How much has been enough for you?

Discussion in 'Professional Trading' started by Gcapman, Mar 24, 2011.

  1. Gcapman


    So you've spent 5-6 years of your life, spending hours and hours each day studying charts...perfecting your psychology...becoming a more calm person...increasing your overall confidence via various methods...

    And now you are able to break-even easily and can make good money when opportunities are there since you see the trends more clearly and even have developed a spidey-sense.

    You can interpret economic news into whether you should go long, short or stay on the sidelines.

    How much is enough money to start trading full-time again and quit your job?

    For me, it's $50K...

    Any thoughts? Personal experience?
  2. NoDoji


    Agreed. IMHO $50K provides the psychological "buffer" that prevents you from screwing with your trading plan.

    The size I trade requires less than $10K to make a decent living, but the additional capital makes it easier, psychologically.
  3. Gcapman



    I trade 1 lot forex positions and I'm able to hit around 100 pips every week so the risk is small and reward is fairly decent -- considering the small risk I use.
  4. It is not about having enough money. The key is about consistency. If you are not consistent, you can have a million dollar to start and lose it away. If you are consistent, you can have the confidence, and borrow money and start with nothing and do okay.
  5. 55 ($50K: 5 years) sounds about right.
  6. Lucias


    It depends on how much you make at your job and at your trading. The empirical evidence indicates that a 30% consistent return would place a trader in the very top. This is what I found when I checked among several various sources. I wish it were higher.

    You need to overcome the opportunity cost of not having a job, the ability to withstand down turn, and the ability to not have to take big risks.

    I would say around 200k is required to trade full time. If you are able to return 30% per year then that is 60k per year you will make. Really it would be better with 300k per year, that would give you a nice 100k living. At around 600k, you would be hard pressed to justify working at most jobs.

    I do not think 50k is enough. But, I hope I'm wrong. Dr. Brett Steenbarger recommended 100k which given the typical but better-then-average 20% return only provides 20k per year. That is not enough to make a living.

    Even if you take a 70% return, 50k is only equates to 35k per year. Remember, these figures I'm giving are net, so if you were making 30% net after all your cost-of-business you will be making more then that gross.

    Playing devil advocate, I believe unrealistic rates of return are possible 5x-6x. However, if you can do that then surely you could do at 2x or 3x working, 50% of your best. If this is true then it would make sense to double or triple account before going full time.
  7. Gcapman


    Who makes 30% a year as a good trader???

    I make 20-30% a month if I use 10x leverage....

    But I make around 10-15% only using 5x leverage.

    IMO if you know what you're doing, you should be able to double your equity per annum. I didn't waste 5 years of my life and become disciplined in the gym to make 30% a year.
  8. heech


    If you start with $50k a year and double every year, you'd be at $51 million in ten years. What color did you say your Ferrari was?
  9. bone

    bone ET Sponsor

    Steenbarger's point-of-reference comes from his experience as the staff shrink/educator at Kingstree Trading and the prototypical Chicago prop trading business model. It is not at all unusual to daytrade futures and realize a 100% monthly ROI on your daily performance margin.

    For example, the SPAN initial performance bond margin requirement for the US Ten Year Note Future is $2,160 Spec and $1,600 member. There are plenty of good traders at Chicago Prop Firms who can average 3 tics (32'nds) profit per day for a month, and that is $1,875 per month. This is quite common, and not at all a stretch.

    This will not compute with most everyone else's (your typical equity trader) ROI benchmark.
  10. Magic8


    You're destined for ruin. Trade as a hobby, but keep your day job. Actually enjoy life. Don't like your job? Get a different one. Don't like working, at all? Volunteer then.

    Do something meaningful with your life vs. being glued to your computer screen 24x7, just kinda leaching money from others in nothing more than a betting game.

    No one can predict price movement, forecast volatility, "have an edge" ... blah, blah, blah... You think you've got it... and then... ruin.

    I thank the Lord for my day job. I have seen others that, with a lot more money than 50K - blow it all.
    #10     Mar 24, 2011