Hey, guys!
I hope you’re all doing well. I’m not a full-time trader, but I’ve been wondering if a full-time trading income can cover life expenses or if it’s too unstable.
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The ability of full-time trading income to pay life expenses is determined by a variety of factors, including the individual’s trading skills, risk management, market conditions, and personal financial demands. While trading can yield large revenue for some traders, it is crucial to realize that trading can also be unpredictable and prone to market volatility. Traders must constantly accomplish lucrative results in order to sustain their income over time. To avoid potential dangers, it is also recommended to maintain a financial safety net and diversify income sources. Finally, it is recommended that you thoroughly examine your personal financial situation, consult with professionals, and create a well-rounded financial strategy that considers the potential risks and rewards of full-time trading.
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@Lee-me is right,
there are a lot of factors than can have an effect. may something that work for me, doesn’t work for you.
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Yeah, I get it. Just now I’m confused that what factors effect that? I’m thinking about becoming a full-time trader some day and I’m not sure whether it will pay my bills or not.
I understand that, but you have to figure it out yourself. It’s something personal and you should consider your own life when you think about it.
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It is possible to make enough money from trading to live on with no other source of income. That does not necessarily mean trading full-time or even every day.
The only way a trader can know whether they can make enough to live on is to multiply their strategy’s outcomes by their capital invested. It will be the strategy which decides on the rate of return, not the trader - a trader without a strategy is like a car without an engine.
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Yeah, you’re right. I’m just a bit confused and not sure whether I can do that or not. Also, now I know beside trading itself I need to make sure that I have good capital management skills.
Yeah exactly, he got a point @Oli_jackson
If you want to pay the bills by earning money from trading, it doesn’t necessarily mean that you have to be a full-time trader.
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Wow! When I was creating this topic, I didn’t imagine that it can help me gaining such a insight about this matter. Thank you.
Well, that’s the whole point behind this community. We’re here to help each other and consult.
So, here’s the deal with full-time trading income. It can be a rollercoaster ride, you know? Sometimes you make it rain, and other times it’s a bit of a drought. It really depends on your skills, strategy, and how well you manage risks. It’s smart to have a backup plan or some other income streams to stay on the safe side.
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So, even with a good set of skills and strategies still it’s not something to be certain about? Part-time trading is good and for me manageable, but full time-trading is harder to manage and it should be worth it.
I will explain how it works in reality, the benchmark is 7-10% per year, if you have access to fintech, algos, knowledge, experience you can increase that number 10x, if you also have experience yourself measured in 1,000hrs you can increase that number again.
With Stocks that is your reference per Year, but with Futures it becomes your reference per Quarter due to leverage, with Forex it becomes your reference per Month due to even more leverage, these are the numbers everyone says you can achieve but no one has their own fintech, their own knowledge base.
The only way it works is if those people have $100,000s capital or are being trained as fund managers, analysts, arbitrage specialists.
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Hmmm, thank you for the analysis man!
Really helpful.
You are very wise to be investigating this before just jumping blindly into a dream world.
Firstly, remember that still, even after years of publicity, over 75% of traders still lose their money let alone make a living from trading - so it is not a easy income option to start with.
There are two basic approaches to trading: to earn a regular income or to build capital which one draws from whenever it suits, (or a bit of both).
If you aim to be a full-time trader then you will need a regular withdrawal to live from. This adds a psychological pressure to trade more often, take profits sooner, take more risks, trade shorter durations, reach certain pre-determined targets (e.g. living expenses).
Trading to build capital is far more relaxed in that you only trade when you see a good opportunity and can give positions proper “breathing space” to play out without external earning pressures. Drawdowns are also less stressful in that they are pre-recognised and accomodated for in the overall strategy and do not directly affect your living expenses funding.
The uniqueness of full-time trading is that you are only as good as your last trade. As many market commentators state: “Past performance is no guarantee of future results”. Full-time trading involves several issues that are beyond one’s control that can quickly and seriously impact on markets and your own strategy: e.g. market characteristics and access, regulatory changes, technology changes, personal health issues, changes in personal income requirements (e.g. family), wars, and even a personal waning interest in trading and following markets.
Many full-time traders who publish Youtubes, etc do eventually expand into other related income sources such as selling merchandise, offering personal mentorships, building coaching programs and website memberships, etc. This is all fine, but does point to an underlying pressure to diversify at some stage away from just trading.
