how to meet monthly expense while growing trading capital?
- Thread starter adamchubb
- Start date
I think that if you are taking half of your trading profit each month to meet living expenses, you may be under-capitalized.
1) You have no provision for paying capital gain tax (as pointed out upthread).
2) You are assuming you will have consistent gains month after month. When you have consecutive losing months, you may be in trouble. Do you still withdraw? Or else how can you pay your monthly expenses?
I think withdrawing profits from trading account regularly should happen after you have become consistently profitable - and sizeably so. Are you in the stage along your trading career?
second stream of income.
get a job where you interact with people. It will do your mind good. One trader I know works afternoons at starbucks (offers health insurance and kept him from living like a hobit)
bank roll management is a tough part of the game.
Last year I killed it in September, took out a large amount from my account and spent it and put some away in savings, boom OCT hit and had a bad month. My account got hit hard from taking out funds and a down month.
I used to teach a series 7 class. It was fun and a good way to make a few hundred every week.
get a job where you interact with people. It will do your mind good. One trader I know works afternoons at starbucks (offers health insurance and kept him from living like a hobit)
bank roll management is a tough part of the game.
Last year I killed it in September, took out a large amount from my account and spent it and put some away in savings, boom OCT hit and had a bad month. My account got hit hard from taking out funds and a down month.
I used to teach a series 7 class. It was fun and a good way to make a few hundred every week.
- a few of you have pointed out the tax issue. actually i live in "some Asian country" where there is no capital gain tax. so i don't have to worry about tax provisioning.
- i really admire jack's way to trade for a living. i think i'll feel more comfortable when the trading profit is about 1.5-2x of the monthly salary. that'll help overcome a losing streak.
- i agree teaching (either part-time course or create your own program) is a good way to generate extra income. actually i've been looking for somewhere i can teach anything about trading or investing.
- i really admire jack's way to trade for a living. i think i'll feel more comfortable when the trading profit is about 1.5-2x of the monthly salary. that'll help overcome a losing streak.
- i agree teaching (either part-time course or create your own program) is a good way to generate extra income. actually i've been looking for somewhere i can teach anything about trading or investing.
Lots of good advice here. The decision on how to handle withdrawls is absolutely based on how well you are capitalized. I like Jack and Boli's takes here. Going full time is an evolution based on understanding the mathematics of ruin and the expected returns for your trading approach.
IMHO - To be full time, you've got to have an account size that grows even after deductions for living expenses / overhead. Clearly this is not easy to do. Making a 100% annual ROR (crazy good well beyond norms - most pros are happy with 20-30%) does no good if you withdraw 100% / year for expenses. Its a tough balance.
You've asked a good question - I don't think I've really added much to the comments here. Most folks here clearly understand that you can't trade with "scared money". Without debating the question of probabilistic trading, undercapitalization is a recipe for disaster.
Its much better to be a big conservative batter going for base hits. A thin man who has to knock one out of the park every game is doomed to lots of strike outs.
