It is amazing what some people consider poverty and a reasonable standard of living. I live in the Midwest and you can live very comfortably on 50k a year, you don't have the big city lifestyle that you have on the coasts but you also don't have the costs.
Yes, strictly speaking you have to do the math backwards to reach the desired number. It is rather simple though... Let's say you need X K a month to live on and your system can make Y% per month after fees and taxes. Then your needed C capital is: C = (100 / Y) x X
There is no right or wrong answer here. In my case, I didn't feel comfortable making trading my living until I had $300,000 to $400,000 in my account and was debt free. As an aside, the smartest move I ever made was making as many trades as possible in my IRA account. There is no better wealth creating tool than the tax free compounding of trading capital over time.
Well I'm trading forex right now, what exactly is the kind of capital I'd be looking at if I were to aim for moving out using forex? I think I'm still thinking £100,000 to 150,000 but I'd like to know what the real traders think lol The reason I'm asking is because my capital is starting to build and I'm just curious to know how much I'd need to get on an average salary.
ideally $200,000 but $150,000 will do if your more frugal. set 1 year living expense aside ($60,000), $100k+ dedicated trade capital that you don't have to touch for that year. 20% return per quarter should not be a problem for a profitable short term trader if leveraged.
Depends on how much risk you are willing to take, how consistent your trading is, how flexible your expenses are etc. For example if you have enough for 1 year in living expenses put aside, plus enough capital to trade, you can do it with just that. But if you earn no money or have a down year, you are kaput after 12 months. Let's say you need 100k in capital to trade with. If you can keep your expenses at 25k, then that gives you a 2 year buffer if you start with 150k. If you need 50k to trade, than you have 4 years buffer etc. IMO if you haven't made money for 3 consecutive years then either your method sucks or it is too volatile for a solo trader, or you just plain can't trade. So anything beyond about 3 years reserve is a bit pointless. Remember if you have 3 unprofitable years and then quit, hopefully you still have most of your trading capital left that you can now use for normal savings, so you aren't exactly broke. So, I would say to be conservative you should work out what the minimum annual expenditure you can survive on is, multiply that by 3, then add on how much trading capital you need. Finally, ignore that post about needing 60k per annum. You are a start-up solo trader, you need to keep expenses to the bone in the first year or two, until you start making money. Each 10k that you spend now, if you become a good trader, will cost you 100k+ in a few years, due to compounding. Most "middle class" spending is wasteful bullshit. Either live large or live frugally - the middle ground means you don't get to live the high life and don't have any savings to show for it either.
Anyone who tries to start as a solo trader and has 60k annual expenses is an idiot. When I started, my fixed/unavoidable annual spend was about 5k.