That is what I thought professional means in the context of trading. It means you are employed by a firm, or are registered as a CTA, FA, broker etc. After all, if you are one of those things, you HAVE to pay the more expensive "pro fees", right? So if you can pay the non-pro fees, why try to call yourself a "pro"? It is just a title for EGO alone. Sorry, I am going to humble my ego and pay cheep non-pro fees if I can, thanks.
Exactly. Why pay for a label? I would rather pay cheap as a non-pro even if I can earn like a pro if the price of that is to be called a non-pro.
But you can deduct lots of expenses if you are a pro, no wash sale rule, whereas an amateur trader's tax treatment is limited with strict IRS definition for trader?
"What do you think about: "going pro" account size?" It is not what is in your account as your net worth and emergency funds. I normally recommend for anybody in any field to save enough for six months in case they are layed off, have enough funds for paying all bills and including food, gas etc before thinking of doing retirement accounts. As a professional, I recommend six times as much, as you cant count on outside government help for a weekly check, there are times of drawdowns and self depression, still have to pay bills and they are even more than a job as you pay health care and no more sick/vacation time. If managing OPM, you don't have to get CTA registered as you can trade so many accounts and moneys, more of a try it out first. Unless you get hired to help run hedge fund or another entity of trading money for someone else, you back to being an employee. If you want to turn self pro, account size for me was 3 million, far easier to attract OPM if you can show you made nearly all those funds, keep excellent monthly records to show perspective clients. But think of the "whys" as fees change. You have to be good chatting to clients if CTA, you have to keep selling yourself besides trade. I don't know if it is the same if you start a Hedge fund, am figuring you chat less or none with clients, but you still have to attract funds. If you can keep drawdowns way down and still hit the numbers of Indexes, they will come to you in few years as I am told. Good luck.
Assuming trading was my only source on income, anything less than a $1 million dollar account would be insufficient. Kids, mortgage, cars, family vacations...these things aren't cheap. Another thing that greatly factors into the equation the amount of "risk free" money I can make a full time day job. My potential profits trading need to be substantially higher than that because my day job incurs no draw downs I work as a software engineer so the odds of being out of work are extremely low.
Hello friend, 1M, 100k, 10M are all subjective. In other words, dependent on the subject. Traders in California or New York would feel the need for a minimum 5M account to go "pro". On the other hand, a trader in Vietnam (a common destination for currency traders who want to maximize every penny into their 250 to 1 leveraged account) can technically go-pro with a 10k account. I personally know a few who have done this and made it balloon it to 1M. They have since returned back to the US and had to rent one of my cars because they suffered a wipeout and was car-less. sad! Well, I digress! The point is, its your cash flow needs. How much yearly cash flow do you need to survive? Mortgage, Kids schooling, vacations, German Cars or Korean cars etc? My yearly cash flow needs is 60k. Once I was able to figure out a stream of income that generated this kind of income without working or atleast work part-time, I went "pro". Nonetheless, being an "unemployed" and "unemployable" investor/trader/entrepreneur, I converted my home expenses and car expenses into business ventures (Home rentals & Car rentals) to reduce my yearly cash flow needs. On the argument against a J-O-B. True, a software engineer is stable and very employable. But a job is something you don't build equity. You cant show your years of work and sell it for a million bucks. Plus, you can't buy PUT insurance on your work. God forbid, an accident where your skills cant be used, a debilitating sickness, i don't think there is a financial instrument that guarantees an income stream on a situation like that. If there is, let me know, that might be business opportunity, I might want to start selling a service like that,
Very good points! The path you took seems much more plausible than the guy/gal who moves to an extreme low cost of living country to build up their stake. Seems like most want to be pro traders on this board think in terms of saving some money, start trading, quit day job, support oneself through trading. Your path of finding a stream of income that can mostly cover your living expenses before going pro seems to missing from most would be traders plans. FWIW, my ultimate goal is not my day job. I am currently working on my non day job income stream. Another point though is having my day job enables me to have more working capital to help get the project off the ground. As in all things, timing is key!
That's a good observation! I didn't notice it until now. I come from the school of real-estate where net-worth is not "realized" till your asset is sold or refinanced. What's more important is a healthy cash flow (through rent or clever financing), so that you can stay solvent and hold ownership to that property till a sale is made. Traders are so enamored with stories of billionaire traders who grew their portfolio from 10k to 1B through trading futures or buying BTC. What happens when once your account hits the magic number of 1M, 10M, 100M or 1B. How the heck are you gonna deploy that kind of capital when that is largest amount of money you've had in your life??? Keep selling credit spreads on SPX? and swing trade USDJPY? or buy more BTC? Given the choice of having a 1M in my trading account vs. 100k in yearly passive cash flow, I would opt for the latter! Ofcourse, I'd rather have both!
I don't have a job, just a full time options trader but I disagree with your statement. Job is like an annuity and you can find its worth by net present value. You can even monetize and borrow using your income, you also have disability insurance, like buying put....