Interesting. What do you trade, what timeframe?
Are you a successful at home day trader with no other source of income who began with modest means?
- Thread starter JTrades
- Start date
Interesting. What do you trade, what timeframe?
3 systems in that active traded account. ES day trade, FX day & occassionaly swing trade and hold options positions. Near the end where the equity curve meets some turbulence is when IB got into some problems with Australian regulations with FX and FX trading was removed for Aussie clients..messed me up a bit especially during the Greek with the Euro moves. So moving the FX part to another broker.
I think having diversified strategies/system is key for income..smoothens out equity very well, especially if you use Shannon's Demon/rebalancing. Tax is also a very major problem..it's super high in Australia, almost 40% for me. If I was in a lower tax country it would be much easier to trade for a living, but I guess that's price you pay for personal preference.
July will be the last entry as it serves no purpose other than stroking ego. I want to move away from this and to be more balanced in mind between wins and losses. Money is the byproduct of trading and managing the trade properly. Gloating or otherwise is a trap for the mind. These figures are far from it but in principle that's my decision.
The problem with most traders is that they don't know how to treat their trading like a business if they are profitable so that they can trade for a living.
Simply, trading is one thing...managing it like a business is an entirely different ball game.
I've seen a lot of people start a business from scratch...make it very successful and then hand it over to their children (now adults) when they retire to only then see the business run into the ground by the kids because of a lot of bad business decisions.
Just the same, I've seen people with high paying jobs not know how to manage their personal finances and end up filing for bankruptcy or taking on more debt just to maintain a certain lifestyle.
I also know that 70% of lottery winners eventually go broke or back to where they were at prior to the winning...within several years. They just didn't know how to properly manage all that money.
Thus, the reality for a profitable retail trader that's trading from home and then having a "business plan" to manage the trading like a business so that he/she can trade for a living is low. Seriously, just last year alone I saw two profitable retail traders making low 6 figure income in financial ruin because health costs...they didn't have a private family health/dental plan. One got diabetes and eventually lost a leg and the other got cancer. Those types of healthcare costs are extremely expensive and with the traders not trading for awhile due to health issues...its a financial disaster so far for them.
My point is this...trading for a living implies more than just doing such as a sole source of income. It also implies you're managing your trading as a business and your managing your personal lifestyle under that business. Simply, you need to be successful at trading and successful at managing your trading as a business and then successful at managing your personal lifestyle to earn that label of trading for a living.
Seriously, how many times have you seen someone here at ET show up and start a thread like "Should I quit my job now that my trading profits are more than my job income"?
Those people seem clueless about the fact that living is expensive especially if they have a family. Therefore, if you're a profitable trader and you have a job...keep that job unless it really sucks. In case of the latter, find another job that you're happier with while successfully trading. Also, everyone knows at least one person that's self-employed and has been such for many years...go have a conversation with that person to get more information about what self-employed people do (must do) to manage they personal lifestyle especially if you have a family.
There's no shame in having a backup plan while trading for a living. Many famous athletes making millions per year have businesses on the side and some of them have very successful businesses. No shame at all because they know if disaster hits and their athletic careers if finish or they get too old to be able to compete...
Its an easy flow into their business that's been growing on the side off of their famous name.
1) Nothing wrong with a successful trader wanting to use it to become a fund manager.
2) Nothing wrong with a successful trader wanting to remain private and be self-employed.
3) Nothing wrong with a successful trader wanting to start another business as a second source of income just in case one day the trading is no longer profitable or they lose interest in trading.
Do not let others try to shame you into thinking you're doing something wrong, you've failed or you're not good enough if you have a plan B. Reality, if you have a plan B...you're brilliant.
There's also the issue of properly capitalized considering this thread is about traders beginning with "modest means". Its simple, most at home traders are under-capitalized. If you're getting financial support while you grow your capital from the profits of trading...no shame in doing that too if the person helping you is ok with it.
***If you know someone that started as such via "modest means"...that implies this is a trader that's been trading for many years and most likely made the bulk of their money during unusual market conditions considering we ain't talking about someone that started trading a few years ago. The fact, you just can't compound a small account in a few years from "modest means" into trading for a living unless your personal lifestyle is extremely cheap (e.g. you were living at home with mom & pop and you're single).***
P.S. If you have a family and you have a job while successfully trading, most spouses will not give you support to quit that job. Therefore, don't quit your job unless your goal is to get a divorce. Women are just more in tune with reality than men are in situations involving a second source of income (trading). They want to see a solid plan and proof that your trading income greatly exceeds the income of the current job prior to making trading the primary source of income or sole source of income. Without their psychological support...you'll never trade for a living even if you're a profitable trader unless you get divorce.
P.S.S. If you're single as a profitable trader (at home trader) and you want to start a family one day...you'll impress women if you have private health/dental insurance, life insurance, self-employment pension plan, along with doing such for several years (not a few months) and so on. Simply, most women loves stability especially their parents.
These are all things you need to seriously think about if you want to trade for a living because you have a lot more to think about and complete than just making profits.
Simply, trading is one thing...managing it like a business is an entirely different ball game.
I've seen a lot of people start a business from scratch...make it very successful and then hand it over to their children (now adults) when they retire to only then see the business run into the ground by the kids because of a lot of bad business decisions.
Just the same, I've seen people with high paying jobs not know how to manage their personal finances and end up filing for bankruptcy or taking on more debt just to maintain a certain lifestyle.
I also know that 70% of lottery winners eventually go broke or back to where they were at prior to the winning...within several years. They just didn't know how to properly manage all that money.
