I don't really understand the black and white premise of the question (salary vs profit). Trader is the same as restauranteur, retail shop owner, or any other ownership-like or self-reliant descriptive. All are entrepreneurs. Entrepreneurs have one thing in common... They have an idea wanted to produce a desired result. It can be a hobby, it can be a parttime project. But for all cases, the desired result is not necessarily money-centric. My trading business is for-livelihood and for-profit. Income without profit margin is just a hobby. To each their own. In my case, I control and trade through an S-Corp. The entity is a legitimate employer in my state, meaning workmens comp and unemployment insurance is paid based on all wages paid. I am paid wages with payroll taxes withheld and at year end I am issued a W-2 and a K-1. The K1 is (usually) considered unearned income by the IRS and is not subject to SS+medicare tax. W-2 income, fringe benefits, and K-1 financials are ongoingly engineered through-out the year from a tax standpoint. Since WC and UI is paid, those benefits are available to me (and any other employees) if so wanted. My trading accounts are swept very regularly into locally accessible entity titled accounts. I do not accumulate or maintain sums more than is necessary for my type of trading in trading accounts. I am a 10yr+ FT futures trader. My trading business is for-livelihood and for-profit. Income without profit margin is just a hobby. To each their own.
Good point. But I think it depends on where you are in your life and your circumstances. You can be a good trader but have very small starting capital base and so you need to grow over time. Yet your living expenses are not going to vary, but may infact rise with inflation. You may not reach huge profitability until you've reached a critical mass in NAV while maintaining your historic trading performance. The prior discussion about making enough to sustain western living costs (around $30K as a bare minimum) relates to what kind of starting capital one needs based on what is 'reasonably achievable' by good traders, which is maybe 30% annually. So this means someone contemplating a move to a career trader will need six figures account. We are of course discounting exceptional outliers or downright snakes oil where people report turning $5K into millions in a few years (true or not). Also, some people may be in a life situation where they may be laid off or unable to find gainful employment, and so trading becomes a career venue or a stepping stone until another job is found. And so they must make do with the situation, if even it means that no profit is made after life expenses are factored in. But, being that the longer you are out of the job market, the lower your chances of finding a job, becoming a career trader might be the only venue one has left.
I can't and won't argue with any of those points. Everyone's situation and makeup is different. But I will say you left out one point, perhaps unintentionally. And that is entrepreneurship. It's scary. It's not for everyone. Whether it be trading, or some other type of business doesn't matter. The question (and answer) really has nothing to do with salary vs profits. For some reason a Gerald Celente quote comes to mind... when people have nothing to lose, they lose it.
I donât rebalance between accounts. My main income is from the swing trading account. My month end sweep of ½ the profits keeps the account close to the initial capital. There have been months where I drawdown below initial capital so there has been no sweep but I donât top the account up. Day trading account is for the days Iâm bored and have time to watch the market. Itâs like going to the casino. Risk a couple hundred bucks trying to make 5 or 6 hundred. The long term account is where the excess capital ends up. It is still a trading account rather than an investment account. Some positions get closed in a month or so and others I have held for a few years. Preservation of capital is the number 1 priority. Every so often I get whip sawed and end up having to buy a stock higher than I sold it for. The strategy I employ for this account had me out of the market in the fall of 2008. I started opening positions mid 2009 and still hold some of those stocks.
----I'm always anticipating the day when my trading strategies will stop working and my intention would be to go back to my previous career. This also leaves me feeling somewhat insecure.---- i've traded same system for over a decade. unfortunately for me it not performing well today. not worth the hassle i should say. due number of factors,but i believe the biggest one is direct fed intervention of the markers. if you system involves volatility, gaps etc you simply cant fight this: straight line! volatility is all time low. NO GAPS! ZERO in 2013 and 14(oh....argentina default? no biggie-less than 1% gap down). but on other hand-even if you employed (specially in private sector, something like IT field)-you will have exact same problems. your skills have to be up to date all the time and you can be unemployed at any time.the only sure thing that left is a working in certain fields for gvt. something like a teacher at public school or a bus driver
Haven't had a Salaried job in approx 19years, or the 9-5 drudge that goes with it I'm happy to say, 19years of self employeed, I was hoping to be full time trader by last xmas / April 2014, so behind schedule still 2 - 3 months out which will likely stretch into end of the year depending on work load. Nothing in the universe is certain, if you get GOOD at trading, I mean really really GOOD then, maybe Trading profits can actually be more secure than J.O.B. ( Just Over Broke ), lets face it with a JOB your always just scraping through unless your a CEO or something. Make enough, take enough out and put it to 1 side, for when bad days happen is my advice, cause bad days will happen, any plan that does not cover and expect SHIT HAPPENS is a BAD BAD plan IMHO LOL Nearly there, if I don't go Mel Gibson first!!
Wrong, your not a trader unless you place trades. Professional Traders = Makes a living off. Semi Pro trader = Makes a profit from.
Correction, you are not a trader; you are a hobbyist! If your child is sick and rather than taking them to a doctor you correctly diagnose the illness as flu thus you save $ you would have spent at a doctor, does that make you a medical professional or instead of trading your car at a dealer you sell it yourself and make more $, does that make you a car salesman? The answer in both instances is NO... Further more when you file your taxes and you enter job title if it doesn't say trader then you are a hobbyist...
Hobbyist or not, if you place trades and put real $$'s on the table, your a trader no matter how small, demo account people are just hobbyists. That's the technical definition that applies to sports and other activitys.