Any advice for a soon to be full-time trader?

[imjohn]

Hi all,

I quit my full-time job earlier this year to focus on full time trading. October will be my last month in the work force. After that, I'm on my own as a full-time trader.

I'm just curious if anyone who's once been in a similar situation or am in one currently have any advice to share that can be valuable moving forward?

Howard

I've been in a similar situation and my advice is to wait longer until you can start with a larger base (Assuming $15K is not a typo, $150K would of course be a 10x different story). As I'm sure you know, all else equal, the more contracts you are able to comfortably leverage (a personal thing), the more income you can make (or lose) per month with whatever strategy you plan to employ.

Just do everything you can to give yourself a realistic chance to succeed, man. Sounds like worst case scenario is blowing up and ending up back at the same job as before. Frustrating, but not life ending.

 

[comagnum]

My tips

Make sure to have plenty of down time & do lots of fun things - it it easy to get carried away with trading and end up spending 15+ hours a day at it. The better you feel, the better your trading is likely to go.

Focus only on executing the processes of trading following your own best practices - and realize this is all you control.
Don't take it personally if you lose $, aint no big thang.

Use a trading journal, it is like having an in-house psychologist, trading mentor, risk mgr, life coach, etc. The journal is where you turn the spot light on your trading flaws & figure out how to correct them and optimize what you are doing well.

Those trading for a living absolutely need some very big winners to offset their losers and leave them with enough profit to live from.

Don't fall for the retail fantasy of making $ every day. Most professional traders have infrequent large gains with periods of treading water in between - About 5-15% of trades make the lions share of profits annually.

 

[Howard]

Guys,

I appreciate and even understand your concerns, but I get the feeling that most of you are not successful traders or at least not successful day trading index futures. I also feel I'm being adviced as someone just starting out which I'm obviously not. I've been at this for a long while now...

Not saying this to be unkind, but - take the job offer. $15k is ridiculously small as an account size from which to make a living, and even the few problems that you've listed show that you're not a pro. The best professional traders average about 2%/month, or less than 30% annualized; on $15k, that's not enough for a year of decent breakfasts, much less a living.

The job offer is standing for the foreseeable future and I know I have other opportunities. I brought it up simply to illustrate that I feel I've hedged my bets and have other opportunities should this fail. In fact, it's part of the reason why I'm quitting. I know I can do considerably better than this job if I have to work, both in terms of salary and freedom/lifestyle (home office) to combine a day job with trading.

The last time I was day trading full time the ES was trading in the low 1000s and I took a $10 000 account to $16 000 in in 15 trading days trading one contract only. I believe that's a 60 % return in less than a month. With consistent profits and scaling your account as your equity grows (while keeping risk constant) - you should be making far, far more than 30 % annualized as a futures trader trading on margin. It's just not comparable to a fund manager who mostly are not able to beat the market anyway. This does of course assume consistency, little to no drawdown and the discipline to scale down during a losing streak. Of course, easier said than done.

The account I took to $16 000 took a blow precisely because I scaled up too fast (overconfidence) and was not able to stop until it was below $10 000. I lacked discipline and had close to zero savings. It was a very different situation back then.

I've been slowly growing this account as well and I can say I'm already up more than 30% for the year having barely traded this year due to my day job overwhelming me and starting to trade late this year.

The last month I've been working 60 hour weeks at my day job, so there's just no way I could combine that with day trading live markets, so there's been only the occasional simulator trade, but mostly focused on logging/tracking the market after close.

 

[Howard]

The most important thing is: Do you really have edge?
I didn't see from your post that your edge is proved.
I see you assume that you didn't make profit due to your job. This assumption could easily be wrong.
Prove your edge first and after you make consistent profit, then quit your job.

I believe so, yes. The challenge is of course to remain consistent and disciplined over the long run. That remains to be seen. I've had losses this time as well, but compared to the past, I've been able to pull the plug after taking a loss and have followed my money management rules.

I know it's possible I may need to get a job in 4-6 months, but I'm carefully optimistic this time around.

As for my assumption about my job being a hinderance - there's no doubt in my mind that is true.

I think a prerequisite if you are to day trade US index futures is to have at least one hour of preparation and calm before the market opens. That's just not possible for me. My job typically ends when the market opens. I'll then have to rush home, hungry and exhausted after a demanding day at work. Get in front of the screen as fast as I can because waiting means I might miss a move. Start preparations (which I'm already behind on of course) and typically find that the main move of the day is already in motion or even done.

5 hours later it's 10 in the evening and I've basically been up since 6 AM and working for 14 hours. Now, it's time to log the trading day, update my statistics, prepare scenarios for the next day, journal and so on. Maybe I'm done at 11. Then, it's time to start doing the stuff that normal people do after work. At best, I'm in bed by midnight, but usually not.

Rinse and repeat for another 5 days. Then, the entire weekend is spent doing market research and stuff that's accumulated on my to-do list from the week and the prior week.

In effect, this means I'm basically working on average 70 hours per week. Even 80 hours if you count research over the weekend.

