Took out a loan to transition to full-time trading. 24 years old.

Discussion in 'Professional Trading' started by wabu27, Mar 14, 2016.

  1. Xela

    Xela


    That was my first thought, but as I read on, I decided probably not. I think it's genuine, and the OP really is that naive and misguided. I may be mistaken.
     
    #51     Mar 16, 2016
  2. Sig

    Sig

    I'll ask you a slightly different question. What if you succeed? Let's be generous and say you are able to consistently obtain returns of 40% per year, which puts you in the 99.99999 percentile of professional investors, by the way. You're not going to get compounding returns because you need some/most of your returns to live on. So you're going to be making OK money, probably about what you made before, maybe a less, maybe a bit more but not a life changing amount more. Stuck in the house all day staring at a screen. Not making any impact in the world. No interaction with other humans for most of every day. Always one abnormal market event away from losing everything, with the resultant stress of living under Damocles sword. And every year further and further away from being able to jump back into the job market; for better or worse it's hard to explain that gap in your resume and while your contemporaries are moving up the steps of ever increasing responsibility and opportunity you've been stagnating in an unrelated backwater.
    That's success. You may want to think about now if that fits your grand plan in life. It's easy to think about how much your current situation sucks and assume anything else is going to be better, but we seldom actually think about all the advantages and disadvantages of actually achieving what we're setting out to achieve. You may very well find you don't like it when you get there. Your attitude of taking risks and living on the basis of your own talents is great, I fully share it. You might consider becoming an entrepreneur, you'll get all the challenges you're looking for with a far higher chance of success, plus the chance to actually make a difference in the world and achieve some self-actualization in the process.
     
    #52     Mar 16, 2016
  3. We really are lucky to have @Sig on this forum.

    I basically made the same decision as this guy three years back, and a part of me does regret it, I have not been professionally employed over the past three years, but as someone who is priviledged to be single, I can afford a tolerable lifestyle (I have an old car, good phone plan, internet, decent food, decent social life (no trips to aruba or anything like that), rent a room in a decent house ) - so I am not starving.

    I work a crappy job on the weekends (really underemployed), and at times when I think that my friends are all advancing both financially and mentally, I do get depressed.

    Btw most of my friends/family advised me to keep my job and trade on the side (and I dont blame them for it)

    I do consider myself a momentum trader --> but have yet to develop any groundbreaking models which I can launch into the marketplace.

    I do believe in price action theory, but its such a vague term, the actual instructions on how to trade is lacking (Al brooks method?)

    I would say I 99% agree with what Sig mentioned.

    My advice:

    1. Did you read my thread on becoming consistently profitable? Are you willing to accept it will take you at least five years to become consistently profitable? There really isnt anyone to teach you, that is the most frustrating part of this "job" --> becoming a doctor or lawyer is more easier than becoming a trader, because you are at least guaranteed the status quo (I have a friend who was kicked out of med school, but eventually became a doctor), after a couple of years (of hard work) you will eventually become a lawyer/doctor.
    2. Learn how to backtest, backtest this model of yours.
    3. Heres a challenge to you: go on Market Replay and trade this model of yours (assuming you even have a model), and see if it is really profitable (ie that you really are talented vs just thinking you are talented.
    4. Also you really didn't need to borrow 11000 at 26% APR. You know you could of taken $1000 and traded forex or micro contracts?
    5. The biggest loss in embarking on a trading career is time (vision too), I have been trying different methods for the past three years, what have I really accomplished in the past three years? Just lots of knowledge about the market.
    6. Start a Journal so people can guide you (although some advice will be rubbish, you should be smart enough to filter the dumb advice from useful)
    Good Luck.


    @wabu27 @Handle123
     
    #53     Mar 17, 2016
    readthetape, shihpinlo and Wingz like this.
  4. Let's see....you want our thoughts on your stupidity?.....hhmmm.
    Well, .. I think you got the wording correct.
    As a 30 yr "aggressive trading" veteran, it is what you don't know that will ruin you.
    I'm really trying to help you here. There is so much you don't know and so little you do.

    The dice is not rolled!!
    Pay the loan back pronto, pronto, pronto! (Chalk the 5% fee, and interest up to the cost of you being spared a whole lot of misery.

    If you must, use the remainder to trade Forex (at least you won't get a call for additional cash that you won't be able to make, as you might in stocks..... and..Keep Your Day Job!
    And finally..keep $2,000.00 squirreled away.
    There is no "lol" intended in any part of this response.

