLIM is hardly Pure "Price Action".

 

[skc]

Re: Who trades fulltime?

I’m currently not trading, but am going back to trading fulltime, next year. Before moving to Australia I was trading Options on US markets. Since moving here I haven’t been trading, I find it hard to trade US markets from Australia due to time zone difference. Meanwhile am looking around other markets in Asian zones to see what others trade to get a better idea whether I should go back to options or start trading something else. I’m reluctant to switch to something else, I’ve been with options since around 2002. I’ll need to decide by end of this year. PA stands for Price Action.

Thanks PA. Australia is a wonderful place to live, but it's timezone and geographical isolation is one of its drawbacks.

Since going full time with share trading as our prime source of income, obtaining "loans" is an issue. Our bank doesn't see income from dividends and capital gains (on buying/selling shares) as acceptable income for the purpose of determining "regular" income for the purpose of evaluating our capacity to pay back a loan. Gotta laugh.

I recently went through the process and me and my mortgage guy agreed that we just about broken the record for "most emails required to obtain a loan". It's not helped by the fact that my income is earned in company and family trust structure, and my wife being on maternity leave.

 

[PurePA]

Re: Who trades fulltime?

Hassles with options ? If you think they are a hassle then obviously you don't understand much of it, stick to trading stocks buddy.

Also CANSLIM is hardly Pure "Price Action".

All propositions involve two things, they involve content and they involve context. So the distortion that you seem to experience has to do with the failure to properly identify the context. I’m not going to give any more energy into a forum through resisting things because I’d rather go after things that I desire. All the best with your trading.

 

[tech/a]

Thanks Nulla for your reply

The below is not directed at you but is a summary of pondering over the years.

Agree with the Galah

For a forum with supposedly full time traders on board there isn't a great deal of
" this is how it is for me"
Lots of theory as to how you should succeed.

I've been on this and other forums for 20 yrs. In that time I've seen far more who want to be full time traders than those who actually are.
I've looked at the appeal and as a business owner myself certainly like the appeal of no or little staff (I have 18-24),No pesky Clients (Have 100s) and very little overhead (I have plenty needing $200 K a month to B/E in fixed and variable overhead). But trading for a living certainly has draw backs.

Most wage earners and most Business owners only supply themselves with a job some a very well paid job,very few exceptional. Traders are very similar in their business ---in my experience--I know a few full time and know a few more who trade for extra income and Investment/Excess capital management---like myself.

I've asked these questions further to my own pondering and observations of others who seem to derive some if not all their income from trading---some of my thinking is below with my own questions.

I want to know how they budget for TAX.

As said if your profitable you'll pay tax. I personally not only want to minimize tax but need to minimize tax,I have many ways of minimizing tax while building asset. One of the best and most profitable is being able to claim my interest on money earning machinery leases and depreciation of those machines. The boost to earning is dramatic.
Particularly when you have quite a few. This is something not available to a trader.
If your a great trader you'll earn over the $180K a year threshold so you'll be paying around 45% tax with little to claim.Not only that but you'll be pre paying it quarterly going forward so if your not budgeting for that and just winging it------Not ideal and I'm surprised the really successful guys haven't made mention of it????

How much they withdraw for living expenses.

I know personally my wife and I draw a healthy salary and always have. One of the biggest mistakes in small business is NOT paying yourself FIRST! My $180k return trading wouldn't come close to covering our yearly living expenses. Would need a return of at learst twice that. So say $400k a year

How this affects their capitalization.

So what happens in a year where I don't make that or heaven forbid have a losing year. My lifestyle would be severely impacted at best and Id be out of business at worst! I figure that you'd need at least $200k to weather storms before you opened your trading business---for no other reason but to keep liquid. This is without starting capital for trading. So Id need to return $400k a year with a $200k buffer. I figure Id need $100-200K for Futures margin and twice that if attempting to trade stock.
So to start my trading business LIKE ANY BUSINESS I figure Id need at least $300k and more likely double that.

After all what sort of business return would you expect from ANY business that set you back $500K ish.
Rule of thumb is 30% on capital invested.

How their ability to obtain loans are affected.

To me a biggy. In my view if you want to be financially independent you either have an asset base which eliminates your need for out side help eg renting OR you have an income flow that generates a consistent return at low cost. Trading CAN do one Investing can do the other but again not without a solid original capital base. If you want a loan for something you'll need to be able to prove equity and serviceability---two things very difficult to provide if your a full time trader---not impossible but difficult. A conventional Business can be a massive asset. Trading businesses are of little or no value to financial institutions.

What they trade.

