When is it time to go from profitable to professional

Beginner Questions
1

There are tons of threads that advise people how to go from being a complete newbie to being a profitable. I’m interested in peoples thoughts on what it takes to go from being profitable to trading as your job every day, assuming you are passionate about trading. I mean from a skills perspective. Some of my ideas, assuming someone is profitable, educated in technical analysis and realistically confident that they can continue generating pips each week, and has a reasonable amount of money to fund a trading account:

-Have a detailed trading plan (in writing) already prepared.
-Have a detailed business plan (in writing) already prepared.
-Have doubled your money (a decent amount 5K, 10K) at least a couple of times.
-Be able to generate at least 40 pips per week.
-Have 1 -2 years trading experience, following the market etc…

What steps, accomplishments, etc would you expect for someone to have accomplished to be able to go pro. I’m happy for anyone who wants to chime in. It would be helpful to know if you are currently a professional trader or plan to be one some day etc… I’m sure that there is a massive psychological difference between being able to perform when it’s for fun, versus performing when there is a mortgage to pay. I realize that aspects of the question I’m asking will differ based on individual circumstances. But I am genuinely interested in everyone’s (anyone’s…) thoughts on this subject. Thank you.

2

For me personally , I would never care to take on the burden of having a high risk environment provide for my family on a day to day basis. Regardless of successes achieved, my plan is when my entire financial portfolio has grown enough to spin off my existing lifestyle till the age of 95 will I consider myself a pro by finally retiring all together.

3

I could not see if you trade Live or demo.

To me it sound that you are ready yourself, so why don’t you. It is like starting your own business, you dive into it and go for it. But as you ask the question, you may still be in doubt if you can succeed in the long run. If that is the case and you can do your trading next to your day job, why wouldn’t you continue doing that for a nother couple of months.

But for me that point was when I had over a yearsalary in reserve (next to trading accounts) and when my losses, due to attention for my job, exceed my salary.

If you like, but I know it would be a leap of faith for you, I am willing to review your business plan to see if I notice some red flags in there.

Do you have one starategy in place, or multiple? Relying on one system only creates a risk. It would be like having one specialist in your company and when he leaves your are s*rewed.

Do you have some automation in your trading? Or said differently, do have any thought on how your trading will continue when you are in the hospital? Perhaps you can team up with another trader to cover that when one of the two is not available. Something I plan on doing (partnering up) in the next coming months.

I am sorry, not a consistent story but a couple of snippets that popped up in my mind. I hope it still helps.

Happy trading.

4

I think part of this answer hinges on what your idea of “professional” is.

From reading a whole bunch of posts on this forum, it seems that a “professional” is someone who earns his living from his forex trading activities and does not have another “job-type” income source. I think, though, that it’s possible to earn a full-time income trading Forex with or without a separate job regardless of how much of an account balance one has.

This is achieve through providing signal services on sites like Zulutrade. Let’s say you have a profitable system that trades on the daily time frame. You only check in and make decisions once per day and the system you use has positive expectancy.

The good part about such a method is that you are not chained to your screen all day. The bad part is that when trading the daily charts, your trade frequency is going to go way down. Even with high(er) risk, it might be tricky to find enough trades to do much more than double your account in a year. If you have a small balance that means it could be years before you can quit your day job if that’s your goal. It could take even longer if you’re averse to high(er) risk.

Sites like Zulutrade can bridge the gap in such a situation. A lot of people over there have low expectancies and so if you’re on-track to double an account in a year’s time, you’ll find yourself a smattering of followers. This could translate into a livable income in short order even if your bank roll is not very large because your followers might be quite a bit more wealthy than you are and you get a commission on every trade.

5

Never and always. The moment you stop thinking like that, like “oh when i become a succesful one”, that is the moment when changes occur. There is no light at the end of the tunnel. You can be succesful this month and a total disaster the next one. We all have those periods, the key of success is just to make sure the good ones overcome the bad ones.

6

If you are single, it is ok to try it and test yourself if you can live out of trading alone. However, it is different case if you have family/kids who are depend upon you unless the spouse makes more money than you do.

I guess I am more in a “safety” side especially in this economy. I want security (financially). What I would do if I am in your shoes, I will save at least 6-8 months living expenses first put aside (separate from your trading account) that way if there are weeks or months that you didn’t earn any profit, you can still live on those months because you have money put aside…

Is like what they always say… “Plan for the worse and hope for the best.”

7

please kindly keep in mind that we do have high expectations from the traders that we trust our equity on zulutrade. of course these expectations cannot be very very high as much as for example in mutual funds or in managed accounts, where your invested equity is higher, however traders should be diligent and trader causciensciously. This is very well depicted by the following ammount under each trader, as you can see. However, I have seen that many traders are having problems with their trading strategies, there are times that sometimes their even need to make some alterations to their trading strategies (in case they are scalpers and tend to trade with close to market pending positions) and sometimes not all followers get to receive all these trades due to brokers requirements.

