Quitting Trading Job at my Bank to Day Trade at Home

X

XChamp

Hi,

I am a trader at a large investment bank. I am well compensated, but the hours are horrible and will not improve for years (maybe never). I've been thinking about quitting for a while just over quality of life.

I have a trading strategy at work that is consistent and profitable, but is not scalable because the market liquidity is not there, so I can't use the firm's leverage to scale it up and make the bank $100mln, or even $10mln.

However, I believe I can trade this same strategy on my own. I think I can make as much as my total compensation is now, maybe double if things go well. I can't trade this strategy in my free time outside of work because 1 - I don't have any free time because 11-12 hour days + commute is life destroying and 2 - I'm not allowed to trade the same instruments in a personal account that I do at work.

I'm ready to walk away and try it. What are some issues I should investigate before pulling the plug at work?

I've already looked at:
1 - tax implications
2 - software costs, hardware costs, data fees, exchange fees and commissions.
3 - Confirmed with multiple brokers that they will take my business and provide the access to products that I need.


Anything else? The last thing I want is to sit down at my computer on day 1 and discover that this strategy won't work at home.

Thanks
 
XChamp said:
Hi,
----trader at a large investment bank.
----well compensated....
----hours are horrible....
----been thinking about quitting....
----trading strategy at work that is consistent and profitable....
----trade this same strategy on my own.
----can't trade this strategy in my free time outside of work....
----ready to walk away and try it.
----issues I should investigate....
----last thing I want....
More...
1) "Work" can have additional advantages that you have not fully accounted for. :cool:
2) Could you trade your method in another family member's or friend's account? :confused:
3) Can you ask for more money/credit to trade at work in order to boost your income? :D
4) Are you an extrovert? If yes, to trade by yourself might be unfulfilling. :eek:
 
The biggest question is obviously how well prepared for this move are you financially?

It's no different than trying to start a McDonald's franchise or start a flipping houses full time.

Obviously you need capital to trade..... Living expenses...... Capital for hard expenses (computer, s/w, data, etc)....

Other considerations:

-Health care?
-Do you have mouths to feed?
-What is your back up plan if things do not work out well?
-Do you have a spouse? Would she support your decision or leave if things got rough?
-What if your edge worked well for 5 years, and then dried up? Could you get a job with a 5 year gap in your resume?
 
nazzdack said:
1) "Work" can have additional advantages that you have not fully accounted for. :cool:
2) Could you trade your method in another family member's or friend's account? :confused:
3) Can you ask for more money/credit to trade at work in order to boost your income? :D
4) Are you an extrovert? If yes, to trade by yourself might be unfulfilling. :eek:
More...

2 - I have deferred compensation that the bank will claw back if I try any funny business like having an economic interest in a relative's account that I don't report, so I don't want to mess around with that.

3 - I ask for money at the end of each year, like clock work. The way it's set up if you don't fight for your pay you don't get paid, so I'm already fighting.

4 - I am very much an introvert. I absolutely do not like talking to clients.
 
Are you familiar with the pyschology of trading ? Especially when your weekly / monthly income is on the line. Ever had 3 losers in a row, and then be expected to place your next trade as if the previous 3 never happened ? Its hard, and most fail at it.

Even the most profitable system will lose over time without stern discipline.


Are you 100% certain your system is profitable? Is automation possible ? What market are you looking into if you dont mind me asking.
 
I was in a somewhat similar position as you about 9 years ago. Took my strat out to trade at a prop firm for a few years and then went from that to trading from home. It was based around trading illiquid securities. The sad thing is it lasted only for 4-5 years. It has stopped working since the financial crisis. That's something you have to be prepared for. If it made money for 4 years, and suddenly it stops working and you don't have anything in the pipeline, what are you going to do? Do you have a fall back? The moment you are out of a job, the harder it is to get employed again no matter what your qualifications or prior experience was.

In my opinion, nothing lasts forever. Are you confident of your ability to keep up and always stay one step ahead of the game? That's why I am very skeptical of the self styled "price action" gurus here, proclaiming their success to all and sundry. Some of them even claim their "edge" will never die because of their guru-like ability to read a 5 minute chart. That's what we told ourselves too, it would never go away and how we would justify it by saying it was based on demand/supply,etc,etc. In the 80's, it was "trend following". Before that, "tape reading". Today it is called "price action." These newbies have no idea what is in store for them.

I have seen extremely consistent prop traders who have traded successfully for a decade with down days you can count on both hands being forced to leave the business in recent years because of the market environment. You can be sure the next major market dislocation/paradigm shift will carry out many of today's "successful" traders/strategies. The very last words of the Buddha, whom most people regardless of religious affiliation, would agree was a very wise man said," All compounded phenomena are impermanent. They are not lasting." We should all think about that sentence for a minute.

It really boils down to whether you want to take that risk and your ability to constantly and consistently innovate.
 
XChamp said:
I can't trade this strategy in my free time outside of work because 1 - I don't have any free time because 11-12 hour days + commute is life destroying and 2 - I'm not allowed to trade the same instruments in a personal account that I do at work
More...

Should be a way to get around this obstacle. At least for a startup period until you get moving.

Have a girlfriend, friend, wife, sibling execute the orders for you in a account set up in their name? You just send the coded order by sms or use some messaging system.
 
You must log in or register to reply here.
Back
Top