How does one know if he is ready for full-time investing/trading?
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First you need a profitable trading plan. Second, when you don't have to depend on trading profits for living expenses and can just live off accumulated assets. This way, you can trade without fear or worry and will get better results because without pressure you will follow your trading plan.
I have been thinking about this topic for some time. Here is my personal opinion;
The 2 essential criteria that better be met before taking the plunge as a full-time investor is;
- Do you have enough money?
If capital is not large enough, even good returns is not enough to cover the full-time investor's living expense. This will lead to the investor making mistakes out of desperation. His psychology is not right.
- Do you have a good track record?
Full-time job means one has to be competent in the job to earn a living. Without a good track record, the investor may lose his capital, even if it is huge, due to his incompetence. An incompetent salary worker will lose his job but continue to have stable cashflow from his salary. A full-time investor not only loses his job but his savings as well. So, better be sure about the competence level before taking the plunge.
The above 2 criteria is sufficient for success but may not lead to happiness. Money is only one aspect of full-time investing. There are other considerations, mainly social.
- Social pressure
Full-time investing may be frowned by certain segments of society because the investor does not create much social value compared to someone who holds a proper job that contributes to society and the economy. This is particularly so if the investor is young(say, early 40s) and able-bodied. May I ask fellow forummers if they think they will face social pressure if they take the plunge to full-time investing? Maybe I am imagining things that are not really there as I may be too concerned about what others think about me.
- Loneliness
Investing is a lonely activity. Fellow investors/traders will know what I mean. When you go full-time, how do you cope with that loneliness?
The 2 essential criteria that better be met before taking the plunge as a full-time investor is;
- Do you have enough money?
If capital is not large enough, even good returns is not enough to cover the full-time investor's living expense. This will lead to the investor making mistakes out of desperation. His psychology is not right.
- Do you have a good track record?
Full-time job means one has to be competent in the job to earn a living. Without a good track record, the investor may lose his capital, even if it is huge, due to his incompetence. An incompetent salary worker will lose his job but continue to have stable cashflow from his salary. A full-time investor not only loses his job but his savings as well. So, better be sure about the competence level before taking the plunge.
The above 2 criteria is sufficient for success but may not lead to happiness. Money is only one aspect of full-time investing. There are other considerations, mainly social.
- Social pressure
Full-time investing may be frowned by certain segments of society because the investor does not create much social value compared to someone who holds a proper job that contributes to society and the economy. This is particularly so if the investor is young(say, early 40s) and able-bodied. May I ask fellow forummers if they think they will face social pressure if they take the plunge to full-time investing? Maybe I am imagining things that are not really there as I may be too concerned about what others think about me.
- Loneliness
Investing is a lonely activity. Fellow investors/traders will know what I mean. When you go full-time, how do you cope with that loneliness?
Things can get chippy when you are paying a mortgage, insurance(s), school tuition, summer camp, vacations, 401K contributions, Christmas, kids college fund, vehicles, your wife's stupidly ridiculous spending habits, your own whimsical spending habits, booze and quality weed, and oh shit the house A/C needs to be replaced, buying a boat seemed like such a nice idea for the fam at the time, and those fuckers at BMW want $8K to replace their own shittily designed engine components... doing all that when trading is your only income can be quite overwhelming. And nothing good ever comes out of forcing trades.
True story: I have a friend who sat next to me at DE Trading in Glenview, IL. He traded Schatz at about 500 or so a clip. Had a condo in Lincoln Park and an M3 and a boat on Lake Michigan. But for about three years he kept the same job he had while he was just learning how to trade - selling athletic shoes. There was just something about having some sort of reliable non-trading related income stream that put him in a more stable and grounded frame of mind. I suppose that if he figured he could pay property taxes, buy food, and pay for gas and slip fees for his boat by selling New Balance and Asics running shoes then anything trading-related was pure gravy. Sure, he eventually quit that job when it just seemed so ridiculous and absurd. But it had to be his own psyche telling him that it was OK to quit selling running shoes. True story.
