Trading for a living....full time....only income

[MoreLeverage]

What about the gnawing feeling that maybe the edge is gone

if you’re not sure if you have an edge, maybe you don’t. For example, yesterday I knew I had an edge on some trade, and today I knew it was gone. It all depends on what you are doing. Sometimes when things change in the market or with your costs, operations, etc, you can tell (especially when it’s for the worse).

 

[d08]

I would like to ask the full-time elite traders here a question.

How do you cope with a drawdown? For those who do part-time, they still have jobs who pay a stable income. For full-timers, that is going to be difficult psychologically.

What about the gnawing feeling that maybe the edge is gone, after experiencing a drawdown?

Easy. You just have to get over it. It will devastate you mentally but you have to get to work adapting to the new normal. This is for very long drawdowns where things actually change/stop working.

Regular drawdowns are expected, nothing to get emotional over. If you expect to be winning all the time, it's best to have a stable job instead.

 

[schweiz]

it's best to have a stable job instead

The number of stable jobs is shrinking already many years. If you lose your job it is like losing the edge as a trader, no difference (trader is also a "job"). Only difference is that a good trader makes much more money then an employee. So he can put away much easier some money for drawdown periods.

 

[d08]

The number of stable jobs is shrinking already many years. If you lose your job it is like losing the edge as a trader, no difference (trader is also a "job"). Only difference is that a good trader makes much more money then an employee. So he can put away much easier some money for drawdown periods.

Not quite. A trader can lose all the money earned in the last say 5 years in a few days. Very few jobs take back pay unless you commit extremely serious offenses.

A good employee can also make a lot of money, it's much easier for employees that have reached a certain level. They earn more from experience, for a trader it's mostly irrelevant - a trader with 5 years experience can easily outperform one with 25 years of experience.
The only thing helping traders is compound interest, that's only when you don't spend most of what you earn.

 

[schweiz]

Not quite. A trader can lose all the money earned in the last say 5 years in a few days. Very few jobs take back pay unless you commit extremely serious offenses.

A good employee can also make a lot of money, it's much easier for employees that have reached a certain level. They earn more from experience, for a trader it's mostly irrelevant - a trader with 5 years experience can easily outperform one with 25 years of experience.
The only thing helping traders is compound interest, that's only when you don't spend most of what you earn.

I think it is different for each individual.

I daytrade and I put away the biggest part of my profits every week/month depending on how much I make. Only the first year I compounded to increase the size of my trading. My average trading profits are double digit times bigger then the best year ever that I worked for a salary.
As I put away the biggest part of my profits, I can never go broke anymore because I had a long profitable period. Even wiping out my trading account 5 times in a row cannot harm me anymore, and even then I will still have more money then I ever could make with my salary.

If you are a topmanager at, for example, Google and lousy in trading, the situation is completely the opposite.

The question is: are you good enough as a trader to make consistently money? Or is your education offering you better possibilities working as an employee?
There is no 1 fits all answer.

You should choose the best option for you.
For me trading was (but not from start) the best option.
For Larry Page, Serge Brin, Bill Gates, Bezos... using their education was the best option. They beated probably even the best traders in the world.
But on the other hand there are also many traders that beated very high educated people who work for a salary.

There are winners and losers for both options: employees and traders. It is just a matter of making the right choice.

 

[helpme_please]

hi schweiz,

Congratulations on being a full-time trader. Extra commendation for being a day trader which I think is the hardest time-frame to trade.

Salaried employees will always beat traders on earning a good living hands down on a risk-adjusted basis. The keyword is risk-adjusted. All employees, as long as they can keep their jobs, will be guaranteed a stable income at the end of the month even if they are terrible at their jobs, make lots of mistakes and are poor performers. Can't say the same for traders. Drawdowns don't exist for employees. A terrible year for an employee would be pay cut or lower/zero bonuses. THe worst case is losing job. But losing job is still better than drawdown because job loss means zero cashflow, not negative cashflow.

I think it is different for each individual.

I daytrade and I put away the biggest part of my profits every week/month depending on how much I make. Only the first year I compounded to increase the size of my trading. My average trading profits are double digit times bigger then the best year ever that I worked for a salary.
As I put away the biggest part of my profits, I can never go broke anymore because I had a long profitable period. Even wiping out my trading account 5 times in a row cannot harm me anymore, and even then I will still have more money then I ever could make with my salary.

If you are a topmanager at, for example, Google and lousy in trading, the situation is completely the opposite.

