Trading as a business

Discussion in 'Trading' started by gifropan, May 2, 2010.

  1. I have been trading for a while with a highly volatile and erratic equity curve and am nearly at the point of throwing in the towel. Before I pull the plug, however, I though I ask the more experienced traders in this forum whether trading can be treated as a job (earning a salary equivalent) of a business (staring small and expanding) Here I am differentiating trading from investment. Because, for example, if you start with £20,000 and make 15% a year, it is good investment return but not money you can live on.

    Many businesses have started with a relatively small capital and have grown to be quite large and successful corporations. We all have heard the rags to riches stories of the past, but that, necessarily, is not what I am talking about. I have a good friend (who has, needless to say, always condemned the idea of trading for a living) who opened a coffee shop/snack bar with around £20,000 four years ago. He works in it every day and so far earns around £2000.00 per month out of it. Now as a percentage return this is much more than a 100% return because he earns this after expenses. Now he is looking at the possibility of expanding, and if successful, in a few years his initial £20,000 will grow much much more.

    Although I have good and bad trading days my equity curve keeps meandering around the zero line and, to be hones, is slowly diminishing. If this was a business I have not been able to draw any profit/salary or what ever you want to call it, out of it.

    MY question is this, and I know I might be prying here and apologize in advance for doing so, but an honest reply to guide me would be most appreciated. Is there anyone out there (except big banks etc) who is, has or knows anyone who has started with a small amount and either is earning a living out of trading or built up a healthy equity whilst living off their trading profit. Should I throw in the towel or should I persevere becuase thery might be light at the end of this very dark tunnel at present..
  2. Undercapitalized traders have a very low chance of sucess, you will hear if u can't be profitable with a smaller amount of capital, then more capital is just more losses, which is true however a larger amount of capital will ease much of the stress that newer traders face(basic bills) allowing better trade mangement on profitable trades. for example my typical day consists of some small losses some small gains, and one or two trades that I make 60-70% of my gains on nothing special going on here. A % is a % regarldless of capital assuming that the trader is profitable, I would like to hear more for a long term profitable trader on this as well.
  3. mayhem28


    Build up 6+ months of living income profit to ensure your all set for the forseeable future instead of trying desperately to make next months rent, etc. Be prepared in advance for when dry spells (no high prob trades), drawdowns, etc. hit

    Less stress = better trades
  4. TGpop


    stop thinking about how little money you have (yes it looks like you are undercapitalised no offense) and keep trading that amount well, consistently, focus on setups and not money and bank- show your account to a firm, even if they laugh it off it's worth a shot. Either that or keep trading small until you profit, slowly add to your account, yes trading is a business.
  5. lindq


    1. No, I don't know of anyone who started with a small capital base and built it into a living wage. I'm certain that there are a few that have, but consider that in any group of 1000 people there will be some that excel at any task. But that doesn't mean the odds favor it.

    2. With even a decent capital base it is always a challenge to earn a reliable source of income from trading. One month you're a hero, the next month a bum. That's the business.

    Good luck, and my best advice is to take your own advice, based on your own experience.
  6. At the beginning of the year, I was fired from my job. I've been trading on a full time basis. I'm doing OK, especially since the last few months, the market has been hard to predict. It has been on a relentless tear to the up side. I'm hoping to get better and stay willfully unemployed.
  7. mayhem28


    Not through trading, but I did it successfully with affiliate marketing. Infact I started with 2k. Gradually built it up to 40k before the end of '05 (started in May '05) and through till the end of 08 was making enough to support myself and still have enough to keep the "business" running. Ofcourse one the big reasons I was able to do this was that all my sales and commissions where instantly accessable and instantly reinvestable and withdrawable with Visa Electron. No waiting for cheques to arrive and waiting 28 days for them to clear, etc. It's all about puting that money to work straight away.

    Anyway... don't give up with your trading. Being able to stay above the red is one thing, trading to live is really the holy grail everyone is looking for. Good Luck
  8. Surdo


    Why are you posting on a trading blog if you don't trade?
  9. mayhem28


    I do, but I also like to keep myself busy with other things since I don't trade every single day of every week, and have an income to fall back on if the markets don't happen to be to my liking. Being diversified an all that.

    Back then however, I was still somewhat naive about trading (even though I first started learning charts in 99..) and so was heavily involved in other ventures.
  10. If it is possible, trade part time and have a full time job. I feel traders on the west coast have an edge as we trade from 6:30-1-00pm (equity markets) which allows one to trade first 2-3 hours of the day and still can work a 9-5 or ideally 10-6 style shift. Typically most of the trading occurs in the first few hours of the day and one can really learn trading and still make a paycheck or pay their fixed expenses with their regular job.
    #10     May 2, 2010