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Old 06-11-2010, 12:56 AM   #1

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Trading for a Living

You can't reinvest everything you make. Eventually, you will need to take money out of your trading accounts and pay bills, take your family on vacation, etc. But how often and how much should you transfer from your trading accounts to your personal accounts? Should you take out a fixed amount each month or a percentage of your earnings? What if your accounts are currently sitting lower than your opening balance? Should you wait until you move above that point before you reward yourself with a salary?
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Old 06-23-2010, 07:44 PM   #2

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Re: Trading for a Living

Great thread. Unfortunately I have nothing to add at the moment. Looking forward to reading more of this thread.
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Old 06-23-2010, 09:47 PM   #3

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Re: Trading for a Living

Daveyjones, this is a great topic. If you've been trading for a while you know that there's a lot of hype about the fortunes you can make by trading for a living. The reality is that like every job or business it is a process of gradual growth. And if you know people who've started their own business, you'll know that they lived like paupers for years, building their business to the point where they could reap the rewards by paying themselves a decent salary.

It's the same with trading for living. If you have a profitable system, you first need to build your trading account so that you can increase the number of shares, contracts or lots that you trade. You also need to have an idea of how much you need or want to withdraw from your account on a monthly or quarterly basis, that becomes essentially the salary you want to receive. Once you trade enough shares, contracts or lots so that your account grows on average more per month or quarter than what you want to pay yourself as a salary, then you can start pulling money out of it. But not before. You want to be in the position that even after your periodic withdrawals the trading account continues to grow, albeit more slowly.

Depending on the initial size of your trading account, and on the profitability of your system, you may have to build your account for one or two years before you can start pulling money out of it. It can be done, but not as fast as some would have you believe. Of course the larger your starting account and the smaller your salary requirements, the faster the process.
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Old 06-23-2010, 10:42 PM   #4

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Re: Trading for a Living

Thanks Will, that's very sound advice.
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Old 06-23-2010, 11:33 PM   #5

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Re: Trading for a Living


It is very important that you focus on building your account before even considering taking any money out. Trading full time on a $10,000 account just wont cut it. You can start with a small account but you need to leave the profits alone. Pulling money out right away will just lead to you spinning your wheels.

How much money you pull out and when you do it depends on your lifestyle. Keep in mind there are fees when you pull the money out so you don't really want to be doing this too often. I have found it best to start with a budget for yourself. This way once you have built your account size up to make a living off you can pull the minimum amount out monthly/quarterly to cover expenses.

The budget will also help you guage when it's possible to trade full time for a living. You should make sure you can make money for an extended period of time before you consider going at this for a living. Making money for 2 months in a row will not guarantee future success. You could run into weeks or even months where you don't make any money. Hopefully you are using a system that doesn't let this happen very often but it is possible. You have to make sure you are able to ride these times out.

traderwill gave you some great advice. Having a successful system in place is very important. I would also recommend getting that budget in place so you know what you need to make in oder to cover expenses. From there you will be able to schedule your withdrawals.
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Old 03-29-2011, 09:40 PM   #6

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Re: Trading for a Living

I agree with cuttshot. Once you have a sizable account I find it necessary to remove all profits for the week from your trading account. Take physical delivery of that money and go cash it at the bank, touch it, hold it in your hand, and then deposit it into your check, savings, and investment accounts.

I think this process is important because it makes what we are doing tangible and real. Perhaps its mostly for psychological purposes, but if you leave the profits in your account, they are "at risk" of the market. Removing them each week keeps it structured more as a business.
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Old 03-30-2011, 10:16 AM   #7

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Re: Trading for a Living

I like that idea of pulling out the profits. I think where some traders go wrong is thinking in terms of a salary and expecting a fixed dollar amount every xx week/weeks like when they are on payroll.

In all my years of trading my returns are never smooth -- some weeks/months the market is just so generous, other times it's incredibly stingy. I'd drive myself crazy if I had a "salary" expectation that was consistent/smooth.

Even when I look at my long-term non-traded assets like funds and stocks if I look at the monthly returns it is literally all over the map.

So, skimming out the profits makes sense but just don't expect that to ever be a consistent number. Assuming it's positive to begin with!

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Old 03-30-2011, 10:54 PM   #8

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Re: Trading for a Living

When I made a decision to trade for a living, I wanted to see somebody post results just to solidify in my mind that it is possible. I have had a thought to post such transparency, but I am still contemplating the real purpose I want to do this. (Is it useful to my life purpose) But for now I am going to try and post an example clip should I decide to go through with the idea. I will record the entry and exit showing the trading results. It should be more than 10 second recording to show the trade executions.
Attached Files
File Type: avi PNC.avi (7.25 MB, 152 views)
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