Because the chase of wealth becomes an illness. People chase money because they think it brings freedom but all you become in the end is a dopamine junkie looking for a larger fix. Once you reach a point the extra money does not bring anymore happiness and actually leads to more headaches and problems. You can always make more money but you can't buy more time. On average we are given 25,000 days on this earth. At the end of it all wealth will mean nothing even though most trade their relationships and health to obtain it. Take jobs for example, we never know when it's iur time but you can bet near the end he regretted now working less. Now I'm not advocating you be a bum, but I think you need to set a number early on and when you reach it, channel your energy into other areas that will bring true happiness when you are old and looking back. One of the most etched conversations in my mind was from a man who had lung cancer. The last words he ever spoke to me were "Don't spend your whole life working". At the time it didn't really sink but years later I am thankful for his advice.
When is the right time to quit your job and trade full time?
- Thread starter jinxu
- Start date
Because the chase of wealth becomes an illness. People chase money because they think it brings freedom but all you become in the end is a dopamine junkie looking for a larger fix. Once you reach a point the extra money does not bring anymore happiness and actually leads to more headaches and problems. You can always make more money but you can't buy more time. On average we are given 25,000 days on this earth. At the end of it all wealth will mean nothing even though most trade their relationships and health to obtain it. Take jobs for example, we never know when it's iur time but you can bet near the end he regretted now working less. Now I'm not advocating you be a bum, but I think you need to set a number early on and when you reach it, channel your energy into other areas that will bring true happiness when you are old and looking back. One of the most etched conversations in my mind was from a man who had lung cancer. The last words he ever spoke to me were "Don't spend your whole life working". At the time it didn't really sink but years later I am thankful for his advice.
This latest bull market has created a literal army of new traders who actually think they have "trading" skill. The best part about threads like this one is watching all the rookie traders with a couple years under their belt and some modest success in a raging bull market try to talk as if what they are doing now is sustainable for the next 30+ years. At least 90% of traders out there are over 90% correlated to the S&P 500. That includes Elite Trader, Financial advisors, and hedge funds the world over. Over 90% correlated to the S&P 500. And they actually think they have skill 
As I've spelled out with simple math, if you can make 10% a year forever which not many people have proven they can do in the first place, you'll still need a million dollar fund. If you are one of the very VERY rare ones that can make 20% a year in any market environment, you'll still need half a million dollars in your trading account.
And don't forget, the number of people in the world who have a verifiable track record of 20% a year for over a decade is TINY.
I have several times that principle, have earned 20% annualized for over a decade with an S&P correlation of 10%, and I still run a fund and collect management fees to supplement income and avoid withdrawing money from the trading account. It doesn't matter how great of a trader you are, the math gets ugly really fast when you start pulling money out of your trading account.
Ever heard of the power of compound interest? Ok well flip it around. How about the power of NEGATIVE compounding? Think about it...
Unless you're already a millionaire, quitting your job and trading full time is a very efficient way to go broke. If you have a million or more, by all means give it a shot. Trade safe, don't chase high returns, and you'll probably enjoy life more than your current work life...
As I've spelled out with simple math, if you can make 10% a year forever which not many people have proven they can do in the first place, you'll still need a million dollar fund. If you are one of the very VERY rare ones that can make 20% a year in any market environment, you'll still need half a million dollars in your trading account.
And don't forget, the number of people in the world who have a verifiable track record of 20% a year for over a decade is TINY.
I have several times that principle, have earned 20% annualized for over a decade with an S&P correlation of 10%, and I still run a fund and collect management fees to supplement income and avoid withdrawing money from the trading account. It doesn't matter how great of a trader you are, the math gets ugly really fast when you start pulling money out of your trading account.
Ever heard of the power of compound interest? Ok well flip it around. How about the power of NEGATIVE compounding? Think about it...
Unless you're already a millionaire, quitting your job and trading full time is a very efficient way to go broke. If you have a million or more, by all means give it a shot. Trade safe, don't chase high returns, and you'll probably enjoy life more than your current work life...
