A Career Transition into Trading

[niteflite]

I've been on these forums for several years now. For the most part i can say it's provided me with at least some entertainment, so thank you to all.

Anyway, i'm still at a 9 - 5 job paying a reasonable salary. Also have a spouse that makes slightly more than a reasonable salary, and an 18 month old kid. I'm wondering if 3 months is a long enough of a period to give trading a shot. If things don't seem somewhat promising by then either by having shown gains or low losses and i feel that i can eventually make $, i would keep going. If the outlook is bleak, then i would go back to my current profession.

I have no formal experience trading. i've done some swing trading of small positions trying to pocket some dinner money or a car payment, with mixed results. if my goal is to just net $50k a year after fees but before taxes, do i have a shot at this if i take a conservative and very risk adverse approach? or will this result in ensuring smaller losses more than anything?

for someone like me, if i use something like IB, what would i do once i'm all set up? just pick random stocks or does the software suggest hot stocks to look at?

 

[emg]

I've been on these forums for several years now. For the most part i can say it's provided me with at least some entertainment, so thank you to all.

Anyway, i'm still at a 9 - 5 job paying a reasonable salary. Also have a spouse that makes slightly more than a reasonable salary, and an 18 month old kid. I'm wondering if 3 months is a long enough of a period to give trading a shot. If things don't seem somewhat promising by then either by having shown gains or low losses and i feel that i can eventually make $, i would keep going. If the outlook is bleak, then i would go back to my current profession.

I have no formal experience trading. i've done some swing trading of small positions trying to pocket some dinner money or a car payment, with mixed results. if my goal is to just net $50k a year after fees but before taxes, do i have a shot at this if i take a conservative and very risk adverse approach? or will this result in ensuring smaller losses more than anything?

for someone like me, if i use something like IB, what would i do once i'm all set up? just pick random stocks or does the software suggest hot stocks to look at?

Here is another interesting research paper small traders just lose:

Do Day Traders Rationally Learn About Their Ability?

http://www.usc.edu/schools/business/FBE/seminars/papers/F_12-9-11_ODEANpaper.pdf

80% of small traders lose within 2yrs while the remaining 19% lose after 2 years.

Only 1 % makes money day trading.



How will u able to make trading as a career as a small trader? HOW? only gamblers will say it is possible






More than 90% of small traders lose! They just lose!

 

[promagma]

- do you have an edge, such that you believe you can be successful?
- a risk adverse approach isn't an edge, it will just help you stay in the game
- 3 months isn't long enough to predict the long term success or failure of an edge. It is only long enough to prove that you can execute.

 

[Alpha Trader]

More than 90% of small traders lose! They just lose!

The above statement may hold some water. However, those 10%ers are still out there and there is nothing stopping you from being a part of that group if you are willing to put in the time, energy and some sweat and tears. If overcome, the reward can be pretty sweet. It is life changing to say the least.

I will tell you one thing though. Nowhere near 3 months will cut it.

 

[niteflite]

- do you have an edge, such that you believe you can be successful?
- a risk adverse approach isn't an edge, it will just help you stay in the game
- 3 months isn't long enough to predict the long term success or failure of an edge. It is only long enough to prove that you can execute.

i don't know if i have that edge. i know i'm bad at basketball, i used think i was musically talented but i'm not that great, maybe avg at best. i do believe i am disciplined and show self control - will this help at trading?

if three months is too short, how much is long enough? each passing month will show a gap in my employment history and that could work against me when looking for a 9-5 job again.

 

[Grandluxe]

3 months?

Try 5 years.

Anyway people want to transition out of trading, you want to transition into trading?:eek:

 

[Butterball]

if my goal is to just net $50k a year after fees but before taxes,

You got it the wrong way. Your thinking starts with an income goal. That approach will be deadly in trading because it leads you to assume you can earn a regular return from trading to pay monthly bills. Forget about that. There will be dry spells and periods of losses like in any other business. If you sleep better with a steady monthly stream of income buy bonds and stay in your day job.

As a trader/entrepreneur, your thinking should really be: What capital do I have available that I can set aside for my (trading) business from my current finances and afford to live without for the next X years. Is it $250k? $500k? $2m?

When some of your friends tell you they will open a restaurant (or any other type of business), they don't tell you they want to clear $50k a year do they? No, the first thing they worry about is: How big a starting capital do they have available to them and what is the risk of capital loss.

 

[niteflite]

You got it the wrong way. Your thinking starts with an income goal. That approach will be deadly in trading because it leads you to assume you can earn a regular return from trading to pay monthly bills. Forget about that. There will be dry spells and periods of losses like in any other business. If you sleep better with a steady monthly stream of income buy bonds and stay in your day job.

As a trader/entrepreneur, your thinking should really be: What capital do I have available that I can set aside for my (trading) business from my current finances and afford to live without for the next X years. Is it $250k? $500k? $2m?

When some of your friends tell you they will open a restaurant (or any other type of business), they don't tell you they want to clear $50k a year do they? No, the first thing they worry about is: How big a starting capital do they have available to them and what is the risk of capital loss.

i have got those other figures in mind. definitely not willing to lose up to 250k in any time frame, be it 3 months or 3 yrs. i was thinking a loss of $25k is enough to show that trading is not for me at this time.

 

[FCXoptions]

Just do the topsteptrader combine 3 times. It will cost you $150-200 and might help you figure out whether you can make it happen in that short of a time frame. Just an idea fwiw

 

[Clint]

Dont scare him away, we need liquidity in the market!

To be honest with you, If you want to make a real return on your money, I would actually go to trade school.

Example: my auto mechanic who also teaches classes part time in an auto mechanic program at the local community college told me that he will quit at the end of this semester to take a job as a mechanic out in the oil fields. His starting pay will be around 100k a year.

He has been freelancing around town in his off hours from his real job, he is making a ton of money in cash doing body work on cars. With his money he bought 2 houses and refurbished them, flipped them for a profit....but that's not even the best part. He sold his houses owner financed at a 10% per year financing for 13 years to people that are unable to get lending from a bank. Not only did he turn 50k into 70k in 3 months (40% return)...he also sold that 70k house on a owner financed note which gets him 10% a year on his capital.

True, its not like sitting in your office and walking out at 4pm with X amount of dollars in cash....but he also doesn't have to walk out with X amount of dollars negative either.

For someone who has money to invest I suggest picking up a foreclosed house put some money into it, and stick some tenants in it until you can sell it at a owner financed deal which looks good to you.



Unless you are really passionate about trading and don't care to lose money for 2 years while working 12 hour days, I would probably stay away from trading This stuff is harder then you think...