True story: I have a friend who sat next to me at DE Trading in Glenview, IL. He traded Schatz at about 500 or so a clip. Had a condo in Lincoln Park and an M3 and a boat on Lake Michigan. But for about three years he kept the same job he had while he was just learning how to trade - selling athletic shoes. There was just something about having some sort of reliable non-trading related income stream that put him in a more stable and grounded frame of mind. I suppose that if he figured he could pay property taxes, buy food, and pay for gas and slip fees for his boat by selling New Balance and Asics running shoes then anything trading-related was pure gravy. Sure, he eventually quit that job when it just seemed so ridiculous and absurd. But it had to be his own psyche telling him that it was OK to quit selling running shoes. True story.
I own a 1910 Ford Model T, LOL, local Ford dealer last year on some Saturday advertised free oil changes, thought it be fun to watch them try to work on it, LOL I parked it in line and inched it up till I was next and attendant said to turn it off as he was amazed as he never saw this Ford before. I told him it be better to leave running till drive it in, but he insisted, so I turned knob to off position. He asked for keys, I told him this car didn't come with a key. And I went inside for cup of coffee, I came back out and dozen mechanics were trying to figure out how to start it and gave up and pushed it in, LOL, it was little too narrow for their ramps and they were afraid of jacking it up, so one guy crawled underneath and was yelling where was the filter and someone must have stolen it, filters didn't come out for another several years. They asked if they could do a safety check, by all means as I was LMAO. They tried to turn the headlites on, that was the best as they were going to their manuals and they didn't have any for my car. Headlites were fuel by kero gas and have to use a match(I don't drive at night). Had to show young man what bolt to undue for oil and I put bolt back on as I didn't want him to strip it. He kept looking for gas tank, had to point out it was under the seat. I offered to start it up but they said customers weren't allowed, so I knew this was going to be much laughs as they had to get the owner out of his office and he knew exactly how to do so by cranking in front of the car, I ran to him and stopped him as I didn't want him to break his arm, it a little tricky if you don't do often, you have to know when to release or engine will mess you up pretty good. Owner got a kick out it, I let him take a spin, and asked if I was planning on coming back for oil changes, give him a call first. LOL I told him if I come back I expect lunch as I would have to do all the work. LOL
Yea, whether wife or cars, they are costly.
God forbid you put Limit's on a wife's credit cards....I learned long ago and am single for long time now too.
I quit my job 20 years ago to trade full time. Some people questioned my decision since I had a goo corporate job. Even my parents (without saying so) were wondering what I was doing. I disagree that we may not contribute as much to society. For the past 15 years I've volunteered at a school helping kids with math. I put in about 15 hours/week (where I could be trading). But I wanted time away from trading during the day. And I know I make a difference in their lives based on feedback from teachers, students and administrators. But sure I miss some volatile days while at school. But there's always another volatile day. And I'm confident that I'll still be able to make enough trading to be fine even with other commitments.
Loneliness? No one says you need to be glued to your computer from 9 - 4 each day. After all, trading offers you the ultimate in freedom and choices. I often go running or biking pre-market or even after we open. If/when I hit my daily profit goal I end my trading day. If you worry of loneliness then find some activity that involves social interaction. For me it's volunteering and biking with friends.
I would say it would need to start with how much risk capital you actually have and are willing to risk. If you don't have enough you think that will let you last in the game then it's not going to work.
What markets are you trading? And are you just looking to day trade?
Full-time? Couldn't say from experience. But my personal plan has mirrored what a few others have said; to transition when working any other job seems completely absurd.
I opened the thread after glossing over the title and initially thought the question was when to go consistently live, and I was going to say if you've back-tested, forward-tested, and sim traded successfully for a decent interval of time, go for it and see what happens; then re-group.
But I think that definitely wouldn't be prudent or conducive to success for trading full-time. Especially since so many of us have monetary obligations and families on top of that. More like a good way to traumatize yourself into irreparable failure.
I opened the thread after glossing over the title and initially thought the question was when to go consistently live, and I was going to say if you've back-tested, forward-tested, and sim traded successfully for a decent interval of time, go for it and see what happens; then re-group.
But I think that definitely wouldn't be prudent or conducive to success for trading full-time. Especially since so many of us have monetary obligations and families on top of that. More like a good way to traumatize yourself into irreparable failure.