A quick background....I'm 30 years old, I have been trading off and on for about 8 years, 2 of them with a prop futures firm. I scalped there and did it miserably, that style isn't suited to me at all. I'm a poker player so probabilities play an integral part in my trading decisions now. I have found some edges backtesting some of my own ideas and I am now running a semi-automated strategy right now in a simulator and it has been doing well. There are lots of filters I need in my automated strategies to filter out bad signals but I don't have enough programming experience to do that so it's more of a gray box than a black box. Anyway........ I only have 10k in savings. I have no debt, I'm not married and I live with my mom so my expenses are very low. I have no trading profitability yet to speak of but I feel confident I will eventually get there. I work at a brokerage firm right now and I make a little over 50k a year. Should I quit to trade for a living? I know of a prop firm that can leverage $5,000 or whatever I'm able to deposit. I considered doing this before but thought better of it because I didn't have enough savings and I had debt. 10k is peanuts but since I don't have any expenses I'm wondering what savings amount I should aim for. After all, I'm really not willing to lose more than $5,000 anyway. I'd start trading very small size until I show profitability. What does everyone think? Comments, suggestions are much appreciated.
It's a very good idea that you're thinking about using small size first as that's what I'm doing while I'm building up my capital. In a situation like that however I don't think you should quit your job, I recommend using the money you earn to put capital into the trading if things go wrong and when you are very rarely making a mistake that's when you can consider dropping the job. Trading is risky though, you need to have a firm plan and be able to make real profit if you intend to get out of the house with it. I'd also recommend doing the math before hand on how much you'd need to earn in order to get out of the house, live comfortably and have enough capital to trade with at once. You should also check with the people you're staying with how long they're willing to let you stay. This is basically all the stuff I've done and I'm now pretty much heading towards my goal albeit slowly.
Valid question. He did say he paid off a lot of debt though. To the OP, what is your monthly nut ? I say you save one year of living expenses up and 10k to trade prop with before you even consider quitting your job.
Number 1, I can't trade at work, it's not allowed. As far as the 10k goes, I used to have 10k in credit card debt and I had a car loan, so I started off in the negative. Plus I've only been at the job for a year and a half.
I think I partially agree with you, just having 10k set aside and no room for living expenses while I'm trading might not be enough money yet, even if my expenses are low. When I say low, I'm talking about $600/mo. One side note though, I have played poker online successfully in the past, I made about $50,000 and saved every penny but then I spent everything. I had my own place and no job for about a 2 year stretch and I didn't make any money trading. I didn't take it seriously enough and I managed my money really poorly. I know this says a lot about my personality and it possibly decrease my chances of success but I think I've learned from my mistakes.
statistically speaking, you are already a failure. 99.9% fail in this business. you think you can get into the p<.001 error margin? the pain will be excruciating: http://www.flickr.com/photos/gahsoon/2734308807/in/photostream/
Since I work for a brokerage firm, I know this first hand. The same statistic is applicable to poker players as well and I beat the odds there evidently. I actually do think I have a better understanding of trading than 98% of people out there who get into this. It's obvious that very few people really know what they're doing so that stat doesn't bother me that much. I clearly see that I have more knowledge and experience than the vast majority of people so why bother comparing myself to them?