See above on required capital bases.

What is their time frame

Im of the opinion those with smaller bases (100-200k) will need to be discretionary day or very short term traders.
Larger capital bases could have the luxury of longer time frame and setting for dividends.But good dividends will require a solid stake in any company paying decent returns.

How they analyze their day to day trading.

I cant see how a fundamental trader can trade on a day trading basis.So longer term fundamental traders would need a much larger capital base. Technical trading in a discretionary manner gives flexibility and much tighter risk management. Systematic/System traders will also need larger capital bases even if they return 50% a year which year in year out Id say is impossible to mere mortals! Mind you very short term Methods can return 50% on capital at risk in a single session!

How long do they spend at the screen.

Id have thought really successful traders would not need to spend many hrs at all at the screen. Those i know certainly dont.

What sort of initial investment they began with

.

See above for the reasoning to this question. While businesses can be built from virtually nothing (I've done it myself) Its a really tough road and one I think less than 1% who embark on a trading full time life style will or can achieve.

What sort of on going capital base do they try to maintain.

Again see above. Maintenance would mean making up any losses and the cost of living. Not that easy!

Why they choose to trade for a living.

I can see the lure but I also know the reality

I think it a very important that people learn HOW to trade.
Trust me when you've reached 50 will be a very handy way to
Generate extra cash/manage your own super or invest for passive
Income. With retirement slipping further away and age putting up
Barriers from employers----you'll be glad you can! It maybe the
Only job you can get for yourself.

A very worth while legacy to pass down in your family!

To me a much more realistic goal for traders to aim and actually achieve.

 

[kid hustlr]

Could not agree more with tech's post above.

tech, it has been hinted in several threads before by both myself and skc the difficulties and pitfalls a full time trader must deal with TH also. I've said it before and I'll say it again but there is NOTHING wrong with working a full time gig and then doing some trading on the side for extra income on a longer term basis. In fact it may very well be the route I choose very soon.

In regards to your questions it will vary depending on the markets they trade, the amount of capital they have, their proffered style of trading etc. In my experience with the full time traders I know, they:

- trade intraday/very short term
- Have done considerably better in the past than they have done in recent months
- trade discretionarily all be it with a variety of styles
- are in a position to be able to handle periods of not getting paid.

I also know of some VERY successful traders who make serious money. They put in SERIOUS hours, work very hard, live a stressful lifestyle but its a choice they have made and appear happy with.

Ultimately my view is: The dream is achievable but in most cases difficult to reach. I'm not going to hate on anyone who gives it a go because that's what life is about but ultimately the vast majority will fail, if not because of the difficulty of being a full time trader in itself but also because of the plethora of life barrier(s) mentioned.

 

[beachlife]

Does anyone here believe that a living can be made from end of day trading or is the consensus that only high frequency intra day trading is the way?

 

[tech/a]

Does anyone here believe that a living can be made from end of day trading or is the consensus that only high frequency intra day trading is the way?

You'll need a LOT more capital.---In my opinion.
If you want or need to make $80 K or more a year.

 

[beachlife]

You'll need a LOT more capital.---In my opinion.
If you want or need to make $80 K or more a year.

How much?

Based on what?

 

[pavilion103]

Does anyone here believe that a living can be made from end of day trading or is the consensus that only high frequency intra day trading is the way?

From my (limited) experience, I don't think that it has to come from high frequency intraday trading.
With size, I could see myself doing this trading the first couple of hours of the FTSE.

Heck, if you captures 2 x 40 point moves per week with 4 contracts even thats almost $6,000 for the week (assuming all other profits/losses cancel out).

I think the main psychological (and maybe initially, practical) consideration is the lack of consistency of profits.

But there would be weeks when you'd easily make 200 points x 4 contracts = $12,000.


I don't care what anyone says. This is an achievable way to make a living. I have zero doubt.
And I'm talking about making more than $60,000-80,000.


It isn't the most secure and conventional way but you could make it work if you were willing to.




End of day I dunno.
You'd need a large capital base for stocks if you were making a 20% return p.a (if you can even make that return!).
$400,000 to make $80,000.

I wouldn't do futures end of day because of the difficulty in managing risk.
But I'd have position trades running in a semi-passive way.

 

[kid hustlr]

Does anyone here believe that a living can be made from end of day trading or is the consensus that only high frequency intra day trading is the way?

I think it can be done from end of day trading.

I think it's all relative to capital though. The guy who makes 250k a year trading intra day with a small capital base is a much better trader than the old guy sitting @ home with 5 mill in his super fund collecting 250k a year in dividends and claiming to be a trader.