    If you want to watch me trade Forex live at no charge in April (I'll let you in my chat room for free) go to this link. It's my local private meetup group but even if you are in the South Pole, I'll let you in the room in April.
    http://forms.aweber.com/form/59/340029959.htm
     
    #54     Mar 18, 2016
    Buck, Iwilldoit and fullautotrading like this.
  5. Don't know if this was said in the prior 6 pages (apologize in advance for stepping on toes if it has) but if presently at 24 years of age you are making just under 60k you are doing pretty damn good all things considered. What is the risk that if trading doesn't work out you might find yourself in another job making just under 30k? Or that if you stay with current position you might find yourself making 90k in a year or two from now?

    Blowing 9k and being on the hook for the borrowed $11K isn't the only risk!
     
    #55     Mar 19, 2016
  6. Georgii

    Georgii

    Lots of decent advice here but some more ideas:

    1. Use the time you have at your job to develop another business that you can do remotely and outside of trading hours. Then once that business becomes profitable (should be possible in 12-18 months) and can pay your bills, quit your day job and transition to trading. Make sure its a business you enjoy otherwise you won't make money doing it. Meanwhile learn and master the art of being frugal.

    2. Use whatever remains of your time to backtest your trading ideas over several years of data. The more markets you see the more ideas you develop and the more robust your edge can be.

    Chances are you won't have the patience to do that and will want to trade anyway. Just realize what risks you're undertaking and if you screw up, be ready to eat your humble pie. At your age you can afford to play it more dangerously, but you have to be ready to accept the consequences. Make sure those who are on board with you for the journey (family) are willing to accept that as well.

    If you really want to get around the pattern day trading rule, find a way to open an account at a Russian brokerage that provides access to NYSE and NASDAQ stocks like United Traders. If you have a trusted friend or relative who has non-US citizenship you can do it in their name. There are also European brokerages that can do it, again though you have to show you're a non-US resident at the very least, though from what I hear most won't open for US citizens even if they're not residents.

    Your other option is to go to a prop firm, take the Series 66 or Series 63 & 7, and deposit $5-10K with them with 10:1 intraday leverage. Your big minus here is that you're going to be paying professional data fees which will cost you in the neighborhood of $150 a month, plus platform fees. Still cheaper than paying 24% APR on a $11,000 loan and much less stressful.

    I think the pattern day trader rule is unfair and destructive, partly because it encourages such destructive practices as borrowing money to trade. But that's another conversation.
     
    #56     Mar 19, 2016
  7. Suppose the lender has cash of 100K now.
    With annual 26% compounded, their money grows

    1) 100*1.26^30 = 102592.7K after 30 years
    2) 100*1.26^50 = 10435836K after 50 years

    Therefore, you should make them rich, for the next 50 years.

    If they continue the loan of 26% for the last 100 or 200 years, then everyone should go broke, including Gates and Buffet
     
    Last edited: Mar 19, 2016
    #57     Mar 19, 2016
  8. You are making a HUGE Mistake and will fail without question.....

    Why?

    1) You are demonstrating far too much RISK in your strategy.
    2) You are using BORROWED money for that RISK, at EXTREMELY High Interest Rates.
    3) You are being GREEDY and OVER CONFIDENT.
    4) You have ZERO Patience and are representing an ARROGANT position in your new venture.
    5) On top of all that (Which is plenty) , let's add stubborn , reckless , immature, stupid, etc.. etc..

    If you truly want to be a trader, you will do the following.

    1) Take the hit on the Loan and return the money and pay whatever closing/origination costs .
    2) Open a small account with your remaining money with a broker that has a trade simulator .
    3) Keep your 60k a year job and SAVE, SAVE, SAVE. Prove you can trade with the simulator while you build up your own capital . Simulators don't lie, and will help you develop a strategy if you're honest with them. That means, no resets, no large fake account sizes, no gambling in them for fun.

    There is no other way your will actually learn without first developing CALM..
    You are suffering from Delusions of Grandeur and is common for gamblers.
    ANYTHING that is worth while takes study and time investment, like being a doctor, etc.

    Best wishes otherwise, but this is going to be a costly lesson.
     
    Last edited: Mar 19, 2016
    #58     Mar 19, 2016
    levanyashin, R123 and Buck like this.
  9. Gimpyron

    Gimpyron

    Your young. the time for drastic changes is now.
    start small, dont leave your job unless you know you can find another one if things go wrong.
    srsly, start trading before and after work time, in case the work time sits on wall st time you always can trade another markets (chart is a chart for f.sake)
    dont be greedy and dont take the loan
     
    #59     Mar 19, 2016
  10. Errrr maths fail.
     
    #60     Mar 19, 2016