I'm a part time trader/investor thinking about going full time. I would need to your help in some brainstorming. Current situation: I'm 31 and making close to 100k per year in my current job. I have about 100k in capital to start. I'm married, have a kid and a mortgage. But my wife is working and her salary is enough to take care of the monthly expenses. I dont HAVE to make money every month to make ends meet. I have been trading part time and doing okay. Why Iâm thinking of day trading: Stock market is my passion. Whatever spare time I have, I follow stock market. I trade part time (mostly swing trading as I donât have much time during the day to trade) and am doing okay for the most part. My plan: Leave the job and start day trading, using the 100k capital. For a few years, I can just let the capital grow (if I'm lucky enough to make money that is) as I dont need to this money for monthly expenses. Long term (say after 5 years), I might have enough capital to make serious money. Trading full time will enable me in cutting down our expenses because I wouldnât be working. Say, manage with one car instead of two and so on. If Iâm successful in trading and Iâm committed to trading long term, Iâm thinking of moving to another smaller town with low cost of living to cut the monthly expenses further. I would like your opinions on my plan. Also, how much money can I make realistically in a year on an average with 100k capital, assuming I'm as successful as an average successful trader ? If its 50% of capital after taxes, I would have a million dollars in 7 years. That doesnât sound realistic is it? So how much is realistic?
Why not keep the job and put 50% of it each year into your trading account (assuming that you are swing trading successfully).
define doing okay Is your current 100k salary before tax ? often it is hard for people to walk away from their job because over time it has become a part of them. How long have you been trading ? How big of account ? What has your worst drawdown been ? You do have an advantage that you do not have to rely on your performance to pay that bills and that my friend is a HUGE advantage. How are things with your wife ? If you blew 100k, would she still be by your side ? You need to focus on how much you could lose, not how much you could make.
Thats what I'm doing right now, but I think day trading would suit my temperament better than swing trading, esp. in this crazy market. I hate to hold positions for more than 2 days.
Yea more power to anyone who can do this with a wife and kids. I know I don't have the experience yet and just lose money when we have crazy opening range like today. Sat on my hands all day, I know If I had a wife coming home in a few hours that worked all day I would be looking to at least do something. "hey honey, how was your day?" "great, I didn't lose any money, sat and watched the screen all day" "but aren't we down 20k this month?" "oh yea, you just need to have patience" good luck with that one over a few years.
Don't even think of leaving your job until you think things through. Are you making much money trading now? If you leave your job can you easily go back to it or find similar work with similar pay? It takes most people years to be successful traders and some never make it. You say the stock market is your passion but if something takes up all your time and takes away your money it won't be a passion for very long.
A thought provoking post. Actually the kind of post I wanted to see in this thread. Iâm doing okay means exactly that. I made okay profits (30%) last year but it was an easy year to make money in my opinion. This year Iâm having a meager profit (few %) but then Iâm not trading most of the days. Iâm just staying put with cash. Itâs very hard (for me atleast) to swing trade this year due to the volatile nature of the stock market and due to my lack of time to invest in studying the market. Agree with you about walking away from the job. I have been working for the past 10 years. More than anything, I fear the lack of social contact every day. May be Iâll do some part time course to appease the social animal inside me ⦠Things are going fine with my wife. I have her nod to go with this and have discussed the possibility of financial loss with her. But with day trading, I wouldnât be losing 100k in the same day, itâll probably be gradual. I wouldnât wait till I lose the last dollar before bailing out of day trading. But I get your point. The way I see it, there is more risk in swing trading (pre-market crash) than with day trading where I will watch the market closely and will have stop losses to prevent major loss.
You forgot to answer 3 important ? 's How long have you been trading ? How big of account ? What has your biggest drawdown been % wise ?
Good advice about thinking through. This post is part of my thinking process and I have a long long way to go before tending my resignation =). If I leave the job and fail as a day trader, I think I can find similar job with similar pay as long as I donât leave the job for too long. If I take 3/4 years to find that day trading is not my calling, I may have to take a pay cut to find similar job.