I'm not sure I understand why you would even consider quitting at this point. It would be different if you weren't profitable, then perhaps you can look at opportunity cost because it might be just continued losses, so the sooner you get out, the less money you would lose. But since you're profitable now, it should be up hill all the way, unless of course you aren't that confident. I see you put numbers to your situation. If lets say you lost 100k, and you figure you can make about 75k or more, then this would roughly work with your figure of needing 1-1.5 years to make it back. The question for me would be can I keep doing what I'm doing and live the life I want to live. If this allows you to quit your job and just there, the answer is easy. If you still have to work, while making money to trade, and this is causing you to be over worked, then I can see why doing this another 1-1.5 years would be hard. But in this case, you certainly haven't found the holy grail because its just a side gig. Like you say, you can always leverage up, and this is what makes trading such a damn good endevour. If you can make 50k per year consistently, hitting 100k shouldn't be that difficult, at least technically. I really wonder what part of you makes you want to stop even if you are finally making money. I would bet that the type of trading you're doing isn't easy on you, is time consuming, is time intensive when you consider your other obligations, and if this is all true, then I would think you haven't quite gotten your stride yet. As a side note, most people need way more than 1-1.5 years to recover losses from other failed ventures.
THANK YOU for your words of encouragement! Sometimes that's all people need. And a sense of perspective! Yes, it would be such a waste to quit now that I have finally crossed the bridge so to speak. But I dug myself into a rather big hole. Rough back of the envelope, the amount I've lost is higher than what you've mentioned above in my negative accounts. I have one positive account that I've been doing positive and good returns. And in one of the negative account I've recently recovered from the lows decently. Now, if I calculate using the recent pace, then it would take significantly less than a year to recover those losses. But that's assuming I can continue to identify and capture these big moves with size. Which to be fair, I have only started to do. Maybe I should give it a few more months to see if I can consistently identify these big moves. If I can then I will wipe out my losses much sooner than the projected 1-1.5years. But pyschologically, when I look at my negative accounts they are basically wiped out. It's very discouraging to look at that and think "how the hell will I make it all back from such a low base??" But in reality, my positive accounts have more than enough capital to generate the kind of good cash flow I need to make up for the losses. I should stop this mental accounting. Just think all of my accounts as one big pile of cash. As long as I generate money it doesn't matter where it comes from. Of course, I can't expect to generate much of anything from my depleted accounts. But for my positive accounts I have more than enough to generate good cash flow and I have been dong that recently. You wrote, "I really wonder what part of you makes you want to stop even if you are finally making money. I would bet that the type of trading you're doing isn't easy on you, is time consuming, is time intensive when you consider your other obligations, and if this is all true, then I would think you haven't quite gotten your stride yet." The reason I was considering stopping was because of the magnitude of the losses to recover especially from the depleted accounts. But with your encouragement and some back of the envelope, it might not take as long as I thought. The other element is opportunity cost. As you may know from reading the other thread, I'm currently running my consulting biz and a parent. Both of those things take time. I'm still deciding if I should go back to Corporate America. With my tech skills and credentials, my annual salary would be greater than my losses so far(at least on a gross pre-tax basis). So I could easily wipe out that losses in a year(pretax). But if I do back to Corporate America then it might be hard to do as much trading. I would miss out on great moves(potentially). Since my consulting biz is still early on, it does not generate the same level of income as a normal corporate job(not yet). But the consulting biz gives me the flexiblity to trade more and potentially capturing more returns. Let's see... Thank you for your inputs and encouragement. This sentence "As a side note, most people need way more than 1-1.5 years to recover losses from other failed ventures." really gave me a sense of perspective.