Last edited:
You seem to be fixated with the notion of making 10% pa forever. Firstly, trading returns per year are not fixed, a successful trader is likely to make very big percentage returns on small amounts of capital (e.g. less than 10 million $) than on larger amounts. A million dollars is peanuts in the financial world. It's possible to make several times that amount in a year whereas once you have tens or hundreds of millions, it is somewhat harder. Your average return over a lifetime of trading might be 10% pa, sure, but the variance of that average 10% can be huge.
Second, taking money out of an account is fine. In fact, i would encourage it. If you make 200% on your million, that's $2 million profit. After taxes etc, why shouldn't you take say 500k to live on, in fact, that could sustain you for a long time whilst you build more wealth in your rtrading account.
Second, taking money out of an account is fine. In fact, i would encourage it. If you make 200% on your million, that's $2 million profit. After taxes etc, why shouldn't you take say 500k to live on, in fact, that could sustain you for a long time whilst you build more wealth in your rtrading account.
"IMO a solid trader can get by with 100-200k in an account. I'm talking futures with leverage of 6-20x. Equities need more."
It's just mind blowing how you think that's true. You realize just based on simple grade 8 math you'd have to make 30 - 50% a year, FOREVER ! And that would only allow you to live in the ghetto eating peanut butter sandwiches, again, FOREVER.
You do understand what leverage means right? It means wins are more, and LOSSES are also MORE. It goes both ways my friend.
If you can't make it work without leverage, it won't f'ing work with leverage. Leverage doesn't suddenly make an unsustainable system sustainable. It just helps in good times, and it hurts 6-20x more in bad times. How the F did you think this financial crisis happened in the first place?
How the F do you think millionaires, and billionaires go bankrupt? L E V E R A G E
Why the F is Wallstreet full of people who make big returns for 5 years and then give it all back every recession cycle? L E V E R A G E
Now look at ya. Smack in the middle of a bull market and talking about trading for a living on a PUNY sum of money like it's somehow going to work in the long-run.
Jesus Elite Trader is funny. I promise you can't produce a track record. I absolutely guarantee it. I'm begging you to prove me wrong.
Living off profits from a trading account of 100-200k. LOL ! I spend that in a year. I like my nice house, cars, vacations etc. You want to live on 30k? You are the KING of low expectations aren't you?
a) It'll never work. You won't make 30-50% a year forever.
b) Even if you did, you'd have a total ghetto lifestyle
This is a complete joke of a conversation unless you have a million dollars. And people who do have a million dollars or more, aren't this dumb. They know they need to be a little more forward looking than just a few year bull market.
It's just mind blowing how you think that's true. You realize just based on simple grade 8 math you'd have to make 30 - 50% a year, FOREVER ! And that would only allow you to live in the ghetto eating peanut butter sandwiches, again, FOREVER.
You do understand what leverage means right? It means wins are more, and LOSSES are also MORE. It goes both ways my friend.
If you can't make it work without leverage, it won't f'ing work with leverage. Leverage doesn't suddenly make an unsustainable system sustainable. It just helps in good times, and it hurts 6-20x more in bad times. How the F did you think this financial crisis happened in the first place?
How the F do you think millionaires, and billionaires go bankrupt? L E V E R A G E
Why the F is Wallstreet full of people who make big returns for 5 years and then give it all back every recession cycle? L E V E R A G E
Now look at ya. Smack in the middle of a bull market and talking about trading for a living on a PUNY sum of money like it's somehow going to work in the long-run.
Jesus Elite Trader is funny. I promise you can't produce a track record. I absolutely guarantee it. I'm begging you to prove me wrong.
Living off profits from a trading account of 100-200k. LOL ! I spend that in a year. I like my nice house, cars, vacations etc. You want to live on 30k? You are the KING of low expectations aren't you?
a) It'll never work. You won't make 30-50% a year forever.
b) Even if you did, you'd have a total ghetto lifestyle
This is a complete joke of a conversation unless you have a million dollars. And people who do have a million dollars or more, aren't this dumb. They know they need to be a little more forward looking than just a few year bull market.
Last edited:
Yes let's do some math because apparently you're missing the point.
