Daytrading profit potential

[daniel_m]

Originally posted by stock777


Seems odd that a Million Dollar Man would only need or want to keep a paltry 100k in the acct. Grandma plays with more than that.

And if folks are making 100k or more, why do they 'need' to take money out daily or weekly. Sounds like they may need to chat with Suze Ormand.

With the leverage pro firms give you, you don't need to keep moare than $100k in your account.
You take your money out because if the prop firm folds you only lose what you have in there.

 

[Wonderduck]

Originally posted by stock777


Seems odd that a Million Dollar Man would only need or want to keep a paltry 100k in the acct. Grandma plays with more than that.

And if folks are making 100k or more, why do they 'need' to take money out daily or weekly. Sounds like they may need to chat with Suze Ormand.

Because 100K is a lot if you are working at Wendy's and making $30,000 per year.

But, then comes "The American Dream". Get a nice house in the suburbs, married, kids, an SUV, a minivan, a boat, etc... it's a lifestyle that takes quite a bit of cash to maintain.

If you make, on average, $1000 per day (net trading profits, after commissions), assuming you work 5 days per week, 50 weeks per year, that's only $250,000. Out of this you have to pay taxes, put money away for retirement, increase the size of your working capital, pay trading expenses, and finally, pay yourself some dough to have that American Dream lifestyle.

At that level, you get maybe $100,000 to $150,000 "salary" -- not any more than a good job will get you, and you're still working full-time hours with minimal vacation (2 weeks).

If you're only making net trading profits of $100k/yr, then you really probably need to be taking money out regularly, unless you're living with your parents, or are perhaps frugal, humble, and single.

 

[stock777]

You're probably right. I forget that most people don't save, pay too much for everything, live well beyond their means, and are in debt to banks, and CC companies. For them a stinking 100k is nothing.

 

[Wonderduck]

Originally posted by stock777
You're probably right. I forget that most people don't save, pay too much for everything, live well beyond their means, and are in debt to banks, and CC companies. For them a stinking 100k is nothing.

Yeah, it's really too bad. I knew a guy who had a good job ($90K + bonus of about $20K, living in the midwest) whose wife also worked. When he lost his job, they only had enough savings to live two weeks beyond the last paycheck. They ended up having to sell a car and their house almost immediately. :-(

It just goes to show that it's much too easy to always live exactly at the edge of your means, even as your income increases.

 

[Brandonf]

Originally posted by Wonderduck


Yeah, it's really too bad. I knew a guy who had a good job ($90K + bonus of about $20K, living in the midwest) whose wife also worked. When he lost his job, they only had enough savings to live two weeks beyond the last paycheck. They ended up having to sell a car and their house almost immediately. :-(

It just goes to show that it's much too easy to always live exactly at the edge of your means, even as your income increases.

I think that for every single person savings is important, but for traders it is especially so. As a self imployed person you do not have the same safty net as others who work for someone else. There is also no promise that success yesterday, the day before, week before year before etc will transend into anything tomorrow. One simply need to look at the Market Wizards to know this is true. Almost all of us will encounter significent periods slow to no growth in our equity curves. It is during this time that most who are unprepaired have to give it up. I save over half of what I make, but even if this is not possible because you dont live in a place that has $150,000 3000 sq foot homes you should still be able to save 10 to 20% of your monthly profits for a rainy day. To do otherwise is, In my humble opinion, to do a dis service to yourself and family.

Brandon

 

[Mike777]

Daytrading or any other form of trading is very hard, but then what isn't?
I work for a big global company and it's damn hard work and very stressful.

 

[EricP]

Originally posted by Mike777
Daytrading or any other form of trading is very hard, but then what isn't?
I work for a big global company and it's damn hard work and very stressful.

There is no doubting that other careers can be stressful, just like trading. However, when was the last time you ever LOST $5000 on a bad day working for the global company? For full-time traders, a bad month can not only mean daily stress, but also the inability to pay the morgage or other bills.

I strongly agree with Brandon's statements that any full time traders, or those considering trading as a career, should have plenty of savings to help them overcome the rainy days...

Best of luck,
-Eric

 

[Mike777]

and when was the last time you were trading and lost a major account and 350 employees had to be laid off etc etc....

It's all relative and I've done both, my point is, yes trading is difficult and stressful but don't talk yourself into believing that it is so much harder than anything else otherwise you might be convinced that success is not attainable in relation to other careers. I believe it is.
BTW, I do agree that it is prudent to have reserves to fall back what ever you do. If you get laid off you might have no income for a year. If you lose money trading ditto.
Cheers

 

[Don Bright]

Originally posted by stock777


Seems odd that a Million Dollar Man would only need or want to keep a paltry 100k in the acct. Grandma plays with more than that.

And if folks are making 100k or more, why do they 'need' to take money out daily or weekly. Sounds like they may need to chat with Suze Ormand.

Good comments actually. We give the high dollar guys all the money they need to trade with....but as far as the others always taking money...Hmmmm?


Don

 

[CalTrader]

IMHO trading should be looked upon as a business: before you jump into it you should have a business plan which defines adequate capital. If you have run the numbers and run the risk calculations then you should know at the outset how much money you need to keep in your account and how much you need to produce to maintain your desired lifestyle. A good plan should have estimates for slow periods etc and thus should at least make an educated guess at the reserve dollars you need to set aside.

No job is easy. Running a business just changes mix of things you work on each day. The payback is that you know - or should know - the state of the company at the close of each day. In a large company or organization you rarely know the complete story .....