8

I see a lots of great responses here, and I really appreciate that everyone took the time. I’m going to post a summary of my trading plan later, hopefully that does not put everyone to sleep, and as always I am thankful for any comments, suggestions, etc. This is the first serious thread that I’ve started now that I’ve been around BP for a while.

My wife and I both work at professional jobs, but trading for a living would be the chance to do something that I really love to do every day. I know that I’m making an assumption that if I were relying on trading for income, that it would still be something that I love to do, given the considerable additional pressure.

A chunk of my own income currently goes into sustaining my work lifestyle, via commuting costs, child care costs, buying lunch, getting dinner delivered at night because we’re both too tired to cook by the time we get home. My logic is that my cost of living will go down considerably when I am working from home, and therefore making less income initially will be doable. The added benefit is that I will be able to provide child care to my six year old every day after school, etc.

I’m planning to have two trading accounts to start with: one will a ‘building wealth’ account that I’m hoping to at least double each year. This can be done via compounding of 1.5% per week / 6% per month

The other account will be to ‘generate monthly income’ to pay bills and have a little left to keep growing the balance. I’d like to make 2% a week in this account which is 8% per month. I’m planning to deduct from my pay net of 40% for estimated income taxes that I will leave in the account so that the account balance generates higher earnings, and an additional 10% stays in the account as my reinvestment into the business. I’m playing around with these numbers right now, so my key focus is more about the concepts rather then the numbers, but any comments are welcome. Next post will be my trading approach.

9

My living comes exclusively from trading forex, but I’ve only been able to do that for the last six months or so (having started trading over two years ago). It’s interesting that for me I got to the stage where I simply no longer felt much emotion about winners or losers, I was simply comfortable with my trades and have developed a strategy to get out of losing trades fast so they don’t impact my account too badly.

The biggest problem with trading for a living is that most of us have monthly expenditure that goes out regularly, but trading doesn’t necessarily bring in regular income. It isn’t unusual for me to go a week or so without a trade and it’s imperative that I don’t trade simply because I can feel the pressure of my commitments building up and in order to manage that, I keep a financial cushion in my bank account that can absorb irregular income.

That said, I only need 3% a month in order to pay bills, so that’s usually fairly easily achieved. The danger comes from having banked, say, 6% in a month and continuing to trade as there’s a danger that you lose some of these gains, so you need very strict rules about your monthly goals and what you’ll risk once you’ve achieved them. Greed breeds pain. Always!

Anyway, I wouldn’t rush to make trading your sole source of income. You’ll know when you’re ready because you feel peaceful, content and open minded while trading. It’s easier to get that state of mind if your world doesn’t depend on it.

10

You might try PM-ing Simon Templar. ST has experience in making the transition into full time trading under similar circumstances, working spouse, stay-at-home daycare for children, etc. He’s a smart guy and seems to be always eager to help. Give him a call!

11

Some really great thoughts and comments folks; I really do appreciate it.

12

Another thing that I can think off…

Pretend that you are already a full time trader that means your household generates 1 income.
Try to live out of 1 income and banked all of your current income while you are still working on a regular job and working on your trades. This way, you get the feel how it is like living on a 1 income and at the same time you are building on your “emergency fund” (living expenses)….

It is very important to have a little cushion aside so you are preferred for whatever comes out of this without sacrificing the lifestyle of the family…

Good-luck!

13

Long time lurker, first time poster so hiya everyone!

Figured I’d chime in with this since I’m currently working towards this exact goal. Forex as a full time income. Personally, I have a few criteria for “going full time” that look like this:

  1. Demonstrated history of profitability. At least one year on a live account.
  2. Profitability that is at least equal to 2x my monthly expenditures.
  3. First “split” on my account has been achieved. (We won’t go into this…)
  4. Minimum 6-8 months of living expenses + discretionary income in a bank account.

Once all of the above are in place I will be free to quit my job and focus on forex as a full time endeavor. It should be mentioned that I’m being realistic about this. Having just started trading live 3 weeks ago, I’m almost expecting to completely nuke this account into oblivion. Expecting however doesn’t mean I am planning on it. I spend every free moment I can find researching the wonderful world of forex to give myself the best chances of succeeding. I do have the luxury of working directly for the owner of my company and he’s fine with me doing forex related activities on company time. Best of both worlds!