If you have a 1,000,000$ account you're trading size accordingly otherwise you're not going to be making a sustainable living. Your problem here is you're confusing over-leverage with leverage. You're equating them as if any use of significant leverage means immediately that one is somehow intrinsically more screwed than the guy who's unleveraged but trading with the same notional amount. This really isn't true. So whether you're trading with 500,000$ notional or the leveraged guy is trading with 500,000$ you're BOTH still trading with the same damn notional. What matters is how much margin is backing it vs an extreme move. That has nothing to do with annual returns whatsoever. It also has nothing to do with "wins are more, and LOSSES are also MORE." It's a given and it goes both ways, trading with size goes both ways - a bear shits in the woods, duh, nothing new there.
Let's take someone trading 5 lots in ES, ~5k of margin/contract, 25k total in margin, 25% of total account, 5x effective leverage, 525k notional. If a >=20% move *out of the blue* happens, you're toast on that 100k. Guess what genius, if you're trading with a million dollar account with no leverage and you've got the same 525k notional of exposure and that 20% move happens - you're *still fucked* out of 100k. The only difference is you have your 900k trading account left. In both cases the trader lost 100k. Either way both traders got screwed out of 100k on an extreme situation, leverage or no leverage.
So let's talk about the more realistic case of ES not making a blind 20% move that you can't get out of:
You trade with 525k notional, the 5 lot ES trader trades with 525k notional but effectively leveraged 5x. Both with the same expectancy. Who do you think comes out ahead? Neither, it's the same damn notional amount. I don't know if you just cannot simply grok this or what, but 25k of margin (with 75k in reserve) being used to control 525k notional or 525k of margin being used to control 525k notional is still 525k notional. The unleveraged guy obviously has more protection against the absolute most extreme of moves (so extreme it's beyond flash crash extreme), that's a given, everyone using leverage already knows this. If the market is so volatile that one can be exposed to such utterly ridiculous moves they might as well not put *any* money in it leveraged or unleveraged. At a certain point you've got to have a pragmatic outlook on just how extreme things can get otherwise you might as well not trade period. Buy OTM options if you're that worried about it.
Once again, another self-evident duh statement. Who in their right mind thinks leverage changes EXPECTANCY? No one. If you can't make it work you can't make it work period. That hasn't a damn thing to do with how much leverage is used. It's blatantly obvious that positive expectancy here is a given for this discussion. You've also conveniently ignored the alternative premise of "if you can make it work" because it goes against the strawman narrative you're spouting here.
Right, of course. Because everyone on wallstreet who uses leverage gives it all back and they always go bankrupt. This is just such a sweeping generalization based on cherry picking it's not even addressable. Nothing to do with prudent use of leverage and everything to do with the risk management of it and what type of trading is done with it. There's plenty of people here who keep enough in their trading account to trade the number of lots they need to generate an income. This obviously goes against your worldview, so try not let it make your head explode.
The fact that you keep talking about bull markets makes me think you don't trade any futures whatsoever and think with a 100% equity based mindset. If that's your thing, that's your thing - but it doesn't apply to everyone. Most traders here would rather not have a mindlessly bullish market because the more moves the better. Nobody cares if it's a bull market or a bear market, they just want moves.
Nobody gives a shit.
"The fact that you keep talking about bull markets makes me think you don't trade any futures whatsoever and think with a 100% equity based mindset."
I've already stated I manage a 100% options based fund, with a correlation to the S&P 500 of less than 10%. My trading has literally NOTHING to do with equities, or the current economic cycle.
My point is, the vast majority of other people are massively correlated to the S&P 500. It's just a basic statistical guess that almost everybody posting in this thread is VERY highly correlated to the S&P. I would bet a lot of money the OP, you, and all the other clowns who think they will make 50% or more forever are HIGHLY correlated to the S&P 500. And in two years you'll come back here and read your comments on this forum and be embarrassed as hell. You'll ask yourself how you were ever so delusional to think that your returns from 2012 - 2014 have anything to do with your long term average...
Does the phrase dime a dozen mean anything to you? My guess, probably not. But soon it will...
Let's address the elephant in the room shall we?
If you're not smart enough to go get a better job, a better paying job, that is satisfactory to your desired lifestyle, then you're sure as shit not smart enough to turn a measly 200k into a career.
