I was offered just below six digits out of uni. I decided to try my hand at being my own boss until this works or I get sick of living like a hobo.
The financial picture is a huge part of your decision making process. Costs and opportunity costs are a huge factor. Costs for independent traders: Pay you own health insurance $500+ a month average...younger people with no family, a bit less No retirement package (no company matching 401k) No paid holidays No paid vacation days No paid sick days No stock option potential No year end bonus Sometimes huge stress levels when in a drawdown. Riding the highs and lows of the business. When you think you have an edge they move the cheese on you. So what do you need to make trading to overcome the benefits of working for a company? In my opinion, as a trader you would have to consistently make at least double what a company can pay you. Probably more than double to be safe.
This answer is not a simple one. I know a guy who gave up a job making over 100,000 dollars a year as a medical equipment salesman. They also paid for a lot of his expenses like a company car, telephone line at home, internet, cell phone, etc. He traded very successfully over the years and turned tens of thousands into hundreds of thousands and then into millions. However, we have been in roaring bull market the last 2-3 years. You could have invested in most anything the last few years and it went up with a few notable exceptions. 100,000 invested 2-3 years ago in a diverse portfolio would have yielded substantial gains today. We could even blindly pick 10 stock symbols out of a hat from 2-3 years ago and a buy/hold strategy would have probably yielded substantial gains. However, where are we going from here? I dunno. Are you able to trade in a real down unpredictable or sideways market? We dont know what the future will bring. I hold down a job and trade the market at the same time. There are times when I am up to 2am doing research and completing tasks. Its very difficult. I do make more cash in the market then at my regular job. However, I choose to keep my regular job for security. From 1997-1999 there was a huge bull market. I remember there were some daytrading brokerages that opened up where you could go in and use their systems to trade. There were these ridiculous commericals on television with the tow truck driver who owned an island from the proceeds he got from trading. It was a big party. Then it happened overnight, the market went dark and people were losing their shirts. 2 years later, everything was horrible. Jets crashing into buildings, the good times were over. Now we are at a point where the good times are back again and some people have forgotten the lessons learned from 1999. I have not forgotten and do have a comprehensive risk management in place for myself. For one, I keep 6 months of cash in sleepy savings bonds at all times. I contribute the maximum into diversified retirement accounts and 1000 every two weeks to DRIP plans with those dividend stocks you love like Kelloggs and Colgate. Come on, you guys love the DRIP plans. There is one thing that is certain. A downturn is in the future. It may not be next month, next year. It may take a decade or longer. Whenever it comes, it will be when you least expect it. The most expensive seat on the NYSE was purchased for $625,000 (six million in todays dollars) shortly before the 1929 crash. They didnt expect it. I would say that you know yourself better then anyone. Ask yourself if you can manage the risk. The consequences are quite high if your wrong or fail. There are a lot of persons (vendors) on this website who I will not mention by name. They respond very well to some of the posts providing lots of knowledge. They promote their prop trading firms and whatever products they have. These guys will disappear when the market turns bad again. Just like the tow truck guy with the island and the daytrading brokerages.
P.S.- Dont worry about the ladies. They will get you in trouble. If you want ladies go to Brazil or Thailand. Just focus on the tasks in front of you...
<i>"There are a lot of persons (vendors) on this website who I will not mention by name. They respond very well to some of the posts providing lots of knowledge. They promote their prop trading firms and whatever products they have. These guys will disappear when the market turns bad again. Just like the tow truck guy with the island and the daytrading brokerages."</i> <b>eagle</b>, you are 90% correct about everything said. I have lived thru much of the same as you, and see the future in similar fashion. Here's the 10% part you missed: if we ever, ever, ever are blessed enough to enjoy another bear market like 2000 - 2002 with even half those incredible charts, a number of us here will emerge with 10-figure account balances in the end. The money I made in long puts = call credit spreads thru that most glorious market ride south would pale in comparison to the Olympia-size pile of cash emini futures will rack up when markets come tumbling down. Viva la VIX at 60+ again!
benefits as a trader: health insurance is a write off electricity/cable/phone write off no social security/fica tax no self employment tax and most importantly i decide when I want to work sounds good to me....only paid ~10% tax rate last yr
It does appear that the Russell 3000 is at or near the points it reached in 99-00. Everyone has been so focused on the DJIA, S&P, Naz, etc. No one has mentioned that the Russell 3000 index is nearing the highs it reached during the tech boom. The difference though is that this time it has a P/E of about 15-16. Either it reaches the double top and pulls back which I doubt or it breaks through the top to the next consolidation point. When it does break through, the market will go much higher, but I will be waiting eagerly monitoring the indexes for the next crash. Does anyone have any idea what the P/E of the 3000 was during the height of the tech boom? http://finance.yahoo.com/q/bc?s=^RUA&t=my
Yes there are many benefits to being a trader...write offs just like any other business you may start. The question remains...WHAT SALARY WOULD IT TAKE...? I maintain at least double what we could make working for the man. ( if monetary security is the most important factor)