I agree with the past comments about putting away about 6 months to 1year of living expenses, getting out of debt, putting away some money for taxes, etc.
I just wanted to add, with all of the above, health insurance should also plan for (unless you are in Medicare or similar to that). If you don’t have this, maybe part time job with health benefits will do until you make 7 figure and above so you can buy your own insurance.
Hei Michael thank you for giving some numbers.
Basically If I make an assumption and I consider that I can double an account in 1 year of trading, starting from this point I need to get 2.5 times the amount of money I usually need for living. Is it correct ?
Thank you.
Mastergunner sir…could you elaborate on the third account for the taxable dollars?..are not all capital gains taxed?
Hey Peterbaik,
I think you may have misinterpreted mastergunner99’s comments.
Just to clear it up for you, he meant that he would have a side account (bank account) to deposit money to pay his taxes. For example, here in Australia, if you set up as a “company”, the tax rate is a flat 30% on all earnings. I believe that mastergunner99 would then for example, make $10k in a particular month, then witdraw $3k from his trading account and put that $3k into a separate bank account, so then at tax time, the money was there ready to send off to the tax office.
So yes, capital gains are taxed, but you need to pay that tax from your gain. The fx broker does not handle any taxation stuff.
Hope that helps.
ahh yes, i thought he meant a separate brokerage account…seemed odd to me…thanks for clarifying!..but while we’re on the subject…any tax accountants in the US out there?..suggestions on if it’s worth setting up a company brokerage account vs. a personal account for tax purposes?..does Tassiefx have any input regarding australia?
Try living in one of these for your first few years; that way you will have a place to live when you can’t pay your bills 
There is alot of stuff involved there you will need a tax pro. I looked it up a while back after getting hit with taxes on my account last year. For me as I am part time and dont make a whole lot on forex right now its smarter to either have a separate savings account that you put 30% of quarterly earnings in (or monthly whatever) so you have taxes covered. Or in my case I make enough at my job that my tax return will cover it. But again I dont do it full time and account is kind of small. But still I got a surprise on my tax return. However if you are paying taxes then you are making money. If you are going full time and making a living then it is your business and needs to be treated as such. Just keep good records of everything there is alot of info out there on this. But still if you plan on bringing in real money then talk to real tax pros. But there are a lot of advantages to having a company account and a lot of pains. So only you can decide not here. I just said my piece. Do plan on taxes as they will be due.
Regarding Australia … It has been bloody hard.
I have emailed many tax places and have had a different answer each time. One saying not to worry about setting up a company until you make at least $80k where the company tax rate takes over being the cheaper rate. So, what about me earning nearly that at my normal job? It seems that it will cost about $7k to set up as a company, but I am still trying to find an accountant that I believe and trust to handle my financial side. I will let people know if/when I find what I am looking for as there is not much posted that I know about in regards to the tax time issues etc for us.
That’s my opinion… yes. You do not want to have the added “pressure” of needing to Trade for the bills each month… versus Trading for the sake of your system or edge. This is a heavy factor on your psychology and almost always is overlooked by Traders making the switch from Part-time Trader to Full-Time Trader. Give yourself all the chance of success going in… and you will have the clearity needed to make sound objective Trading decisions.
[B]GLGT [/B]:57:
I think the transition from a job to full time trading is a very personal thing.
To be a full time trader you need sufficient skill, discipline and capital. When you have been trading long enough, you will know when you have the first two down. Deciding how much capital is sufficient is a little more difficult.
There is no simple answer, so I think you have to err on the side of caution. I am personally going to go professional when the realistic minimum monthly profit (not average profit) I can expect is twice what I need. I will plough half back in to grow my account, and the other half will be my personal income.
For example:
you need $5k income per month
double that is 10K
realistic minimum monthly profit is 5%
10K is 5% of 200K
Your trading capital needs to be 200K
This is just an example, and I’ve just plucked figures out of the air.
I’m confident that I have sufficient skill and discipline to be a professional. However, my capital needs to increase considerably before I get to that stage.
In the eventuality I am not going to trade with a private capital since is going to take me ages to built 100k, what could be the roadmap to work for somebody else or to trade for clients that want to invest in the fx exchange.
I was evaluating certification like CFA and CMT to gain credits in the business but I am curious to hear from you as well.
Thank you for the answer so far.
Trading other peoples money is certainly an option, but unfortunately I have no knowledge or experience of this. However, if this is the route you want to take, trading your own capital would give you some valuable experience.
Don’t be put off by the fact that it can take a long time to become a full time trader. It might take a few years, but the rewards are more than worth it. And don’t forget about compounding. Plough all your profits back in, and you will be amazed at how (relatively) quickly your capital will grow. Add to your capital from your income as well, if you can. Every little helps.
Besides, once you get to the point where you are trading successfully, and the initial learning stage is over, you WILL see things a lot differently.
This is really interesting but where you able to make the full transition yet? How did it worked out for you? 