I think there are two important aspects to be clear about:
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Income will inevitably be irregular in both quantity and frequency, so you will need a lot of initial capital to carry you comfortably over periods of weak earnings or prolonged drawdowns. This is to avoid both mental and financial stress leading to rash and impulsive trading. Some people estimate capital should cover about 6 months of living expenses to ride out these periods or change to another income source if necessary.
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Be aware that pure trading is unlikely to be a lifetime career and it does not automatically earn you a pension at the end. So you need to be clear about your trading objectives and how long you intend to do it, where it is leading to - and what you will do if it fails (and especially defining at what point you declare it has failed and not leave it until bankruptcy).
Trading is a rewarding job in many ways and offers lots of benefits. But it is a relatively narrow field with many risks along the way. And, as has been said before, it is entirely possible to be fully involved with trading full-time without making it your sole income source - and that is certainly what I would fully recommend!
P.S. If you are still reading this, another alternative you could consider would be to join a trading prop firm and become a funded trader. This way you can bypass the capital requirements and still receive a good share of earnings. HOWEVER!!! This is ONLY an option once you have a consistently profitable strategy that functions within conservative risk parameters. It is also worth checking out the terms of the, now many, firms in this field since they vary a lot. If this interests you then I am sure @flamingoproxy can give you some info on this.
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this is absolutely the key point to understand, before trying the “funding company route”: there’s no point at all in paying a funding company for a challenge/evaluation until you know you’re in that group (and it’s a much smaller group than most people realise)
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Most new traders will probably have a main source of income outside of trading. For them, trading will start as a part-time activity. The safest approach (with capital retention in mind) seems to be with longer time-frames, such as daily, and committing low levels of risk only. Many quote 1% of an account balance per trade and then limiting the number of trades at the same time. Simple calculations (low risk and higher stop levels) demonstrate that you are talking about low risks with low returns. You’ll need a large amount of capital or have a long period of reinvestment to gain any wealth from successful trading. If you don’t, then you’ll need to trade with other people’s money. Hence prop firm funding seems the only way for many. I’ve read elsewhere that less than 5% of those who apply actually secure and maintain funding over time.
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Yes, I agree. This is it in a nutshell. As far as I can establish, few people (as a percentage of retail traders) succeed in full-time trading as their sole source of income. And the same reasons why they don’t succeed with a personal account will also result in failure with a prop firm account. So it is no surprise that the failure rate is high.
However, the prop firm approach does usually come with some overall limiting risk parameters which certainly can help guide a trader into a consistent and modest approach and prevent the common mistakes of over-trading, gambling, revenge trading, and so on.
Personally, I would never recommend anyone to try and trade full-time. It is a very narrow field with many risks and uncertainties and doesn’t naturally lead to any career development.
But one can trade equally effectively alongside a normal job and is an excellent way of building capital without the strain of having to achieve any specific objectives. We can only gain what the market offers and one can be happy with that whether it is large or small.
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I’ve spent over 20 years working on a 100% commission basis. What I learned was that there were very good years and there were poor years. So if I could cover all of my expenses based on the poor years, then it was doable.
It seems the best way to handle a situation of living off of doing only Trading would be to build an account to the size where it could handle your bills for a couple of years. Then continue to trade, but withdraw what you need to cover expenses.
Trying to cover your expenses with trading earnings this month for the bills coming due next month sounds like something shouldn’t count on.
I know it’s all relative. If my expenses were $2,000 a month but I had $30, 000 in a trading account. I would expect to be able to make $2,000 fairly easily in any given month. That’s enough to where I could expect to make more than what’s necessary to pay the bills each month and could build my cushion from there.
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there’s plenty of good sense, of course, in both the two posts just above this one 
in the light of your own now-supersized thread, @AmericanTrader , (of which i have read every single post!), i offer you one of my gratuitous, unsolicited and maybe not-entirely-welcome observations …
for a one-off payment of $299, you can do a $50,000 evaluation account with MyForexFunds … one thing I think I can tell you with plenty of confidence is that if you can’t qualify for that, using your methods, you won’t be able to make a steady living from $30,000 of your own funds, needing to withdraw $2,000 per month from it to cover bills
if you can make the 6-7% per month you’re talking about just above (and clearly it looks like you can), you could have a lot to gain, that way, and almost nothing to lose - i think it might have many advantages for you, actually
not necessarily that specific funding company, there are other similar ones (including a lot of tricksy and scammy ones) but that’s a decent one, and you get the general idea, anyway?
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