Trading after a job layoff

I was a stock broker for 12 years, 5 years as a sales trader. I thought I had all the knowledge necessary to trade for a living. I am learning differently. The key is that I am learning... every trade, every trading day.

My wife makes enough money to support us, though we do need to dip into savings to make ends meet monthly. So this venture is not entirely without risk.

I paper traded for a couple of months and traded very well before going live. Maybe too well and developed poor expectations.

The way I describe it to people is:

You can be the best marksman in the world, but it's a whole new ballgame when the targets are shooting back!

I wasn't implying that trading is gambling, but you cannot deny that there are principles that apply to both.

dfuang, there is a lot of good advice in this thread. Unfortunately a lot of it won't make sense until you experience it yourself.

I am going for it, maybe you should to. However, if you are not going to be a "pattern-day trader" then you should get a job earning a salary and trade on the side.
 
Quote from Durango Kid:

You can be the best marksman in the world, but it's a whole new ballgame when the targets are shooting back!
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Once upon a time, a man was joking and laughing with his friends in a bar. He would have a duel the following day. One of his friends asked: "Do you worry at all ? "

He replied: "Not at all. I can hit a small bottle 100 yards away with a pistol."

His friend snapped: " Yes, I know. But can you do that with a gun pointing at your heart ?"

Everyone can walk through a six-inch wide, twenty-foot long wooden beam on the floor. What if the beam is raised 1,000 feet above the ground with no safety net below ?

:p :p :p
:D :D :D
 
Quote from dfuang:

I am about to be laid off from an insurance job in April. With a combination of severance and a company 401k, I could come up with about 20k. I am considering pursuing my dream of a full time trading life starting with this 20k. I have six months of unemployment to cover expenses while I learn and try to grow my account. I am not new to the world of finance and markets having previously been a series 7 licensed broker years ago. I have lived the market for the past 5 years trying to learn as much as possible. I know it 's a huge risk but I won't forgive myself if I don't try. My question is, given the 20k and my desire to start slowly and methodically, and having expenses covered for six months, do you think it's realistic? Finding another insurance job in my city will be tough as I'm not in sales but on the carrier side. Any thoughts or advice would be greatly appreciated...
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My advice:

1. Cut down on expenses immediately, so as to save a few extra thousand between now and April. Hopefully you can have over 25K by April

2. Immediately begin devising a PROPER TRADING PLAN - visit www.dynamictraders.com - under - "free Stuff" - Education Archive for details on how to build a REAL trading plan. A proper trading plan should explicitly and unambiguously govern entries, exits, RISK MANAGEMENT, position sizing, time horizons, etc. Focus on risk management !!!!!!!

3. Once you have done No. 2 - paper trade for at least THREE MONTHS using the trading plan you have devised. You may also refine (indeed you should) the trading plan during this 3 month simulation period. Keep a daily journal during this trading period. This is a habit you should maintain when you begin real trading. Review this journal periodically. Also keep a daily chart of your P & L and a trade blotter.

4. While doing 2 - 3 continue to live a prudent life-saving as much as you can. Indeed until you are making more than you are currently, making in your insurance job, live a prudent life. This is one of the sacrifices you have to make to achieve your goal.

5. After successfully completing items 2 & 3 AND you have a reasonable level of confidence in your plan, then divide your saved trading capital into 3 parts and trade with one portion. For example, if you have saved 25K, begin trading with only $8k.

6. Trade with this 1/3rd portion for six months. If after the first six months, you are profitable, with minimal drawdowns then add your second 1/3rd portion to your trading account. If you are not profitable or have incurred severe losses, paper trade for a month or two before resuming trading.

7. After another six months (i.e. at the end of month 12), if you are still profitable, and strictly following your plan you many now add your final 1/3rd portion plus any other savings to your trading account.

8. While doing all of this find a part-time job -evenings or weekends - to reduce your emotional stress and as a source of income.. Frankly do not expect to make income for living from trading for the first year at least. If it happens, consider it a blessing, but do not expect it.

