Trading for a living is a professional endeavor like any other. It requires a large amount of capital to go full time like other business & the returns are irregular much like being a commissioned sales person.
It is less about trading from a lap top on the beach with a Lamborghini in the garage and more about taking on the risk, managing the uncertainty along with the stress and being rewarded for good trades.
There is no regular paycheck, there are losing weeks, months & years.
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1. You have to purchase medical insurance as you have no employer plan
2. You will be your own boss so you have to make yourself do the needed work of research, screen time, and trading
3. The lower your living expenses are the less you need to make to trade for a living.
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4. You should never attempt to trade for a living until you have a record of success trading part time over multiple types of market environments.
5. The amount of capital you need for trading is based on your return expectations and living expenses.
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6. Don’t think trading for a living will be less stressful than your job, it can be more stressful than most jobs due to the uncertainty and mental stress of trading to pay bills.
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7. Trading for a living is a lot less stressful if you have minimal monthly bills, no debt, and a year’s worth of living expenses saved.
8. If your spouse works it can be less stress as you have another source of income & access to healthcare and EPF benefits
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9. When you trade for a living you not only have drawdowns in capital during losing streaks but also have the monthly drawdowns in capital due to having to pay your monthly living expenses.
10. Multiple streams of income make trading for a living much less stressful.
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For the majority of people trading to compound capital gains part time is the best strategy. Trading for a living requires a lot of capital and minimal expenses along with a long term track record of successful trading to have a chance.
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Trading for a living is very similar to being an entrepreneur as you risk a lot of capital for the chance at freedom, being your own boss, and unlimited profit potential.
Avoid the risk of ruin by making sure the math works before you make the leap.
Shared by Steve Burns
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The richest and best traders in the world aren’t trading their own accounts to pay the weekly grocery bill and monthly rent they are managing billions of dollars to grow their clients capital over the long term.
The best traders in the world are under pressure not only to make money every month but also must keep their clients satisfied with their performance.
These top traders not only have to beat the market returns but trade in markets with enough liquidity to execute.
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These traders are in the major leagues of the markets and are rewarded for it. Maximum pressure, big trading size, and clients that demand results monthly and yearly. They are also entrepreneurs as they run firms and manage employees.
From low earnings in the initial phase of our careers to higher expenses post marriage, the reasons are many that we fall back on. What little we save often ends up either in just the savings account or at best an FD even for years together.
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We do end up getting our collective acts together later on when concerns for our childs future or a drying up job market force us to think seriously about investing But is there a cost to investing later on in life, rather than earlier?
Losses is a part and parcel of trading. The trick here is to be able to limit your losses and find the appropriate money managing strategies to suit a situation.
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Money management not a guarantee of sure fire success and high profits but is an assurance against mounting losses in a difficult market. At the same time you need to keep an eye on the volatility of the stock and how much money needs to be put at risk on any one position
You shouldn’t be concerned about portfolio returns every now and then. Of course you have to check at some times, But looking at your portfolio returns too often can be detrimental too.
In a market crisis, negative news causes anxiety and fear. In such times looking at the falling value of your portfolio can only add to that anxiety.
The opposite happens when the market is rallying; you feel like you have made all the right choices.
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You can’t really compare the portfolio return to your return objective on a daily basis, because your goal is likely to be unchanged for a while. Hence, a daily comparison says nothing about whether your portfolio will be able to achieve what it has been set to do.
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