Top Ten Things You Need to Trade Full Time

Top Ten Things You Need to Trade Full Time

There is a big difference between trading for capital gains and trading full time and needing it to pay monthly bills. The first thing to consider is if the math works out. If your living expenses are $4,000 a month and your trading account is $50,000 you will burn through your capital in one year with flat returns. You would need to return 10% a month to cover your monthly bills and have a margin of safety. Those returns would put you as one of the top traders in the world and is highly unlikely when you consider the world’s best traders and investors return about 20%-30% a year on average. Most traders do not trade to pay their monthly light bill, the majority of legendary traders were money managers or had jobs working for banks, trading firms, or in the financial industry. Most retired rich but it was a journey to full time status as a trader not an early jump before establishing their own process. 

So let’s consider what you need to seriously consider trading as your full time job.

  1. You will need enough trading capital to increase your probablty of success. This depends on your returns and living expenses but for most people this will be multiple six figures. Trading has to be properly capitalized to produce a full time income like any business. 
  2. The more you minimize your living expenses the less you will need to make to do it full time. If your house is paid off and your have no debt or car payments it makes the process a lot easier. 
  3. You need months of living expenses saved in addition to your trading account to create a buffer between your bills being due and your trading returns. 
  4. Do not under estimate the pressure and stress that you will be under to make returns as it is now your job. Plan for managing for the psychology of this new pressure and avoid bad trading due to wanting to make something happen too much. 
  5. Plan for drawdowns and losing streaks, the only trader that won every month was Bernie Madoff and he was not real just like all the other traders claiming to never have a losing month. 
  6. Trading is a sedentary lifestyle so you have to plan exercise into your routine. 
  7. Trading can be isolating so it is great to have trading friends to talk to daily to help you in your journey. 
  8. You have have to purchase your own independent medical insurance as your employer will no longer be helping you with this expense. In the U.S. you can probably expect your medical insurance to double. 
  9. You have to consider the tax consequences on capital gains and be able to pay your tax bill at the end of every year with no employer holding back your income tax. Most traders need a CPA to do their taxes due to the complexity of different timeframes and dividends.
  10. You must have a long enough track record of trading to know if you can trade successfully before you make the leap. 

If you are married or have children this is not a decision for just yourself you have to consider how this effects your family and think it through carefully and fulfill all your obligations. 

Mutiple streams of income make trading full time a lot easier and many millioniares have seven streams of income. 

The markets aren’t going anywhere, take your time and launch only when the math works.