In today’s episode, you’ll discover if you should quit your job to trade full-time (and it’s not what you think).
So tune in right now…
Hey, hey, what’s up my friend? In today’s episode, I want to discuss this – should you quit your job to trade full-time? I believe you’ve thought about this before.
So in this episode, I want to share with you a few important things to consider before you go down this path that many traders missed out.
1. You must have results to show for
If you want to trade full-time, then when you’re part-time trading now, you must have positive results to show for. If you’re a losing trader and you want to trade full-time, you won’t suddenly become a profitable trader, it doesn’t work that way.
This means that if you want to trade full-time, you should at least be a profitable trader, your trading account should be in the green, you’re seeing some consistency, and you want to do it full-time.
But if you’re not, then trading full-time will just make things worse. Let me give you an example.
Let’s say you go to a casino maybe once a week, once a month, and you’re losing money at the casino, and then you tell, “Maybe if I visit the casino regularly, I can be a consistently profitable gambler.” Does it make sense? No, of course not.
And it’s the same as trading. If you are trading part-time and not making money, trust me, when you do it full-time it’s going to get worse when your emotions come into play.
That’s where you lose your income, where all the negative thoughts come into play and make things worse (more about that later).
So that’s the first thing – before you want to trade full-time, you must have the results to show for.
2. You must have a reasonable trading account size
Let’s say you can make 20% a year on a $1,000 trading account, that’s about $200 a year. On a million-dollar trading account, that’s about $200,000 a year. You can see that it’s nothing to do with your strategy and more to do with the size of your account.
I don’t think you can survive with $200 a year. But $50,000 or $100,00 would be ideal.
Here’s the deal, if you want to trade full-time, you must have the account size for it. It’s going to be pretty difficult to trade full-time on a small account size, because you probably would be taking a lot of unnecessary risks that lead to your account being blown up.
So manage your expectations, don’t expect to trade full-time with a $500 or $1,000 trading account.
3. Be prepared to be incomeless for weeks or even months
Every trading strategy out there seeks to exploit certain patterns in the market. And when the market changes, that strategy will go into a drawdown and stop working until that market conditions change back to be favourable for the strategy again.
What this means is that if you have a trend trading strategy, and if the market is trending, you’ll probably make money for weeks or even months until the market stops trending, and it goes into a range or even reverses, then that’s when you start to lose money.
But you’ll never know ahead of time when market conditions will change. This is why you’ll experience losing streaks and drawdowns.
This means that if you’re going to trade full-time you’ll expect to go weeks, maybe even months, where you simply don’t make money from the markets because market conditions are unfavourable to you. So be prepared for that.
To overcome that it’s not too difficult. What you want to do is to set aside, for example, 12 months of living expenses.
Then when market conditions are not favourable to you, you don’t have to dig into your trading account to cover your daily expenses, because you’ve already set aside a pool of money to cover your expenses. And that’s important.
That gives you a ‘psychological buffer’ because even if you don’t make money this month, you can still put food on the table, you can still survive. And that’s important.
4. Your spouse should at least have a regular full-time job
This would be more for those of you who have a family to feed. If you’re single, then I think it’s not as hard on you, because you’re just liable for yourself. You don’t have to feed your kids and whatsoever.
If you have a family to feed, my suggestion is that your spouse should at least have a regular full-time job. This way, even if your income is not consistent, you have someone with a consistent income and together, both of you can still put food on the table to feed the kids and pay your bills, etc.
And another thing to add is that just because your income is not consistent doesn’t mean that you can’t contribute to the household. What you can do is instead of contributing to the household every single month, you can do it once every six months.
Because by the end of the six months, chances are, the law of large numbers will work in your favour and your strategy is likely to make money. By then, when you have some money, do contribute back to your household.
5. Know your trading timeframe
I know you want to trade full-time, but you must ask yourself if this is necessary. Because let’s say if you are looking to trade on the daily timeframe, you don’t have to do it full-time.
Because on the daily chart, the chart is only printed once every single day, once every 24 hours. What’s the point of trading full-time on a daily timeframe? You don’t need to do it full-time.
This would only make sense if you are a short-term trader trading off the 5-minute timeframe, the 15-minute timeframe because you require a lot of screen time to watch the markets.
But if you’re trading on the 8-hour timeframe, the daily timeframe, the weekly timeframe, and you tell me you want to trade full-time, then it doesn’t quite make sense. So think about your trading the timeframe.
6. Know what you want
Many traders claimed that they want to trade full-time. But when it comes to trading full-time, watching the market for 10 to 14 hours a day, they realize that they’re like a slave to the markets, sitting in their chair all day, and they realize that’s not what they want.
What they want is the freedom to do anything that you want and still have some extra income to sustain their lifestyle. That’s what you want – freedom.
Think deeply about what you want. Do you want to be a full-time trader watching the markets 10, 12, 14 hours a day? If yes, fair enough, go for it. What I just shared with you would apply.
But if you want something that brings in some money, at the same time allow you the freedom to do things that you want, you want to really reconsider your options, take a step back to see how you can achieve that goal because trading full-time isn’t the solution to the lifestyle you want.
Dig deeper, don’t blindly go after a goal that you don’t understand what it entails. All these can be planned ahead of time, so take a step back, look at the big picture and ask yourself like if that’s what you want.
Define your goal first and after which, you can find the approach to achieve that goal.
Here’s a quick recap…
- You must have results to show for
- You must have a reasonable account size
- Be prepared to be incomeless for months
- Ideally, have a partner or a spouse who works full-time to have a regular source of income that is contributing to the household
- Know the timeframe that you’re trading in
- Know what you want
With that said, I have come to the end of this episode. I’ll talk to you soon.