9. BE PATIENT & HUMBLE

10. EXPLAIN TO YOUR WIFE THE RISKS INVOLVED & BE SURE YOU HAVE HER APPROVAL AND FULL UNDERSTANDING. I purposely put this in all caps!

11. Do not day-trade. If you do, I guarantee you will blow up in 3 months max. Devise a position-trading trading plan. Hint: Soros, Paul Tudor Jones, Bruce Kovner and the rest of the legends are not DAY TRADERS!!

12. Finally, do not use margin - at all. Read voraciously and be a student of the markets. Listen to others, but only incorporate the ideas of others after you have extensively tested, verified and understood them. Remember the best traders as one of the market wizards said are "independent and contrary to the extreme" [I paraphrase].

I wish you the best.
 
Quote from CPTrader:



11. Do not day-trade. If you do, I guarantee you will blow up in 3 months max. Devise a position-trading trading plan. Hint: Soros, Paul Tudor Jones, Bruce Kovner and the rest of the legends are not DAY TRADERS!!

12. Finally, do not use margin - at all. [I paraphrase].
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You are correct in both these points, but if followed as they should be, someone with only a 25K account will not possibly be able to generate a living income from position trading. I consider myself to be a very successful position trader, and I would not expect to live off my trading with anything less than a 200K account. So the bottom line is, it is ridulous for anyone to promote the idea of being able to live off a 25K account, starting essentially from scratch.

A few months back some poor dufus started a thread asking for advice on how to live off a 4K account. Kid you not, there were many ET "members" who were actually encouraging the guy, in all seriousness. That is at best plain stupid, and at worst highly irresponsible to the person asking the question.

So when this poor guy has busted his life savings, run out his unemployment, trashed his shred of remaining self respect, and still doesn't have a job, all of you experts who encourage him can send him support checks.
 
Yeah, that's the bottom line. Profitable trading takes a long time to master and money used to learn with MUST be money one can afford to lose.

Quote from lindq:

So when this poor guy has busted his life savings, run out his unemployment, trashed his shred of remaining self respect, and still doesn't have a job, all of you experts who encourage him can send him support checks.
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Do you feel that you could consistently take 30$ to 60$ per day out of the markets and be satisfied with that for months on end?

I ask this question seriously.

Geo.
 
Quote from dfuang:

I am about to be laid off from an insurance job in April. With a combination of severance and a company 401k, I could come up with about 20k. I am considering pursuing my dream of a full time trading life starting with this 20k. I have six months of unemployment to cover expenses while I learn and try to grow my account. I am not new to the world of finance and markets having previously been a series 7 licensed broker years ago. I have lived the market for the past 5 years trying to learn as much as possible. I know it 's a huge risk but I won't forgive myself if I don't try. My question is, given the 20k and my desire to start slowly and methodically, and having expenses covered for six months, do you think it's realistic? Finding another insurance job in my city will be tough as I'm not in sales but on the carrier side. Any thoughts or advice would be greatly appreciated...
More...

no way you gonna make it man. the odds are stacked agin you boy. in a big way. i say this realistically. you got "tuition" to pay. and it aint cheap. you aint gonna make it. :-/
 
I am in a similar situation.

I have some experiece , I traded part time in the late 90s.

It is very difficult emotionnaly though. I have to protect my funds

that is my number one priority. That is what makes it hard for me.

So far after 6 weeks and 250 trades I am virtually net even.

I decided to stop trading SPY and go with the QQQs. They seem

to move smoother.

There is a lot of good information on ET but you have to be

selective. Paper trade if you like but it wont help you match

nothing replacs the real thing. Myself I trade small and I will not

increase my size untill I risk money I extract from the market.

Hamb
 
Quote from dfuang:

I am about to be laid off from an insurance job in April. With a combination of severance and a company 401k, I could come up with about 20k. I am considering pursuing my dream of a full time trading life starting with this 20k. I have six months of unemployment to cover expenses while I learn and try to grow my account. I am not new to the world of finance and markets having previously been a series 7 licensed broker years ago. I have lived the market for the past 5 years trying to learn as much as possible. I know it 's a huge risk but I won't forgive myself if I don't try. My question is, given the 20k and my desire to start slowly and methodically, and having expenses covered for six months, do you think it's realistic? Finding another insurance job in my city will be tough as I'm not in sales but on the carrier side. Any thoughts or advice would be greatly appreciated...
More...



