Living off Trading

[tonyf]

How much capital are you trading with?

What are you fixed living expenses?

How much are you able to save (i.e. trading profits - fixed expenses)?

thanks!

Right. I was hopping for less subjective questions!

But here is me. P.s. there is no right or wrong it is just what worked for me.
1) it took me 10 ys of hard work in a high paying job in high finance.
2) during those 10 ys I was learning as much as I could (Ms in finance , CFA lev 3) and saving 80 per cent.
3) half way through the 10 ys, I was diagnosed with MS which somehow Motivated me more knowing that my high octane career will be short.
4) I have 3 Young children and our comfortable top 1 per cent lifestyle costs X.
5) I profile returns to generate 2 to 3X per annum, covering for inflation, future expense and the expected cognitive decline at age 55.
6) I shield my family from the stress of market volatility.
7) I use margin but never third part monies.

 

[longandshort]

A good rule of thumb is that your withdrawal should be capped at 4% of your bankroll.

So if you need 100k to sustain yourself, you need about 2.5MM in assets. If you expect to generate returns of 10-20%, then you still need upwards of 2MM. If you only need 50k to survive then 1MM might work.

 

[fan27]

Right. I was hopping for less subjective questions!

But here is me. P.s. there is no right or wrong it is just what worked for me.
1) it took me 10 ys of hard work in a high paying job in high finance.
2) during those 10 ys I was learning as much as I could (Ms in finance , CFA lev 3) and saving 80 per cent.
3) half way through the 10 ys, I was diagnosed with MS which somehow Motivated me more knowing that my high octane career will be short.
4) I have 3 Young children and our comfortable top 1 per cent lifestyle costs X.
5) I profile returns to generate 2 to 3X per annum, covering for inflation, future expense and the expected cognitive decline at age 55.
6) I shield my family from the stress of market volatility.
7) I use margin but never third part monies.

Sorry to learn of your diagnosis...you are clearly not the typical trader coming to this site with hopes of trading for a living. Best of luck with your trading...will be rooting for you success!

 

[fan27]

A good rule of thumb is that your withdrawal should be capped at 4% of your bankroll.

So if you need 100k to sustain yourself, you need about 2.5MM in assets. If you expect to generate returns of 10-20%, then you still need upwards of 2MM. If you only need 50k to survive then 1MM might work.

Realistic numbers...personally, I would consider going full time if I had 1MM, though I do enjoy the risk free money I get from my day job.

 

[tonyf]

Realistic numbers...personally, I would consider going full time if I had 1MM, though I do enjoy the risk free money I get from my day job.

I would say 1m is not enough, unless if you move to a place like Thailand.
That 2.5m figure is more like it.

 

[tonyf]

Sorry to learn of your diagnosis...you are clearly not the typical trader coming to this site with hopes of trading for a living. Best of luck with your trading...will be rooting for you success!

Thank you but....the only difference betweenI and the rest is that I know my diagnostic already. How do you model for real life unexpected things ( medical, divorce, etc...?). I would be prudent if I were you. Life is not a spreadsheet.

 

[fan27]

Thank you but....the only difference betweenI and the rest is that I know my diagnostic already. How do you model for real life unexpected things ( medical, divorce, etc...?). I would be prudent if I were you. Life is not a spreadsheet.

I totally agree, which is why I carry life insurance, medical insurance and try and keep to keep the wife happy

 

[fan27]

I would say 1m is not enough, unless if you move to a place like Thailand.
That 2.5m figure is more like it.

I was thinking in terms of a 1MM trading account but with other assets (401K, IRAs, etc) totaling about 2MM. This would be with a payed for house, cars, etc.

 

[tonyf]

I was thinking in terms of a 1MM trading account but with other assets (401K, IRAs, etc) totaling about 2MM. This would be with a payed for house, cars, etc.

I guess you are not far. A couple more important points to share:
1) most guys who do what I do well (early retirement, double digit return...) have a solid IB or buy side, accountancy or corporate law background.
2) there is the odd IT guy or statistician/academic but less common.
3) most guys did their money arranging deals, brainstorming with teams etc,... And trade on their own.
4) I (not sure about the rest) am missing the human side of things. In short, trading is a very lonely thing. COVID did not help. That is another thing individual traders do not discuss much. It is not all caviar and champagne..

 

[misterkel]

What does it really take to make it as an independent trader ?

Sufficient capital base - minimum $250k for a lower middle class lifestyle.

Balls of steel

Objective ability to analyze risk and reward in both dimensions: probability of win AND Return/Loss ratio. If you're trade is verifiably above 50% in the first and above 1/1 in the second, then (and as high as possible in both), then the trade is worth considering.