The question is: are you good enough as a trader to make consistently money? Or is your education offering you better possibilities working as an employee?
There is no 1 fits all answer.

You should choose the best option for you.
For me trading was (but not from start) the best option.
For Larry Page, Serge Brin, Bill Gates, Bezos... using their education was the best option. They beated probably even the best traders in the world.
But on the other hand there are also many traders that beated very high educated people who work for a salary.

There are winners and losers for both options: employees and traders. It is just a matter of making the right choice.

 

[jl1575]

I think it is different for each individual.

I daytrade and I put away the biggest part of my profits every week/month depending on how much I make. Only the first year I compounded to increase the size of my trading. My average trading profits are double digit times bigger then the best year ever that I worked for a salary.
As I put away the biggest part of my profits, I can never go broke anymore because I had a long profitable period. Even wiping out my trading account 5 times in a row cannot harm me anymore, and even then I will still have more money then I ever could make with my salary.

If you are a topmanager at, for example, Google and lousy in trading, the situation is completely the opposite.

The question is: are you good enough as a trader to make consistently money? Or is your education offering you better possibilities working as an employee?
There is no 1 fits all answer.

You should choose the best option for you.
For me trading was (but not from start) the best option.
For Larry Page, Serge Brin, Bill Gates, Bezos... using their education was the best option. They beated probably even the best traders in the world.
But on the other hand there are also many traders that beated very high educated people who work for a salary.

There are winners and losers for both options: employees and traders. It is just a matter of making the right choice.

Larry Page, Serge Brin, Bill Gates, Bezos, mark zuckerberg, Elon Musk, these are not employees but employers, and basically they have the freedom and intellectual power to do almost anything they desire or choose to do with their life and time.

None of the traders ever reach their levels of wealth on earth, at least not yet. Again, trading profitably gives you the financial security and allow people to live comfortably without worrying getting a paycheck and the hassle of dealing with toxic bosses, and yet, there are lots of people have the means to live comfortably from different sources with much higher wealth.

However, some traders make tons of money and they use their wealth to pursue something even more meaningful in their life or to other people's life using their intelligence and creativity, because money itself does not offer the ultimate satisfactions in life.

 

[ironchef]

I would like to ask the full-time elite traders here a question.

How do you cope with a drawdown? For those who do part-time, they still have jobs who pay a stable income. For full-timers, that is going to be difficult psychologically.

What about the gnawing feeling that maybe the edge is gone, after experiencing a drawdown?

Here is one answer from a non professional retail who started in 2010. The answer is therefore tainted by the bull run starting in 2009.

1. You cannot be a full time trader if you need ALL of your trading profit to put food on the table. It will not be sustainable because there will be unavoidable drawdown that puts you in a tailspin you cannot get out of. So, instead of a day job you draw on your "retained earning" when you need it, no different than folks on commissions like realtors...

2. Perhaps no more than 20-30% of investable capitals should be in trading. Depending on your own personal situation, your trading expectancy, you can calculate your own starting capital. Undercapitalization is a kiss of death for non elite retails.

3. You learned to live with drawdowns. But that is the easy part. The hard part is to keep going in spite of horrendous drawdowns.

4. I don't have an "edge", just riding this bull market.

Good luck and welcome to the club.

 

[ironchef]

None of the traders ever reach their levels of wealth on earth, at least not yet.

???

Soros, Druckenmiller, Paulson, Dalio.....just to name a few?

 

[d08]

Here is one answer from a non professional retail who started in 2010. The answer is therefore tainted by the bull run starting in 2009.

1. You cannot be a full time trader if you need ALL of your trading profit to put food on the table. It will not be sustainable because there will be unavoidable drawdown that puts you in a tailspin you cannot get out of. So, instead of a day job you draw on your "retained earning" when you need it, no different than folks on commissions like realtors...

2. Perhaps no more than 20-30% of investable capitals should be in trading. Depending on your own personal situation, your trading expectancy, you can calculate your own starting capital. Undercapitalization is a kiss of death for non elite retails.

3. You learned to live with drawdowns. But that is the easy part. The hard part is to keep going in spite of horrendous drawdowns.

4. I don't have an "edge", just riding this bull market.

Good luck and welcome to the club.

I was on board until the last point. So he's not even a trader, just hoping for the bull to continue. Obviously he only started in 2010, if he started two years earlier, he would not be speaking about trading at all.

Point number 3 is extremely important and underestimated by most. It's devastating to get up to trade after a very very long period in a drawdown, you'll feel dead inside.