You're welcome. I find it interesting how you look at all this because if I were you, I would look at it differently. Yes, that money is gone, but what would it have really done for you if you never learned to trade? Money parked in a bank is always good, but if you will truly be able to now replace income from a corporate job year after year, that money was well spent. You said it above, time seems to be your most precious resource. Even if trading provided less income overall, but gives you the flexibility to be home and work on your business when you feel like it, is this not a fair exchange? Seriously, if I could choose making 200k and having to go to the office every day, vs. 100k and working at home a few hours and then doing whatever I wanted to do, the choice would be easy. Another thought. None of these corporate jobs are safe. You can go from 200k or more per year, to nothing but a severance package that will run out. Sure, trading can also put you out of business, but in my opinion, those that didn't survive the transition when HFT came along never really knew how to trade in the first place. I think being a trader at home who is good is a little more future proof than any corporate job. So in many ways, going the route of trading at home and making it work is the smarter choice, in my opinion of course. If you get sick in 5 years, and all you've done is slave away for 5 years since today and have a nice bank account but no more time, how will you feel? If you instead lived a decade in those 5 years, since you never had to actually show up for a job every day, you will perhaps feel that you accomplished more, for yourself and your kids. Most people look towards retirement because they hate their job but need the money, and hence can't wait to retire. They of course need to make enough because after they retire, generating income will be limited. A trader never needs to retire. Its not one of those jobs you hate going to, and its not one of those jobs where after 60, your body just can't do it anymore. All that money lost will mean nothing if you're generating $250 per day, or $500 per day, or whatever you deem acceptable and can continue to generate. I think if you combine this with your consulting business, you've got a nice dual income which back each other up, and your lifestyle should greatly improve as well. This is just how I see it.
You have a lot of dilemmas. LOL First you are worried about the uncertainties and now you are worried about opportunity cost... What you need to do is first decide what you want to do, according to your personalities, your skills and talents, your risk tolerance, your financial situation, your health condition, everything, and then just focus on that one thing and don't think about others. Do you want to trade? Then focus on trading, don't think about anything else. If you want to spend time doing other productive stable income generating activities, then focus on doing that and don't think about trading. Both trading and your other productive stable income generating activities have their pros and cons and both are worthwhile. We all have limited time and energy and with everything that we choose to do, there is always things that we will give up, the opportunity cost. The worst is when you are doing one thing but constantly thinking about another then you end up not being able to do either of them well. Don't do that. You have only ONE life. Focus on ONE thing in this one life and do that ONE thing well. Not everybody can be Teddy Roosevelt who can become expert in ten thousand things that he got his hands on.
Lower the size so you when it goes according to plan and you recover losses you will learn in the process,if you don't you will lose it all. Implement amount of strict max drawdown you allow yourself on monthly basis.This type of discipline will come handy when there are conditions to trade or you are in sink with what market is doing.Trade one or two set up only,less trades the better. Understand that gambling addiction depends on hope,put that aside. Choose to participate in some charity events,humility goes long way in trading. Ego is an obstacle to clarity of mind,serve others to win the fight when it matters and your money is at stake.
I believe I gave you that idea. Thanks for the credit. j/k But at the very least I see you're learning something. Here's another one. Loss money are only losses if you didn't learn anything from it. Can you still go back to corporate? I'm under the impression that Corporate America wants young dumb college kids and not old middle aged men? The work force experience I have is once you've been out of the system for a few years, it can be tough to get back in.
I think the concept of opportunity cost is learned in econ 101. But I can give you credit if you like! haha I'm fortunate to be in a hot area of tech. So, I get recruiters calls every day(actually multiple times a day). I usually say no because the jobs are not in my geographic area. But recently I was presented with 2 high level(Director and VP) jobs in my area. I have been making excuses and not going through with the process(stalling the recruiters). Maybe in the back of my mind, I'm don't want to go back to Corporate America. My original plan was to do a job and trade around it. But I think at the level that people want to hire me it will NOT be a 9-5 job. Higher pay equals more work and stress. I don't know if I will have any time level to trade after that. Maybe early mornings or nights. I don't know. As expected. So, I'm still debating the merits of going back or not... "Loss money are only losses if you didn't learn anything from it." That's a good point. Something to keep in mind. thanks!
let this be a lesson for all new beginner traders. get educated first in trading if you want to be a trader, find a mentor who has been trading successfully and able to prove their track record. otherwise, you will learn it the hard way and pay your dues and "tuition" to mr. market.
you are right. To put everything in perspective as Gotcha and others suggested, the loss is less than what my top tier undergrad and grad school tuition cost. LOL. Luckily, I only paid a very small fraction of that cost due to scholarships and other stuff. One way to frame this is I'm getting a top notch education from the market these last few years. haha