I’ll be perfectly honest, when I came into the world of forex (courtesy of a massively multiplayer online game, and one of the players who happens to be a forex trader) my head was filled with pictures of massive wins and a huge bank account. Talking with my friend though and reading all of the books I could find tempered my expectations greatly though. Now I realize that not only is it going to take a long time, but a LOT of work to get to the point where I can “retire” from the rat race. But in the end, it’s all worth it.

Having said all of that, I’d say the biggest asset a trader can have is faith. Probably not how you’re thinking. You’ve got to have faith in yourself and your own abilities to succeed here. If you second guess every trade you enter or “helicopter mom” your orders, you’re going to be miserable. Put the order in, realize that you believe in yourself and your system, and let it play out how it will.

Best wishes to everyone trying to make this work! It’s completely possible, you just gotta have a little faith!

14

Nice post Venom.

I started trading when I was 20. I am 22 now, I am turning 23 in 3 months. Trading is a gift in disguise.

I watched someone turn 500.00 into 1.5 million under a year by risking 1.5 -.5% a trade.

If you can get to the point where you are trading 20 lots 50 pips is an easy 10k and if you have successfully proven to yourself that you can trade profitably (meaning withdrawing majority of profits and starting off fresh as part of you’re training) you can definitely trade full time.

Building your account to the point where you can easily trade 20 lots by risking 2% in your account not only proves skill but it proves that you have the ability and the cushion required to stay out the market when its not giving anything .

Good luck on your journey.

15

Enoch,

I wish I had found this world at your age, but I’m even thankful I stumbled across this world at all. I would LOVE to be able to trade 20 lots in a trade, but I’m having to make due with .1 lots. Honestly, I think I could make a comfortable living on just 1 lot pulling in 30-40 pips per day (my average over the past 7 months on demo and live). I have the luxury of being a single guy with extremely low expenses, so $3-400 a day would be a huge change in my life. I’m hoping to be one of those 500 to 1.5 mil success stories, but I’m not banking on it, nor will I be disappointed if I don’t. I’d be happy with doubling my account in the first year. Realistic goals is the name of my game.

I like your statement of “trading is a gift in disguise” as it really rings true to me. It’s fun to realize that I’m operating in a part of the world that I’d say 95% of people don’t even know exists. Everyone’s heard of the NYSE but say “I’m a foreign exchange trader” to people and they look at you like you just grew a second head. It’s also nice to be operating in a realm that I always wanted to work in but I never found the way to get into. I remember back when I was 13-14 I’d wake up early and sit there watching the stock ticker on CNN trying to figure the whole thing out. Here I am, 17 years later trading forex.

If I may ask regarding your situation, are you a full time trader, or do you do it on the side while holding a “normal” job? I don’t mean to pry and I full understand if you’re not comfortable answering. Also, how do you trade? Not looking for an exact detailing of your system, just a simple description. (price action, Fib, EMA crosses, etc.)

16

As far as my trading plan goes, I imagine it’s pretty similar to a lot of folks on BP. I am a technical trader and will utilize price action. I consider myself to be a student of ICT, and I’ve also taken one of Chris Capre’s classes, paid for a London Close class, I follow a few good threads, such as Nikitafx’s thread, and had some Skype lessons in S/D zones last year. I utilize the COT report and follow what the Commercials are doing net, look at historical seasonal charts, and follow correlated markets such as equities, T-notes, commodities, etc for clues (as well as the dollar index) to what my bias should be. I study Monthly and Weekly charts for S/R, as well as the daily charts. I like to have an overall feel for what might evolve over the week, and carry those levels down to 4H, 1H, 15M and rarely 5M.

Most of what I look for can be found in ICT videos including various patterns, etc. I try to use correlated currency divergence, interest rate divergence, etc. ICT has been teaching MM patterns (these are GREAT!) that help to make market structure more understandable.

I plan to trade Cable and Fiber primarily. I’m going to be targeting large moves as my plan A, and try to at least have Reward at 2x Risk. I expect that this will result in 1-3 trades per week, probably just 5-8 per month. I’m going to try to limit Stop Losses to 30-35 pips, and keep my equity risk to around 1%-1.5% per trade. I’m not going to trade NFP. I’m expecting to at least net 40-50 pips per week.

I may scalp as plan B, but it will be on a reduced risk level. Choppy weeks I may look to capture 3 to 4 15-20 pip scalps. I know that trading can get a little slow at times and I would like to avoid the television, aside from financial shows, so I will keep a project list going of productive things such as back-testing, continued education, even scalping other currencies in a practice account to stay sharp and focused.

I am currently using GFT, and I like their software Dealbook 360. I will probably keep this account for wealth accumulation, and am considering my primary income account being with Citifx, Dukascopy, or possibly another GFT account utilizing MT4.