The OP has stated he hates his job. Ok great, lots of people do. How about get a better f'ing job? If you're not smart enough to do that, or not smart enough to start your own business that will allow you a better life, then wake the F up. You have NO FUTURE in trading either.
I've already stated I manage a 100% options based fund, with a correlation to the S&P 500 of less than 10%. My trading has literally NOTHING to do with equities, or the current economic cycle.
My point is, the vast majority of other people are massively correlated to the S&P 500. It's just a basic statistical guess that almost everybody posting in this thread is VERY highly correlated to the S&P. I would bet a lot of money the OP, you, and all the other clowns who think they will make 50% or more forever are HIGHLY correlated to the S&P 500. And in two years you'll come back here and read your comments on this forum and be embarrassed as hell. You'll ask yourself how you were ever so delusional to think that your returns from 2012 - 2014 have anything to do with your long term average...
Does the phrase dime a dozen mean anything to you? My guess, probably not. But soon it will...
Let's address the elephant in the room shall we?
If you're not smart enough to go get a better job, a better paying job, that is satisfactory to your desired lifestyle, then you're sure as shit not smart enough to turn a measly 200k into a career.
The OP has stated he hates his job. Ok great, lots of people do. How about get a better f'ing job? If you're not smart enough to do that, or not smart enough to start your own business that will allow you a better life, then wake the F up. You have NO FUTURE in trading either.
I trade NQ, CL, TF, GC, DX, 6E, some energy and equities based spreads, and whatever else moves consistently. Care to explain how I'm "correlated" to the S&P500 other than the obvious? Do you seriously think the futures traders here are putting on positions and managing their "portfolios" throughout the year? Whether it goes down 10% or up 10%, it simply does not matter. Correlation to SP500 doesn't mean jack.
Why not just simply state what you trade? Many of us here have no problem stating their trades or even showing their trades. Seeing as your 1st post in October of 2014 (less than a year ago: http://www.elitetrader.com/et/index...ng-tax-implications-several-questions.287197/) has you asking about how to do *basic* taxes on option trades related to S&P500, VIX, etc. with the your own-word statement of "Income off these trades is relatively small compared to their full time employment salary" you've managed to go from "do I have to worry about wash sales?" to "I am a fucking baller with a million dollar account" in less than a year. Quick learner there, you're starting to sound a bit bullshit to me, honestly.
Apparently everyone posting in this thread *also* includes you.
Hey, I don't have any problems with my actual job income. I could do zero trading and be absolutely fine. Aside from the fact that I *agree* with your general stance on the OP who hates his job the problem is you apply your hugely assumptive attitude to everyone here who's not doing things exactly like you are. You also keep applying this blockheaded idea that everyone trading here are a bunch of 5-year+ bull market suckers somehow depending on infinite growth while continuing to ignore the fact that large amounts of people here don't even trade those markets in that fashion or timeframe.
Last edited:
"has you asking about how to do *basic* taxes on option trades related to S&P500"
I've never managed money for an American, hence the question on this forum. All my clients are Canadian, Asian, or European and wash sales have never and won't ever come up. I still have just the one American client, and I've directed him to a tax lawyer because I don't have the time or experience in taxes to advise further than that. My question was fishing for an answer to something I know nothing about, which is American tax laws and how they deal with options specifically. I still don't, and have no problem admitting that.
"I am a fucking baller with a million dollar account" in less than a year."
I've never stated I'm a baller. I simply stated that my comments in this thread are not from personal experience. I've never tried to turn 200k into a trading career. At no time in my life was I dumb enough to think that's a good plan. I personally have much more than 1 million, make much more than 10% a year, and spend much more than 100,000 a year. All true, all fairly irrelevant, but they were stated in generalized terms to make a point.
"Apparently everyone posting in this thread *also* includes you."
It would, until I clarified that it didn't. My trading is completely uncorrelated to the S&P 500, and my personal situation would make it very easy to manage my own money with no other sources of income. I simply don't want or need to. Anybody who makes great trading returns for many years as I do, have ZERO problem with finding clients and collecting fees.
