To answer the question in the title: Yes, of course it's realistic, depending on a) your experience b) your capital. One major point you didn't address in your post is your capitalization. Some food for thought a) I always get a shiver down the spine when I hear the question "I need $X000 a month, can I make that with trading". Yes, you can technically make any amount imaginable trading, the question is what risk are you taking on to achieve your goals (what % of your capital are you risking every day)? And what are you doing when you hit the inevitable dry spell of a drawdown (loss of capital for an extended period of time). A drawdown means weeks or even months of no income and an actual reduction of your trading capital. You have to be financially and emotionally prepared for that point, because sooner or later it will happen. b) By all means, keep running your business. I'd suggest trading stocks "swing style" long/short (holding each position anywhere between a few days to a few weeks) for now, i.e. establishing positions e.g. in the first/last hour of a day, putting in stop loss orders on each open positions and then review all your positions each night. Thus you spend maybe 2-4 hours every day and can still run your company in the day time. Use the weekend for doing your homework and educating yourself as much as possible. c) Here's something to ponder on: $400 a day = $8k a month = ~$100k a year. The very best traders make anywhere between 15-35% a year on their capital (without leverage) year in year out, over a complete market cycle. A good drawdown here would be 10-20%. 10% DD and 35% annually would be absolutely fantastic and probably only the top 0.2% of traders worldwide achieve such numbers, again, annualized over 5-10 years. (Please ignore the people telling you about returns of 500% year etc., it's all bogus. Of course, it can happen just like people come to Vegas with $10 and go home with millions, it's just not feasible to be replicated year after year) If you want to make $100k a year consistently (year after year after year, rather than making $100k one year and making $22k the next) working from home, without big leverage and without taking out of this world risks then I would say you'd need anywhere between $250k-$500k in capital. I can't wait for people to flame me on this but that's how it is, I am sorry to spell out the facts. d) Don't waste too much time going from stocks to futures to forex to options and back and forth again. One market is not better than the other looking at risk/reward characteristics, however, they all have their own feel to them and it takes time getting used to them individually. If you jump between markets a lot you will waste a lot of time getting used to each before you know what you're doing. e) My approach would be: If you have experience with stocks, stick with them. There are something like 8000/9000 stocks listed. There are always some going up and going down. If you indeed are interested in swing trading stocks, buy this book (http://www.amazon.com/How-Make-Money-Stocks-Winning/dp/0071373616/ref=ed_oe_p/002-4887096-0505651) and read it. Not just once, but once every 3 months or so. You will always find new things to learn. f) Have realistic expectations: A transition from your brick and mortar business to full time professional trader will likely take anywhere between 12-24 months, maybe even longer. In between, you will go through phase of frustration and self-doubt. It's part of the game, don't get discouraged. Keep risk low, be opportunistic, cut losers fast and don't give back all your profits on winners. Good luck.
bryan942 Registered: Jul 2005 Posts: 2 06-08-07 09:57 PM I have recently been exploring the possibility of making trading a career. Currently, I own and operate a small business (3 people) and enjoy what I do, for the most part. During the past few months, our company has hit a dry spell and has had me thinking about ways to generate alternate income. Looking at the bigger picture, I have come to realize my current career choice may not lend to being a long term solution, for reasons not worth discussing at this point. ############### Suspect ,that with good chance starting trading in this situation is not relevant. Did you won any public trader contest ?(without entry charge) As example www.marketzar.com Why you decided to risk capital in business ,where you are new ?
that was an excellent post. There will be a few small exceptions - but do not expect to be an exception unless someone gives you a great edge.
To say I have to make such and such amount in a monh is a losing mentality. Trading should be free of fixed goals because everything is so fast and dynamc.
Very good point. If the goal is +$8k a month and you have your mortgage and bills waiting to be paid and after a week into the month you're down -$3k it inevitably will take a toll on one's control over emotions and unbiasedness. I find it easier to work with annualized ROI and DD targets instead. One could also incorporate Max Time to Recover goals although I also find that to apply unwelcome mental pressure once you find yourself in the DD and that's the time when (in my experience) being an emotionless robot executing your strategy without deviating can pay off big time.
Find something else to do. I had a serious business for years, and you will not be able to spend the time to do this as well. You are more likely to LOSE $200-$400 a day. The advice you get here is likely to be way over-optimistic. Many people here claiming to have become successful are actually people who actually are losing or possibly breaking even. 95% of traders will lose their money over the course of their first year or so. You will try, but you will discover that you still have a 95% chance of losing your trading money. b Nobody is "different."
bryan - I think you have a leg up being a business owner. I am biased b/c I ran a successful stock brokerage business before going into full-time trading. With that being said, you realize that this, like any business, will take time. This business is a little different though - there's no map laid out for you (although many will try selling you a map) and if you are not careful, you can blow through your reserves quickly. Your education experience will be costly, so prepare for that now. My advice is to start reading some general trading books - esp about trading psychology. I would NOT delve into the many different technical books and systems out there to start. There's just too much in the beginning. I suggest reading a number of psychology books and then slowly look at some technical ways to trade. I suggest candlesticks. Others will suggest many, many other ways to trade. As for your daily target, it's very achievable, esp in futures and/or forex b/c of the leverage you receive. I personally trade futures, mainly the ES. You'll find over time what suits YOU and YOUR temperament. There's no right answer here. Good luck!!
In order to get to the point of making $200 to $400 a day or anything positive, it will take a lot of effort. My first guess would be if you put half of that effort into making your existing business work you would be better off. If I had a choice between the two challenges, how to make money at trading or how to improve an existing business, I would certainly choose the latter as the easier one.