I like you and I would assume most people around here are working toward the goal of trading for a living. After attempting this once before (with no expenses beyond geting married in about a year) I fell flat on my face. Of course I was a total newbie and had only heard of trading about a month before and figured I could start with much less than what you are. Ignorance is bliss until reality hits. On my second attempt around (and a little wiser to the ways of the market that I trade as well as having a wife and two kids) I have figured that with my current performance I would have to have at least 100k before I go full time. Even in this scenario I would probably only do it if my wife was working as well (steady income and insurance). If she isn't working then I would want about 150k - 200k. The 100k will allow for living expenses as well as growing the account. Without account growth you would be fighting a losing battle. All it takes is one or two months of not hitting your target and you could be done for good. Your account would shrink to pay bills and then you do not have enough capital remaining to create as much income as your were planning on so you have to take more out of the account to pay bills. The process continues until there is no more left. This is my scenario and I am sure that your situation is different, but with only 20k and a wife and kids you are setting yourself up for failure. If you had no expenses and no obligations it might be a different story.
Very well said. I agree. It is hard enough to be consistently profitable. Yet, if you need to drain your account for living expenses, you have absolutely zero chance of making it with a 20k account. Not when you are new to the markets. For somebody who knows what they are doing and have learned the hard way, then you might be able to make a living out of a 20k account. You need a second income. Period.
suppose you were to join a prop firm who gives you 4mm in buying power, asks you for no capital contribution, and your goal was to make 300-3k a day?.......just a thought. grimer11
Your post would be spot on if we were dealing with a static market, but the market I have come to know over the years is a living, breathing, dynamic, everflowing organism that takes the utmost pleasure in transforming an "edge" into a thorough exercise on chewing cactus. I know you know first hand what it is I speak of... Nice to see you posting again Qwik, its been some time... PEACE and good-trading, Commisso
Good call. I was thinking about having in my trade account but I think I'll have to have it in a money market or in my checking so that it's liquid.
Very well said Qwik..Based on your past experience what is the average expected return (you mentioned 2 pts) I would planning for 10 points per trade trading "boring" stocks...some stocks that trade steadily...but very low margins. Wonder what others have to say?
Jim do not listen to these morons that fill your head with nonsense....of easy riches and instant career. Yes some of what they say is true but only because the market conditions have allowed it in the last 2 years. This is a career and must be approached/treated as one, just as a Doctor or Lawyer etc .. etc... I have been in this industry for 20 years and seen these guys come and go, they have a few good years and then most 90% blow themselves out. Yes it is true that I have only been trading fulltime for 2 years but I was on the other side of this business as a stock broker for 7 years and as an investor for 17 (Just to set the record straight) and I have evidence if any other member on ET feels the need to challenge me. Prop firms will give you a decent education if you choose the right one and if you are going to do this take the time to investigate ALL of them and learn the FACTS. But I still stick to my original recommendation of learning and educating yourself part time based on your current life situation/family. Good luck and I hope you make the right decision but please treat this seriously.
I won't quit my current job until my trading account is ten times my annual wage. It may take a long time, but I like playing safe. Plus if I make a transition to a full time trader, I want to be sure that I don't go back to my job because of a couple of bad months. DVB
Jim: By the time you are ready to actually trade for a living, you will have already answered your question for yourself. What I mean by that is that you will already have developed one or more systems or methodologies that you have traded and perfected for a while and that you will know exactly what to expect from these systems. For instance, I have traded my main system long enough to know that it cycles once about every three weeks, that it takes about 6 steps forward and 4 steps back (net gain of about 2% per cycle). The greatest drawdown of my system has been 12% of equity so far, which occurs in times of market panic. Based on those behaviors, I can easily calculate the amount I will need to be able to make a living off of my system. EVEN THEN, I have not done the calculations because I am not so naive as to believe that this system will continue to work on the order of years instead of months. I had a favorite system a while ago that I used for many months and thought would never fail, and then it started to go bad as the underlying market conditions began to change. After two months of severe losses, I was totally demoralized and finally had to admit that my favorite system was no longer working--I've never felt worse about trading than then, and I wasn't even trading money that I relied on for sustenance--it was all "throw-away" money that I could do without! Seriously, you have got to practice a lot more and learn your technique/system/methodologies inside and out. You should know how your system as well as you know how to walk, because even when walking, sometimes you will trip and take a bad fall. The key is creating consistent results and being able to take the stumbles that will occasionally occur, and for that, you have to be "walking" your techniques in the market for years.