Just say you have an aggressive trading style with about 50% gain and 50% drawdown yearly. Would you quit after making 1Mil and trade less aggressively or continue compounding, risking losing back 500K? Or would you diversify and invest part of your equity in some other investments?
I would take 900k and put it in a cd or bonds and maybe trade 100k. I think people are getting 5.50% on Cds now.
So you are happy with a sure 50K interest plus a potential 50K trading income versus a potential 500K trading income? That is a rather conservative approach. Imagine what you can do with half a mil.
I make that in a day you piker...hehe just kidding Why stop at a million...then what would I do if I did not trade? Michael B.
Forget about CDs and Bonds. Go with the Vanguard Wellington fund. It made out just fine through the tech crash and has given an average yearly yield above that of the money market and bond funds. 5% isnt going to cut it when you factor in real perceived inflation. The Wellington has done over 12% this year and in bearish markets still does pretty well since its balanced with bonds and large cap value stocks. Vanguard also has a tax managed balanced fund which would be a little bit kinder to you when April rolls around but the Wellington seems to have fared the best through bad times. As for "quiting" entirely, why? Why stop there? I enjoy this, its not work to me. If you want a more relaxed lifestyle, there are ways to invest the cash into a diversified portfolio of obvious long term plays and go from there. Like over the summer, we could have put our cash into large quality companies that we know would have accrued in value until September. So the million dollar value play is this. Every July look for beaten down equities and distribute the million accordingly. By Christmas, if you did it right, you should see a 20% return or more. $200,000. Thats a respectable amount of cash. Then take that cash and hide it away in the money market until next summer. Then choose again.
I would need atleast 2-3 mil to feel totally comfortable. Maybe just stop trading for awhile. Since I enjoy it I would probably go back to it. Invest in a Papa Johns, maybe Chipoltle and trade for fun.
I know quite a few traders who have made it to 1 mil. Sometime for better and sometimes for worse, but not a single one of them stopped there.
I don't know about everyone else, but I don't consider a million to be a lot of money these days. In Australia, a nice house in the inner suburbs will cost you a million. Nothing amazing just a four bedroom with a backyard and a garage. So after you've bought a house, what are you going to live on? Runningbear
Up until I got to what you posted, I was thinking the same thing. That a million dollars is really not all that much today. Remember years ago people always said how it would be great to be a millionaire?...well that was when a huge mansion like house cost $200-300K....Where I live in New York, damn cottages cost over half a mil today. And property taxes alone are like having another damn mortgage payment with them being so high and increasing each and every year. But to answer the OP question, if I had the ability to make a million in trading, I would most likely keep trading and set a goal to make 2 million faster than I made the 1 million.