Nice! ill check it out.
You would need more if you’re making 100k from trading. Far more to compensate for the employee benefits the salaried guy enjoys.
The salaried guy would be able to either enjoy more lifestyle or defer for a similar lifestyle and enjoy a retirement that would exceed that of the trader.
There would be more of a need for the trader to have more money set aside more liquid assets, then the salaried guy. The salaried guy in most cases would be fine with three months set aside during his career while working to set aside more as he reaches retirement age when he would want at least two years saving.
This is assuming both are the same age, have the same family, and live on the same taxable region.
That’s just for starters.
Risk tolerance is entirely different for both. It might sound weird, but it’s more probable that the trader is risk averse when it comes to savings, while the salaried guy is more risk tolerant. But that is just a very broad statement.
Their individual financial goals would depend specifically on what they individually are looking to achieve.
First point is true… However lets say for the example that the total benefits package… Salary and other benefits is 100k for the full time employee and the traders annually profits are 100k… Therefore it’s even…
The only difference then would be the trader has to have trading capital… Other then that there isn’t much difference… Especially if the full time employee is working off of commission (he would experience salary variations as would the trader)
Trading performance variance should already be taken into account with money management… The trading capital wouldn’t be viewed as savings… And if the trader treats his income as any other salaried individual would, setting aside however much he desires as saving, his finances would be essentially identical.
Correct, the trading capital should not be viewed as savings. He should have savings up and beyond that because regardless of how accurate he feels his money management to be, there are risks outside of the control for the trader. The economic risk alone is a huge red flag.
The salaried, and sure we can make him commissioned guy, earning 100k has less monetary risk of his position. Even if he were to lose his job, odds are he either has enough experience or education to make a smooth transition into a new position of relative pay. The same transition may not be the same for the trader if he were forced out of the Forex arena to head into new waters.
The goals between the two can be the exact same, but to strategize appropriately to minimize risk effectively and efficiently , the implementation of each plan would vary greatly.
A financial goal at the end of the day is only as good as the foundation created by appropriate risk management.
So just curious… A few posts before this one you said trading only takes 15 minutes of your day… Why would you make a choice of not making this your main source of income if you are capable of it? 15 minutes a day versus 8 hours seems like an easy choice… If you are capable…
No ways, you can’t be serious… You again?? How many accounts did you open?
I trade an hour a week at most.
I choose not to place the capital required to trade for a living into my Forex account.
I presume you are or were a Banker, so you understand portfolio diversification and asset allocation. In terms of associated risk, Forex is off the charts. As such, it represents the smallest segment of my portfolio. I maintain my assessed asset allocation on a daily basis so as my overall portfolio increases so does my Forex account. I do not however reinvest every dollar of profit right back into the account as at times that throws off my asset allocation.
Secondly, I like what I do for a living. You mention 8 hours but I am closer to 10-12 hours most days. I will probably work till I die simply because the nature of my work allows the flexibility. If it ever came to a point when it is no longer in my control and I’m at a point where it’s not a need, I may leave it all together. That’s decades from now nevertheless.
Lastly, just because I can make a living doing something else doesn’t mean I want to. I could become a landlord or own some laundry mats and hardly put in any time in a given month, but that doesn’t mean I want to.
Someone with no passion for forex… And no aspiration to take it beyond a hobby… Is a rare breed to find on a forex trading forum indeed.
Well thanks for humoring my questions.
Forex isn’t a hobby. I think I thoroughly explained how it fits in. I frequent forums and chat groups from just about all aspects of my life.
You are correct that it’s not a passion. That’s not really a prerequisite to participate in a forum. My presence here is hit or miss. I’ve been registered with this site for years on end now, but maybe a quarter of that time I’ve actually been active. If the hobby is anything, it’s hanging around the forum and chat room. I have learned a lot and most of it derived from Babypips. So I do have a preference here.
Nevertheless, your welcome.
I am allowed to be on this forum you know…
This is a very good thread. Should be stickied lol.
I would like to say a couple things.
