Whether trading can be done for living, has always attracted the interest of active traders and people in general. I firmly believe that trading can be done for living provided certain conditions are fulfilled. Below are some of the factors that play a significant part in deciding whether a trader achieves success in his goal of making a living from trading the markets.
1)Experience – As trading is all about probabilities and trading psychology, more the experience better are the chances of success in earning a living out of trading. One should have sufficient experience (years not days), that too should come out of operating in different market cycles (bull and bear markets). If you start to trade for a living from day one, you will fail badly. This point is basically about finding a system and being at ease with it.
2)Capital Requirement – Returns from markets are variable, but let’s take a return of 10-15 percent CAGR for a conservative estimate (some traders will laugh at this number, Larry Williams made 11,376% return in World Cup Championship of Futures Trading!).Your living expenses should be less than 10-15 % return on your capital. As living needs are different for different people, you need to do your own math to find the amount of capital required, before you take a step towards making trading, the only source of income for yourself. This point is all about money management and setting realistic expectations from the markets.
3)Psychological Challenges – Apart from dealing with the madness in the markets, an individual trader has to face psychological pressure from the family and the society as well. Trading is considered synonymous with gambling by a large section of “non trading group”. They will surely ask very difficult questions once a new trader takes up trading as a carrier. Other thing that adds up to the psychological pressure is debt. Make sure you don’t have any outstanding loans, it should be paid off before you start trading your own account. In short, try to minimize the noise and distraction to achieve a focused approach towards your goal.
Odds for achieving success in trading become quite favorable if above conditions are met however experienced traders can work in very demanding conditions as well (Larry Williams made that kind of return in 1987 when many traders went bust). Trading is like a business, just as millions of people are running their businesses successfully, you too can be successful. Quite a lot of businesses fail, you too can fail in trading. Understanding and managing the risk is all you need. Finding your own space in the trading arena is very important, and that takes a lot of time and effort. The sooner we realize this, easier and less stressful, will be our journey towards our goal.
Life (as well a trading) is all about probabilities, when certain things align in certain ways, things tend to look simple. We find an effortless way around things that once seemed complicated, demanding and impossible. Trading for a living is much harder than people assume.
Good luck.
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1)Experience – As trading is all about probabilities and trading psychology, more the experience better are the chances of success in earning a living out of trading. One should have sufficient experience (years not days), that too should come out of operating in different market cycles (bull and bear markets). If you start to trade for a living from day one, you will fail badly. This point is basically about finding a system and being at ease with it.
2)Capital Requirement – Returns from markets are variable, but let’s take a return of 10-15 percent CAGR for a conservative estimate (some traders will laugh at this number, Larry Williams made 11,376% return in World Cup Championship of Futures Trading!).Your living expenses should be less than 10-15 % return on your capital. As living needs are different for different people, you need to do your own math to find the amount of capital required, before you take a step towards making trading, the only source of income for yourself. This point is all about money management and setting realistic expectations from the markets.
3)Psychological Challenges – Apart from dealing with the madness in the markets, an individual trader has to face psychological pressure from the family and the society as well. Trading is considered synonymous with gambling by a large section of “non trading group”. They will surely ask very difficult questions once a new trader takes up trading as a carrier. Other thing that adds up to the psychological pressure is debt. Make sure you don’t have any outstanding loans, it should be paid off before you start trading your own account. In short, try to minimize the noise and distraction to achieve a focused approach towards your goal.
Odds for achieving success in trading become quite favorable if above conditions are met however experienced traders can work in very demanding conditions as well (Larry Williams made that kind of return in 1987 when many traders went bust). Trading is like a business, just as millions of people are running their businesses successfully, you too can be successful. Quite a lot of businesses fail, you too can fail in trading. Understanding and managing the risk is all you need. Finding your own space in the trading arena is very important, and that takes a lot of time and effort. The sooner we realize this, easier and less stressful, will be our journey towards our goal.
Life (as well a trading) is all about probabilities, when certain things align in certain ways, things tend to look simple. We find an effortless way around things that once seemed complicated, demanding and impossible. Trading for a living is much harder than people assume.
Good luck.
Related Post
Reposting the Holy Grail Post in text format