Thus, the reality for a profitable retail trader that's trading from home and then having a "business plan" to manage the trading like a business so that he/she can trade for a living is low. Seriously, just last year alone I saw two profitable retail traders making low 6 figure income in financial ruin because health costs...they didn't have a private family health/dental plan. One got diabetes and eventually lost a leg and the other got cancer. Those types of healthcare costs are extremely expensive and with the traders not trading for awhile due to health issues...its a financial disaster so far for them.
My point is this...trading for a living implies more than just doing such as a sole source of income. It also implies you're managing your trading as a business and your managing your personal lifestyle under that business. Simply, you need to be successful at trading and successful at managing your trading as a business and then successful at managing your personal lifestyle to earn that label of trading for a living.
Seriously, how many times have you seen someone here at ET show up and start a thread like "Should I quit my job now that my trading profits are more than my job income"?
Those people seem clueless about the fact that living is expensive especially if they have a family. Therefore, if you're a profitable trader and you have a job...keep that job unless it really sucks. In case of the latter, find another job that you're happier with while successfully trading. Also, everyone knows at least one person that's self-employed and has been such for many years...go have a conversation with that person to get more information about what self-employed people do (must do) to manage they personal lifestyle especially if you have a family.
There's no shame in having a backup plan while trading for a living. Many famous athletes making millions per year have businesses on the side and some of them have very successful businesses. No shame at all because they know if disaster hits and their athletic careers if finish or they get too old to be able to compete...
Its an easy flow into their business that's been growing on the side off of their famous name.
1) Nothing wrong with a successful trader wanting to use it to become a fund manager.
2) Nothing wrong with a successful trader wanting to remain private and be self-employed.
3) Nothing wrong with a successful trader wanting to start another business as a second source of income just in case one day the trading is no longer profitable or they lose interest in trading.
Do not let others try to shame you into thinking you're doing something wrong, you've failed or you're not good enough if you have a plan B. Reality, if you have a plan B...you're brilliant.
There's also the issue of properly capitalized considering this thread is about traders beginning with "modest means". Its simple, most at home traders are under-capitalized. If you're getting financial support while you grow your capital from the profits of trading...no shame in doing that too if the person helping you is ok with it.
***If you know someone that started as such via "modest means"...that implies this is a trader that's been trading for many years and most likely made the bulk of their money during unusual market conditions considering we ain't talking about someone that started trading a few years ago. The fact, you just can't compound a small account in a few years from "modest means" into trading for a living unless your personal lifestyle is extremely cheap (e.g. you were living at home with mom & pop and you're single).***
P.S. If you have a family and you have a job while successfully trading, most spouses will not give you support to quit that job. Therefore, don't quit your job unless your goal is to get a divorce. Women are just more in tune with reality than men are in situations involving a second source of income (trading). They want to see a solid plan and proof that your trading income greatly exceeds the income of the current job prior to making trading the primary source of income or sole source of income. Without their psychological support...you'll never trade for a living even if you're a profitable trader unless you get divorce.
P.S.S. If you're single as a profitable trader (at home trader) and you want to start a family one day...you'll impress women if you have private health/dental insurance, life insurance, self-employment pension plan, along with doing such for several years (not a few months) and so on. Simply, most women loves stability especially their parents.
These are all things you need to seriously think about if you want to trade for a living because you have a lot more to think about and complete than just making profits.
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How does one treat their personal trading as a business? Do they build a website? Do they buy advertising in the local paper?
By keeping impeccable activity-records and financial accounts, perhaps ... that's "businesslike", isn't it?
(It's also certainly an almost universal habit among successful traders, but I strongly suspect that that's not so, to anything like the same extent, among unsuccessful traders.)
You've been here at this forum a very long time. Thus, not sure if you're joking because there's lots of threads here about such.
Seriously, pretend you're starting a business as a self-employed trader...what's the first thing you're going to do ? See your tax accountant and have a long discussion so that you'll know what you need to do before the next tax report year involving ownership structures (e.g. sole proprietorship, LLC, S corporation and other alternatives). Also, will not hurt to setup an in person appointment with a IRS tax representative (that's what they are called in the U.S.) about self-employment and different types of trader status you may need to declare.
Next, go see you bank representative about what you need to do to setup a business account but only after advice from you tax accountant and IRS tax rep.
Just as important, find a friend or relative that's a self-employed business owner for some private discussions about such even if they have employees. Also, if you already have a job with typical benefits...you don't have to worry about that stuff like health/dental insurance unless you plan on quitting your job. Yet, if you don't have a job and you're a profitable trader with a decent income...make sure you discuss those things (e.g. health/dental insurance, self-employment pension plan and many other stuff) with your tax accountant and then insurance companies that cater to self-employed citizens...it ain't cheap.
P.S. What about traders that are not profitable or have a down year ? A trader that's not profitable without the proper declared trader status with their government...will not be able to deduct many things associated with the cost of trading. My point, don't be stupid and think you can be a trader while not letting the tax folks know you really are a trader.
Today, there's lots of public documentation about this at the government tax office. Simply, it ain't like the 1990's when people were running around without their heads when it came to a simple market to market (m2m) declaration. There are online tax services that specializes in that stuff for traders these days if your tax accountant is not schooled enough about traders/taxes.
This is how you should start to treat your trading like a business and it has nothing to do with trade signal strategies or starting a website.
P.S.S. I remember many years ago when I was single when I first met a particular girlfriend's parents. The parents owned their own business and very successful with +30 employees. I remember the first question they asked when I told them I was a private trader...they asked what was my "business ownership tax structure" and what company I was with for private insurance.
They didn't care if I was a trader, mechanic, landscaper, interior designer or flipping real estate properties. They just wanted to see if I was serious about whatever I was doing as if it was a business and what plan B I had in place.
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