Younger people should be taking the riskiest positions. I’m going to assume a lot of people on this forum are under 30 just because of the nature of the Internet and forums. It’s better for these people to “try and hit it big” or “swing for the fences” because they have a lot more time left to make up for any mistakes they make. I’m not saying be stupid but if you’re 25 and been trading for a few years with good results but don’t have the capital maybe take out a loan. I know that’s crazy talk. But if you’re 25 you still have FORTY years to make amends if you mess up. But don’t mess up your families life if you have one 
And second if you can’t save money habitually you have other things to work on than learning how to trade.
Hmm… I can database programme, web site create, enjoy forums (only this one for fx mind you) - but the bad news is I’m slightly more than 30 
So I guess if I goof up I might’nt have those 40 years - note to self - do’nt mess up.
I didn’t mean you shouldn’t been trading just meant don’t do something risky to trade(like taking out a big loan) if you’re older.
Iya, I was just teasing, I know what you meant.
I will be impressed if I live to 65-70. I tend to agree with lyaJenkei about risk though (probably not the loan part for forex trading, loans for other investments though are a given). At 25-35 you are usually saving for a house deposit and not to fund a trading account(well the sensible low to no risk people :)).
Can only make an assumption on the age range that people actually do trade for a living would be in the area of late 30’s to early 50’s. You would probably be out of your mind to solely trade forex up until your retirement without looking at other financial instruments or asset acquisitions. Recently I looked at my superannuation statement, it’s a bleak balance at the moment equivalent to just over one year of my wages (only been working for 13 years) - that being said being in regular job and this fund compounding even with minimal contributions I would have well and truly have enough to retire at 65.
O ok lol I didn’t want to offend. I also invest in stocks and read a lot. One of the ideas I came across was when you’re younger allocate a bigger potion of your portfolio to low or mid cap high growth stocks and as you get older move more and more to stable dividend payers. I just applied that to forex lol.
You’re actually quite right - as you get older your risk tolerance also lowers - maybe experience has taught that things can so often go wrong - it’s the same in business - more often younger people will take the greater risks and thereby have the potential for greater gain.
I’ve heard it called over here the ‘bmw’ syndrome - the older business owner has his mortgage paid, his business running ok and his bmw in the garage - so he’ll not take any risks on new investment in the business.
Risk tolerance generally takes more than age into account. Fixed income revenues such as pensions or social security might allow an older person the ability to maintain a higher level of risk.
Generally speaking, the younger you are the more risk tolerant you are, but after 2008, even a younger generation has been understanding the benefits of safer dollars.
Dollar cost averaging is only truly effective to establish a nest egg if you are at a level of risk you psychologically can tolerate.
MG99, I am planning to go pro as a currency trader in the first half of 2013. I feel like I’ve put a lot of thought into most aspects of this decision. I would definitely appreciate any thoughts or advice, but as you probably require some personal information, I d rather give it in a PM. Could I ask what information you would need to get started.
I dont really need personal information. This can all stay pretty high level.
The first question you should ask yourself is if your goal to trade fulltime is willing to be deferred if the numbers don’t add up.
Let’s take a really low example.
Let’s assume you’re single, have a roommate, and you are able to get by on $500 by eating Ramen noodles.
Your necessary insurance needs alone will nearly double that. So for conservative purposes, you need $1000 a month to survive.
You would want to have between 10k-20k in the bank to eliminate the psychological and financial aspects of market variance.
Now let’s say you are able able to double your account annually. You would need another 10-20k to have as your trading capital.
Then finally to eliminate the risk of not having a secure retirement you would need nearly $90k in the bank earning 5% annually.
You could just as well increase your monthly expenses to save for retirement. So the 90k is fairly optional in this equation.
But if I were to trade for a living, I would do so without ever having to have financial concerns. I would rather have my focus stay on the task of trading.
There’s nothing wrong with having a goal of trading for a living. But if it’s a serious goal, you should be adequately ready to fund the venture.
And this is all even on the basis you have a proven winning edge in the markets.