I've been working on my trading non-stop in addition to my day job for 2 years now, but I just feel it's not worth going on like this any longer. Progress is too slow as well and I'm exhausted. There's no continuity to my work going on like this.

don't trade anything below the 15M timeframe. I learned that the hard way ... wasted tons of years on the 5M

I don't trade time frames per se. My day trading model is not based on charts, but based on statistics and probabilities which are calculated by my proprietary trading software. That said, my main chart is a 1-minute chart. I also use faster tick charts to aid execution, but always with the entire day ahead in mind. Each to his own, I guess.

 

[Howard]

I've been in a similar situation and my advice is to wait longer until you can start with a larger base (Assuming $15K is not a typo, $150K would of course be a 10x different story). As I'm sure you know, all else equal, the more contracts you are able to comfortably leverage (a personal thing), the more income you can make (or lose) per month with whatever strategy you plan to employ.

Just do everything you can to give yourself a realistic chance to succeed, man. Sounds like worst case scenario is blowing up and ending up back at the same job as before. Frustrating, but not life ending.

I wish it was a typo, but it's not. Since you were in a similar situation - where are you now?

Anyway, as I mentioned earlier, I think it's quite possible for me to get a better paying job which means saving money faster. So quitting my job now is a risk I'm comfortable taking.

Anyway, since most people are concerned about my account size and returns:

Is there a way I could scale my account/results assuming I'm profitable?

I don't know what opportunities there are, but I've talked to a investor/trader in Norway who backs traders. He said that he backs traders who can show a decent track record.

So, my focus will basically be on being consistent moving forward and honing my method and learning as much as I can now that I have more time to focus. And maybe if I'm out of living expenses in 6 months and my account isn't as juicy as I'd like to - maybe there's some way I could gain access to a larger capital assuming my results are decent.

 

[Howard]

My tips

Make sure to have plenty of down time & do lots of fun things - it it easy to get carried away with trading and end up spending 15+ hours a day at it. The better you feel, the better your trading is likely to go.

Focus only on executing the processes of trading following your own best practices - and realize this is all you control.
Don't take it personally if you lose $, aint no big thang.

Use a trading journal, it is like having an in-house psychologist, trading mentor, risk mgr, life coach, etc. The journal is where you turn the spot light on your trading flaws & figure out how to correct them and optimize what you are doing well.

Those trading for a living absolutely need some very big winners to offset their losers and leave them with enough profit to live from.

Don't fall for the retail fantasy of making $ every day. Most professional traders have infrequent large gains with periods of treading water in between - About 5-15% of trades make the lions share of profits annually.

Good advice. I actually look forward to having more fun. It's been so long since I had any time to really unwind that I really look forward to that. Also, I really look forward to finally be able to average 7 hours of sleep per night.

Are you currently a full time trader yourself?

I remember feeling lonely and isolated the last time I was at this full time. I'm curious if that will happen this time as well. I'm a different person this time and know what I'm missing outside the rat race, so I don't think it will be a problem.

 

[tommcginnis]

I took a $10 000 account to $16 000 in in 15 trading days trading one contract only.

That is not reality. That was a video game that paid you. Unfortunately, you're (apparently) going to have to learn the difference.

May I recommend a solid practice of bracket trading? Without exception? That would keep the coming disaster stretched out some....


["So, were you being mean there?" No. The opposite, in fact. ]

 

[cvds16]

get in contact with some other traders throught email and chat. Also get spotify, it helps to relax during the trading day with some good music in the background.

 

[Howard]

That is not reality. That was a video game that paid you. Unfortunately, you're (apparently) going to have to learn the difference.

What do you mean?

 

[Evermore2017]

Hi all,

I quit my full-time job earlier this year to focus on full time trading. October will be my last month in the work force. After that, I'm on my own as a full-time trader.

I'm just curious if anyone who's once been in a similar situation or am in one currently have any advice to share that can be valuable moving forward?

I'm not really seeking advice on trading methodology as I'm feeling fairly confident in what I have there and have my own stuff to focus on, but anything else would be of interest.


Some background information about me:

- I have an account size of just over $15K. I day trade US index futures.

- I have savings to cover living expenses for 6 months.

- I have a standing job offer with another firm and can also get my old job back if needed.

- No kids. Just a needy girlfriend who feels she sees too little of me.

- I've been full time trading twice earlier. The last time, I was severly undercapitalized and simply had to quit because I was broke. I didn't 'blow up', but slowly bled to death and had to eat.

- I've been exposed to the markets on/off for 12 years by now and have devoted long periods of time to serious market study and research. I have proprietary tools developed to aid my market analysis and research. So, I'm not new to the markets.

My initial plan was to trade part-time after work and slowly build my account, but it turned out to be much harder to do than I anticipated and I quickly felt burned out juggling these two on <= 5,0 hours sleep. Especially since my day time job is very demanding/stressful and I can't always leave on time either.

Because of this and since I feel I have options otherwise, I decided to quit my job and finally try full time trading with full focus once again.

One thing which will be different than earlier is that I will try to focus on consistency of returns instead of trying to hit home-runs every single day. This is something I can afford doing now since I'm not pressured to do so. Of course, in order to succeed, I need to make money, but I think slow and steady wins the race.

Thanks in advance for any advice on this exciting journey.

Best regards and thanks for reading.

Howard

Your trading capital must be less than 20% of your total savings or investments