I’ve been trading a dummy account for 5 weeks now and am enjoying so far as my trades have been mostly successful. I am aware, however, that I could be doing even better if I could stay at home all day and watch the charts instead of having to go and do my 9-5 job! What I would like to ask you all is…is there anyone here who was in a similar position to myself and took the jump to quit their day job to concentrate on forex trading full time and if so, has it been as fruitful as you had hoped?
Please reply with your experiences as although it’s early days yet, I am hoping that this may be my ticket out of the 9-5 rat race that I am growing so tired of. Cheers!
Welcome to the forums. You’ll find this to be a great place to get started.
On to your question…
I personally have not taken the jump yet, nor do i plan to any time soon. When i first started i thought trading to be my saving grace from the day-to day rat race. But as time went on and i learned from my own mistakes caused by faulty expectations, i changed some of my perspective. I also learned a great deal from a trading partner who quit his full time job way too soon to get started in full-time trading. It was when i saw what he went through that convinced me that trading full time was not for me yet.
Basically what happened was that my partner sold all kinds of personal assets, including property, to fund a trading account with well over 100K. This was defintily enough of a capital base to make a living off of, but it didn’t work for him. In fact, it didn’t work at all. He self destructed in every way possible and it was quite sad to see. I think there are many lessons to be learned from my partner’s hardships, especially to all the newbies who expect trading to be the answer to the typical 9-to-5 rat race.
My partner, hating his day job, wanted to get out as soon as possible. He was so desparate to leave it and was so sure of his ability to succeed at full-time trading that he no longer had the patience. Before he even established a track record for himself, he made the jump.
Several things went wrong from that point. Even though he could go weeks without a losing trade because he scalped the news for 2 or 3 pips, he held his losers way too long. Several times, he spit away 3 months of profit in a single day, sometimes less than 2 hours. He needed the money to pay his bills so the thought of holding trades was painful. He couldn’t. He only got his satisfaction when he ended every day with profit. He tried to interpret the news, his position sizing was crazy risky, sometimes as high as 7 or 8 % during times of revenge trading. He would average down his losers. Even worse was that the capital he was working with could not be lost. If he lost it his life would be over.
He never had any stability in his approach, jumping from method to method, news feed to news feed, chat room to chat room. He would trade at any and all times because he always felt 2 or 3 pips was within his grasp. He never had an objectively tested system, which is why lived and died by every single trade. He had no real idea of how his system would behave over the long run, or how it behaved over the past while. His days became completely engrossed by trading and trading related activities at the expense of everything else, including exercise and his family relationship.
During winning streaks he felt such euphoria that the position sizes kept getting bigger and bigger and then during the losing times he felt nothing but anger and regret that he refused to use decent stops.
His life was totally off balance to begin with and he felt that trading was the only outlet. It was supposed to represent a solution to all his self esteem problems and other inadequacies, including his job. This was another reason why he lived and died by every trade. Every trade was another shot at his ego, be it a good shot or bad.
Eventually, because he did not have the right perspective of trading from the beginning or the right expectations of the market, his trading only ended up contributing to the very problems he was trying to resolve in the first place. He is fighting depression right now and has since stopped trading until he resolves his own personal issues.
So before you decide to take the plunge, i think you should ask yourself some serious questions:
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Is your job really that bad that you can’t find room for both trading and a day job? Despite popular belief i don;t think it is necessary to have to focus strictly on trading in order to make money with it. Change your time frame and profit targets and you can easily compensate for lack of opportunity
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If you must trade for a living, how much capital will you need in order to sustain a living all the while risking 1-3% per trade and still have room to withdraw for living expenses and let your account grow.
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Do you have a fully tested system? What can you expect from it in terms of drawdowns, duration of drawdowns, win/loss distribution, avg win, avg loss, trade opportunity? How will you pay your bills during rough patches in the market? Do you have a live trading track record for yourself before you take the leap?
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Realize that when you trade for a living, the psychological dynamic will change. All of a sudden you need this money to live and put food on the table. Trading, by definition, will be much more effortless if you do not have to rely on the income it generates.
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While trading for a living, will you be able to maintain a balanced lifestyle or will you fret and worry over every single trade?
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Realize that the trading arena is a dog-eat-dog world. How bad is your job really? Trading is so enticing because of the profit potential. There are so few domains out there that can offer this much potential. But are you thinking of the downside? (and please don’t say that it can’t happen to you). Can you really stomach the downside of all this without having any other supporting income?
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Never treat trading as an escape. Even though it represents infinite freedom, you are entering a world that is very likely much more difficult than your 9-to-5 job. You may find yourself to be escaping from one reality only to enter a much more frigtening reality unless all the pieces are together just right.
Now i do not want anyone to misunderstand me here. I think trading for a living is very feasible. People do it and people do it well. I just don’t think that it is a reasonable expectation for any newbie to treat trading as the ultimate solution to other problems (like a day job). Getting to the point where someone can trade for a living is a journey fraught with all kinds of challenges that can only be achieved with a nothing but a long term commitment. Stay the course and do the right things and you will get there no doubt. It just won’t happen over night. Start small and build up in time.
Wow!!! That was long!!! :))
Thank you for the above comment, Pipbull. A classic case of burnout/financial ruin caused by the wrong psychology.
No matter what magical trading system one uses, the almost mechanically rigid rules of money management, risk and psychology HAVE to be followed in order to survive. Any other approach to the Forex is simply gambling.
A professional gambler told me " When I put on a bet, I wave goodbye to that money. It’s lost, gone. If a win comes out of it, then that is a bonus."
One of the number one trading/betting/gambling rules is DO NOT RISK MONEY YOU CANNOT AFFORD TO LOSE.
Unfortunately, too many websites promise beginners easy fortunes with fantastic trading systems. Reality can often be a bitter lesson.
Thanks for your replies to my message, it’s definitely food for thought. I realise that it is early days for me and I’m not even trading for real yet, so if I was to ever do this full time, it would be way down the line. I have always been a very cautious person, so when something comes to me that seems too easy or too good to be true, I always treat it with caution. I’ll keep your comments in mind though for the future so many thanks for that.
Regards