I was a little nervous starting a real thread, and am very happy that so many people took the time to respond. I am happy for any comments, critiques, battle stories etc. Thanks.

17

Reading through your trading plan I can safely say I know what some of those words mean. :stuck_out_tongue: On a more serious note though, sounds a lot more in depth than mine, although I’m sticking to price action as well. Battle stories? Oh hell do I have a big one…

Eight days into my live account I learned a valuable lesson: NEVER take advice that takes you out of your comfort zone. My mom has been following the progress of my demo/live account from afar which is made more difficult by the fact that she’s hundreds of miles away and doesn’t have reliable access to a computer.

My fourth trade (previous three had been winners) had a 2:1 R/R ratio set, and I got stopped out. Doing an autopsy on the trade to see what I could learn about the trade I realized that while I had been stopped out, the order went on to hit my TP just four hours later. In relating this to my mom she said “well then just stop using a stop loss” which at the time sounded like a horrible idea, and not something I was comfortable with. But I listened. I set my order up at 7pm local (my broker’s daily candle close) and shut everything down for the night. I checked it once before I went to bed and it was doing nicely with about 10 pips gained so far.

My alarm went off at 6AM as it always does and I stumbled out to check the markets. Needless to say, the results kinda ruined my day and set off a panic in my mind. Overnight the trade had gone a full 90 pips against me. By the time I recovered and closed the trade I was down $92.30. All of my profitable trades and a sizable chunk of my starting capital had vanished.

Silver lining: I learned very early on the value of sticking to your own system and ignoring advice from others who aren’t “in the world” that we inhabit. I also learned how to recover from a massive account loss and over the next two weeks I was able to not only recoup that loss, but return to profitability.

Does that count as enough of a horror story? :21:

18

I can definitely relate to you when you tell people about FOREX no one seems to really understand that its the REAL money maker of all markets, everyone is stuck on the ‘Stock Market’. It’s also funny you felt that way as a kid I was the same way being intrigued by math as my favorite course I always wondered what those numbers really meant, I knew they were always money…LOL But indeed the Forex world is exactly where I need to be.

As far as me? Yes I am a full time trader and I have a business that brings income on the side (nothing major yet) but I am still on the learning curve, not at the end of the tunnel yet but I’ve gotten my way out of two thirds of the darkness. The last one third comes from patience, discipline and persistence with time. Pretty soon 40 lot trades will be a reality :21: .
As for my system its based on Price Action. I use Volume along with a combination of ICT’s methods, and Nial Fuller’s methods as well. I pay attention to the Daily, 4H, 1H and 15m for entry rarely 5M. I aim for a minimum 1:2.5 risk reward ratio, anything less than that is not worth my time or trade. Yes I do use Fibs, & Yes I use EMA’s (Price always reverts back to its mean :wink: ) I use it in a different way, got it from Nial fuller. If you’re interested in knowing more message me or add me on skype.

So to sum it all up PRICE ACTION is equivalent to algebra. All the other layers (Algebra II, pre calc, calc 1 and calc II) have been different theory’s which hold credible information. I have compiled a system that works for me! Perhaps you guys may be interested in my thread, i just started it still no reply’s but hey I’m a New Generation Trader

19

Indeed ICT’s stuff is powerful I wanted to know which site do you utilize for the COT report? also which London close classes did you take, I definitely think its interesting and I wouldnt mind checking out some of your sources. Its great to have an edge when it comes to trading. Do you have a skype? It’s ok if you dont want to give information I can completely understand. Its great to network with traders who are at the same level of the learning curve we can all get rich together and learn from each others mistakes.

20

For COT, I use the weekly chart on Pricecharts.com. I subscribe to Pricecharts, but I think it’s only $25-$30. I also go into the site that is linked to the Babypips school and downlaod history reports into Excel, but that is just to verify. Pricechart weekly reports are really great, because they show the price on the top, so you can see the relationship between Commercials net position and Price.

For the London Close, the person teaching the course is Shirley Hudson. and she does it through Forex Mentor. I hate to see you spend the money as the London close is known concept regarding the effect on price that happens when the average daily range has been achieved, and then traders / hedge funders start cashing out their positions for the day (very similar to what price does at other times.) If you really want to buy it go ahead, but I’d happily explain it to you more via Skype or in an email for free. Check out the Fiber on Nove 15. See how it went up after first making a low after the open (est) and then hit a high at 10:15 - 1.28. At 10:15 (the time varies) price starts to retrace. The idea is that this is basically the London folks cashing out daily positions forcing price to go in the opposite direction of a strong daily range day. Basically you also want to find a point of S/R and a fib level as well.

I’ve benefited from people doing nice things for me. I am more than happy to share my sources. Hope this helps