In this episode, you’ll discover whether you should continue trading or quit it altogether.
So listen to it right now…
Hey, hey, what’s up my friend?
In today’s episode, I want to talk about when you should quit trading.
There are times where it’s better for you to quit trading. Because let’s face it, not everyone is meant to be a trader, not everyone is meant to be an entrepreneur, not everyone is meant to be the president.
I want to share with you a few things to consider to see if it’s right for you to quit trading or not.
1. If you’re struggling financially
This is something I feel strongly about. If you can’t meet your daily lifestyle, your day to day living, or you’re in debt, you should quit trading immediately.
Trading is not like a job that pays you a fixed income where there’s a fixed payout every month, it doesn’t work that way. There might be months when you don’t even make money at all. You might even lose more than what you put into your trading account.
If you can’t even survive your day to day lifestyle, or if you’re in debt, quit trading immediately. And don’t even think about borrowing money to trade, that’s the worst thing that you can do. That’s financial suicide.
When you’re borrowing money to trade, those are money that you can’t afford to lose. The emotional toll on you is even worse. You’ll make even more horrible trading decisions.
So don’t trade if you’re in debt, don’t trade if you have difficulty putting food on the table.
2. If there’s poor ROI
This is largely applicable to day traders and short-term traders who left their job to get involved in day trading.
Hypothetically in day trading, you make like $5 an hour, while in your previous job it’s paying something like $25 an hour. In terms of ROI, it doesn’t make sense to be a day trader.
Why not keep your previous job that pays you better and you can maybe trade off the higher timeframe. You can still trade the markets, but at least you get a better ROI in terms of your time and money.
This is something for you to think about, for those of you who value freedom much more then this might not be applicable to you. But for most of you out there, who value time and money, think of it in terms of ROI. Does it make sense to go down this path?
Or is there another path like having a full-time job and then trading part-time in the higher timeframe? That might be another avenue to consider.
3. If you have no more mental capital left
When you have no more mental capital, you will literally quit trading. We talked about this in the last episode where mental capital is the capacity to continue trading, to power through your losses, to overcome the drawdowns and the losing streak.
But when you lose all your mental capital, maybe you have busted a few trading accounts, maybe you’ve been trading for years but your results are getting nowhere and you’re getting tired, your mental capital is depleted, this is the time to quit trading.
It’s perfectly fine. As I mentioned, trading is not for everyone. Maybe your talent could be put to use elsewhere. Maybe you’re the next Michael Angelo, maybe you’re the next mathematician or maybe you’re the next person who can build fast cars, etc.
There’s no shame walking away from trading.
4. When the pain of losing money hurts you too much
You should also quit trading when the pain of losing money hurts you so much that you have difficulty sleeping. Let me give you an example. In my poly days, I used to do have someone, one of my classmates whom I owed 10 cents (to be exact).
I’m not sure how I owed him 10 cents. But that person is so agitated over the 10 cents, he would walk up to me, pull my t-shirt and constantly ask for his 10 cents.
Clearly, this type of person is not meant to be a trader. It’s not right of me to owe him money, but the point is that if you have difficulty letting go of money or if the pain of losing money hurts you, then clearly trading is not something for you.
Maybe you can put your money into bonds, put your money in a fixed deposit whatsoever. This is something about understanding yourself. If the pain of losing money costs you a lot of sleepless nights, clearly this isn’t something is for you as well.
And yes, you might quit trading now. But it doesn’t mean that you can’t come back to it at a later stage in life when you’re more ready, and maybe when you have more capital to trade with.
It could be when you’re more energized and recharged so your mental capital is back to its optimal level. Or maybe you strike rich and you can spare a few thousand dollars that’s a small change to you to trade the markets, then by all means, come back to this business.
You can always come back again. Don’t think that just because you quit now, you can’t come back at a later date. This business is always open to you. Unless someone in the world says that trading is illegal, you can’t do it anymore. Which is unlikely.
Be open to what’s out there. You can quit now and always come back again when you’re ready.
That’s it, I’ve come towards the end of today’s episode and I’ll talk to you soon.