WISHFUL THINKING!!!

BOTTOM LINE: Unless you are able to find someone who can guide you through ALL the rubbish out here in the world of trading for a living, then you must be willing to spend at least $100k on an education (realtime trading) in the markets (with real money). After that there is still NO GUARANTEE that you will succeed at it.

THE REASON: Successful trading is a closely guarded secret that few if any is really willing to teach you. Sure some things you will just learn on your own by trial and error but the vast majority of books and seminars on trading are truly hype and sensationalism to boost product sales. You have to read through sooooo much garbage that by the time you find someone worth reading or following, you have blown your capital.

SO WHAT: I realize that no matter what I say there will be some who won't listen to a word I've said. I'm only speaking from experience as an X-Broker/insider who got 1st hand knowledge of the industry and I know what works and what doesn't.

WHAT DO I KNOW: How many people do you know who has placed literally THOUSANDS of trades in just about EVERY FUTURES market, COMMODITIES, STOCKS, & FOREX???????
I HAVE!!!!! I have seen clients lose HUNDREDS OF THOUSANDS $$$$$$$$$ in the markets!!!!!! Trust me you will be one of them.
I too would not be trading today if I did not have the privilege of seeing it done right before my eyes. OVER & OVER & OVER again in various market conditions!!!!!

SO WHAT / WHO CARES!!!!: I do. I don't want to see would be hopefuls get all dissaullusioned about the whole idea of trading for a living. That's why I offer "FREE" mentoring here at ET.

There are 7 phases to becoming a successful trader.

Here is the formula for trading success:

STEP ONE: Realize that Your a loser! (95% percentile) of ALL traders period. ESPECIALLY here at ET.

STEP TWO: You will learn how to trade quickly but your risk capital will dwindle quicker!

STEP THREE: You read every article in every issue of Stocks & Commodities magazine, Futures magazine, Barons, Forbes, Wall Street Journal, and IBD (preferrably dating back to 1985), Read the works of Linda B. R., Warren Buffet, George Soros, Go to every Seminar across the country. Spend $10k on Trade Station and have someone to program the dog gone thing for you. Lose continually. Lose some more. Watch others lose. Give up and convince yourself that it just cant be done and that those that claim to do it successfully are liers!!!!
Become VERY VERY VERY discouraged!!!!!!!!!!!!

STEP FOUR: Become depressed, get up and try it again. Lose some more. Trade less than before. Study charts and technical indicators. Determine that Technical indicators are TOTALLY USELESS. Quit trading again.

STEP FIVE: developed your own system of trading based on your own risk tolerance and desired level of trading and your present commitment level. beside what time frame works best for you given your current lifestyle. Backtest the idea of your new system.

STEP SIX: Trade your new system. Lose much money. Become discouraged again. Now you scream out loud with a loud voice--"THIS SUCKS"!!!!! I'LL NEVER BE A TRADER!!!!

STEP SEVEN: Go back to the drawing board. Stop trading against the prevailing trend. Make some money. NOW YOUR A TRADER AND READY TO SERIOUSLY TRADE FOR A LIVING!!!!!!!1

GREAT JOB. YOU ARE NOW ON YOUR WAY TO VAST FORTUNE IN THE TRADING GAME AND YOU ARE NOW ON YOUR WAY TO GREAT WEALTH BEYOND YOUR WILDEST DREAMS!!!!!!


p.s. Unless you are prepared to go through the above harsh realities of trading these markets- "QUIT WHILE YOUR AHEAD"!!!
YOUR ALREADY A LOSER- SO don't EVEN THINK ABOUT IT EVERY AGAIN IN LIFE.

FIND A CAREER THAT BETTER SATISFIES YOUR LACK OF COMMITMENT!
 
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