Base Capital

Discussion in 'Trading' started by Bootsie, Jan 9, 2003.

  1. Bootsie


    I'm curious... what are some of the various ways members have obtained (if you will) their trading capital... their "starting out" capital. I know there is a learning curve attached (I really know) with the manditory dip afterward but I'm talking about the start everyone remembers so fondly!! I'm sure there must be some very interesting stories and some may even offer good ol' fashioned motivation to the less "experienced". Just a thought.

    Best to all,
  2. cheeks


    borrowed it.
  3. lescor


    sold my house
  4. Cheeks and Lescor, if you're both being serious, you're both crazy!
  5. rs7


    Hope you are kidding.

    I remember reading that a couple sold their home on Long Island in the early days of the New York State Lottery. They used all the money from the proceeds and actually about broke even.

    Amazing how lucky people that dumb can be. (Don't they call the lotteries a tax on the stupid?)

    In any event, I think that anyone who attempts to trade with money they cannot afford to lose, is just setting themselves up for failure.

    Best way to learn how to trade (IMO) is to work for a trading company. I know this environment is not conducive for finding those kinds of jobs. With good reason. This market is very difficult. Maybe a great market to learn in, if you have the staying power (the ability to make ends meet without expecting to profit from trading while you learn). But in general, I would not recommend "learning to trade" right now with your own money.
    (Or worse, borrowed money).

    There are plenty of openings for stockbrokers for anyone interested in getting into the industry. The licensing can only be helpful for those who wish to get into the "trading" area of the business. Rough business too (being a broker), but it is a way to get into the industry. And a way to have access to the technology of "trading". Of course, brokers are NOT traders, they are "salesmen". But yet they are exposed to the technology of trading, and if you are young enough and dedicated enough, it is a foot in the door.

    This is just my opinion, and I am sure I am in the minority of the members of ET. I never traded my own account until just the past several months. But even so, getting huge leverage as a "pro" in a partnership is a whole different deal than being a retail customer like so many here are.

    Really, to me, it seems like there are two different kinds of traders. Those that do it as a way to avoid having a "real job"....guys (or gals) with enough money to just have a go at it, (some will be successful...most won't) and the others are the pros, that get there the long way. Coming into trading from perhaps a different area of the business (such as being a broker, or working on an exchange floor for peanuts). Or slowly learning on ones small and part time while working a "real job". Trading only when it is not interfering with "normal" life. And "normal" vocation. One does not become a trader overnight. Or because you just decide to be one.

    I have worked with a lot of traders over the years. I have not met any who really were able to survive bad times coming from a background of trading from home as a "hobby".

    I know that "prop" traders get knocked a lot on these forums. But I believe that working for a Bright Brothers (I don't, never have and don't even know anyone who does), is a better way to go than to go it alone. This is not a plug for Bright. Just using them as an example. I DO know plenty of Schonfeld traders (I was one) and Worldco, and Generic traders. There is much less "freedom" and lots of things to complain about for sure. But IMO, it is well worth the "price" compared to trying to go it alone with your own $. There is so much to learn, and so many to learn from when you are with a firm. Being home and trading your own money sounds so nice, but seems very difficult to me. I would not recommend it for beginner traders. Learn as much as you can from as many as you can. It is well worth the "tuition" to learn on someone else's dime (or at least not ALL your own money), and with their risk management to help new traders from self destruction. Hell, we all self destruct anyway once in a while. It is unavoidable. But the blowups are far less frequent when you are accountable to a firm. Or a partnership. Why take more rope than you need to hang yourself. Better to have someone holding the other end of the rope with both your interest and thiers in mind. You don't get that as a retail customer.

    Good luck, and Peace!!
  6. Bootsie


    Hey Rs7

    Great reply. I think this is the type of thing I was looking for. I think I could see this thread evolving into one that talks about what the leap was like for those that left say a situation where there was a guaranteed income stream (a job) to the next level - depending solely on oneself to pay the bills via trading.

    It's a great topic and I think it could sit under any number of the forums. I know several people who have just been grinding it out working off hours ("2nd shift") so they can trade during the day and work at night... in order to fund (as Rs7 so eloquently puts it) the tuition of trading. I also know someone who moved to the west coast so he could trade early in the day and still go to work later.

    Anyway, that's all for now.

    Best to all,
  7. CalTrader

    CalTrader Guest

    RS7's post says it all: I would just re-emphasize that your seed money should be viewed as high risk funds. If you are just starting out and have little background in the business you can change the previous statement to "very high risk funds." Obviously if you are betting the farm on trading for a living and dont have a good background in the business then you should have a contingency plan. It would be the rare person indeed that could trade their only savings starting with no background and be successful ..... In these cases the best path is to put up less capital and go with Bright or a similar firm .....
  8. cheeks


    Sorry, I really should not have posted that without putting up the disclaimer "I strongly do not recommend this". It can be a recipe for disaster.
  9. cheeks


    You both said it perfectly. It really depends on your background.
  10. how i got mine:

    started as a broker in late 1996...kept putting extra $ into an account buying silly stocks like aol,brcm,aeth....started hating being a broker in early 2000...wanted to try trading..started selling off those stocks and by dumb luck was getting out at th etop and honestly didn't even know it.
    #10     Jan 10, 2003