There's no reason on earth for a successful trader to not simply run a public fund where their personal money is in the fund along with several others. I have virtually zero interaction with my clients at this point in my life. I do very little marketing, and I don't actively seek any new clients. I simply trade my own money, and collect fees on anybody who's along for the ride.
Succeeding as a trader requires most of the same skills as succeeding in life. Intelligence, education, hard work, dedication, patience, networking skills, confidence, planning skills, etc... And on top of all that, it also requires math and analytical skills.
If a successful lawyer wanted to quit and start trading, that might make sense assuming they had the initial capital to make the math of withdrawing money from a fund work. If an engineer with a great position at a company wanted to, ok. If an entrepreneur who's run a successful business wanted a new challenge, go for it. Or, anybody else who's successful in life and has a good chunk of money to invest, be my guest I wish you luck.
But if it's just some dude who's unhappy with his job and has 100-200k in the bank, get the F outta here. They don't have the skills to succeed at life, so they sure as shit don't have the skills to succeed as a trader. It's not 100% true for everyone, but statistically speaking it mine as well be. What percent of paycheck workers will make it on a small account size? 0.01% maybe?
At no time did I literally mean YOU. Sometimes in English, we say you. I was talking about the OP, and anybody who is encouraging him. He's shit outta luck, and anybody who gives him even an iota of encouragement is just contributing to him going bankrupt. 99% of the world doesn't have the capital, the trading skills, or the life skills to make it work. If him, or you, or anybody else here wants to come back in a decade and prove me wrong, feel free but I'm not holding my breath on that. Don't quit your day job
I've never managed money for an American, hence the question on this forum. All my clients are Canadian, Asian, or European and wash sales have never and won't ever come up. I still have just the one American client, and I've directed him to a tax lawyer because I don't have the time or experience in taxes to advise further than that. My question was fishing for an answer to something I know nothing about, which is American tax laws and how they deal with options specifically. I still don't, and have no problem admitting that.
"I am a fucking baller with a million dollar account" in less than a year."
I've never stated I'm a baller. I simply stated that my comments in this thread are not from personal experience. I've never tried to turn 200k into a trading career. At no time in my life was I dumb enough to think that's a good plan. I personally have much more than 1 million, make much more than 10% a year, and spend much more than 100,000 a year. All true, all fairly irrelevant, but they were stated in generalized terms to make a point.
"Apparently everyone posting in this thread *also* includes you."
It would, until I clarified that it didn't. My trading is completely uncorrelated to the S&P 500, and my personal situation would make it very easy to manage my own money with no other sources of income. I simply don't want or need to. Anybody who makes great trading returns for many years as I do, have ZERO problem with finding clients and collecting fees.
There's no reason on earth for a successful trader to not simply run a public fund where their personal money is in the fund along with several others. I have virtually zero interaction with my clients at this point in my life. I do very little marketing, and I don't actively seek any new clients. I simply trade my own money, and collect fees on anybody who's along for the ride.
Succeeding as a trader requires most of the same skills as succeeding in life. Intelligence, education, hard work, dedication, patience, networking skills, confidence, planning skills, etc... And on top of all that, it also requires math and analytical skills.
If a successful lawyer wanted to quit and start trading, that might make sense assuming they had the initial capital to make the math of withdrawing money from a fund work. If an engineer with a great position at a company wanted to, ok. If an entrepreneur who's run a successful business wanted a new challenge, go for it. Or, anybody else who's successful in life and has a good chunk of money to invest, be my guest I wish you luck.
But if it's just some dude who's unhappy with his job and has 100-200k in the bank, get the F outta here. They don't have the skills to succeed at life, so they sure as shit don't have the skills to succeed as a trader. It's not 100% true for everyone, but statistically speaking it mine as well be. What percent of paycheck workers will make it on a small account size? 0.01% maybe?
At no time did I literally mean YOU. Sometimes in English, we say you. I was talking about the OP, and anybody who is encouraging him. He's shit outta luck, and anybody who gives him even an iota of encouragement is just contributing to him going bankrupt. 99% of the world doesn't have the capital, the trading skills, or the life skills to make it work. If him, or you, or anybody else here wants to come back in a decade and prove me wrong, feel free but I'm not holding my breath on that. Don't quit your day job
Last edited: