This is my first post obviously. I need your help and wisdom. I am a small business owner and am in the process of selling my company. Iâm in my mid 40âs with a beautiful wife and 2 beautiful kids. Hereâs the issue: the proceeds from the sale are not enough to retire comfortably and Iâm left with no single avenue to support the family after the sale. I have an undergrad in Finance and an MBA and good industry (non-investment field related) experience but I detest the very idea of re-entering the corporate world. My wife is highly desirious of me working for The Man and I can see her point, as it provides a safety net. And so herein lies the conundrum. So what Iâm really getting at is: have any of you been in a similar situation (ie, midlife with retirement savings in progress but not quite there yet and needing to find a source of income)? I have been reading ET for a while as well as reading books on trading but am not a trader nor have I ever traded. I know all the failure statistics yet see myself as having most of the core competencies of a trader: analytical, passionate, hardworking, willing to put in the time/effort, realizing this is a business and not a hobby, etc, etc. Have any of you made the switch to trading mid career and are successful in relative terms? My family and I could live off the monies from the sale for a year or so easily while I continue to prepare myself for trading. Oh, and a big point: my wife would want at least some degree of assurance that trading could bring in incremental income over and above what I could obtain merely by investing. If not trading, is there any other type of investing you would recommend if you were in my shoes? Swing trading? Anything else? Thanks so much for your constructive feedback.
Anything you risk in the market, any capital you use to start an account - consider it gone. I cannot think of a worse time for someone to start trading as a virgin newbie. Thirteen years ago, any douche with a pulse could make money day trading stocks. The world has changed mightlily since then. Trade SIM and get a part time job doing something - anything. Please think of your family first.
what is your wife going to say if you lose the money? "I know all the failure statistics yet see myself as having most of the core competencies of a trader: analytical, passionate, hardworking, willing to put in the time/effort, realizing this is a business and not a hobby, etc, etc. " dont mean sh## in this business. you have to last long enough to learn the game. it takes a long time and even then its long odds.
Have to second what Bone and Thinker have told you! Excellent advice! Yes, a skilled trader can make more trading small capital than they can investing small capital, BUT it takes time (a lot) and money (a lot) to learn how. On top of that, your background, while probably not to harmful, won't be very helpful. Short term trading is an entirely different animal than investing and has virtually nothing to do with what you learned in business or in business school. Get a job and earn while you learn by paper trading. (You can trade all night long if you can stay awake, or get up very early depending on your time zone.) Do not commit any of your capital to trading at this point. And good luck with that new job after being up all night.
My advice is that indeed, as mentioned in the above post, you should only trade money that you can easily afford to lose! You should not "expect" any income, but sky is the ceiling. In general, I think that everyone has hidden passions and should pursue their dream! You might end up being a charismatic trader. The question is: Do you want to trade so that you can earn income, or do you REALLY want to pursue this career all the way? And if you love it....can you surpass the psychological barriers? This might be the most psychology related endeavor you have ever encountered! Unless you come up with an edge that i cannot think of at the moment, then your psychology in trading will need to become one! And this is the toughest path to walk, especially when financial barriers exist. I advise you to not account for trading proceeds to support your family. Only do it if you really love it and can afford to give it a shot, while having a great backup plan that might keep you in the game mentally!
My advice is to stay away. This is a business to learn when you're "poor" and you don't have a ton to lose. I did it being single and spent most of my 20's paying "tuition" (not that there weren't a number of times when I thought I finally "got it"). My "tuition" probably cost me $60K in cash and who knows what in opportunity costs. You will likely require two full business cycles (8+ years) to become fully capable and at the end it will come down to discipline and your risk tolerance/risk management. Even some guys who were trading a long time got killed in the liquidity event of 2008 because they over-leveraged and relied too heavily on correlations to keep them out of trouble. In the meantime the tuition can be extreme when you have to put food on the table and with 3 dependants the pressure could cause you to make poor decisions. Not knowing the real deep particulars of your situation, my suggestion is to do a tactical asset allocation for most of your funds which will keep your head above water. If you are hell-bent on trading then take a small chunk and trade on the side while you collect some income from somewhere (consulting, wage-slavery, etc). Given this setup, worst case scenario is you'll likely earn your 8-12% a year off of a good asset allocation scheme, and be a little bit wiser when you hit 50. Best case scenario is you end up with the right stuff to trade and maybe you can put up big annual percentage gains. Once you have survived two full cycles with money on the line you'll be ready to do it professionally. Just my .02c but things start to change as we get older and we have people depending on us.
After I blew up my first account, I started a business and after 13 years found myself in the exact same situation as you. I put aside enough to live on for a year, got a job as night cashier in a C store and started trading again. After a year I didn't need the job anymore. It worked out ok for me, but my kids were raised and my wife didn't care. But I worked at it 24/7. When the market was closed I started studying and reading everything. Eventually I had a world class library of worthless trading books.
This is a very clever phrase which certainly shows some degree of enlightenment. It seems to be a necessary step to go through all those trading books because it is a logical first step for someone who aggressively wants to learn. Eventually the realization hits that while there may be some valuable tidbits in various books, the path forward is to actually do your own research or read research of like-minded people (not always easy to find). The paradox of trading is it is a game of secrets but yet there aren't really any secrets (excluding pure inside dealing) because the data is all out there for you to see. It doesn't help that 99.99% of the industry is out to fleece you bare either...
Or to find a Mentor. You`ll need someone experienced,who could show you what to do.You WON`T make it on your own!!!