[Dinerotrader]

Hello all,
I am currently stuck in the corporate world all the while wishing I was just trading stocks full time. I provided a small list of pros and cons related to changing my career to daytrading and I thought it would be interesting to see what you all could add that I hadn't considered. I am not considering the pros and cons of being a daytrader who is not successful at making reasonably consistent profits. I will not quit my full time job until I can prove I have a consitently profitable method/strategy that will exceed my current income so, part time, unprofitable, daytrading is not what I am considering for this list. Ultimately this would be a dream job to most people if money was consistently made but of course this very hard to do. I am sure TL has contributed a lot to the success of many daytraders.

Advantages

• No Boss
• Can trade from anywhere with internet connection if workstaton is portable
• Works hours can be shorter than the corporate world
• Large market moves are no longer a risk with short term positions
• All days the market is closed are holidays
• Good excuse to buy sweet computer system
• No/low commuting time
• Compared to owning business - no legal liability, no employees, no inventory

Disadvantages

• No Paid time off
• Possible stress and money shortage issues if trading methods stops producing profits
• Capital is required to make money
• No company benefits: health insurance, etc.
• Can be lonely
• The market sets its own hours that you have to work with
• Tax filing is more of a hassle than for W-2 wage earner

Thanks in advance for your time adding to this list based on your own thoughts and experiences.

Cheers.

[TradeSmart]

Just a few additions that I thought should play into your analysis:

Advantages
More time for family, friends, and fun! (This alone should outweigh all disadvantages!!!)


Disadvantages
If you leave Corporate America then need to return a few years down the road, you've really limited your earnings potential (just imagine trying to explain why your resume is blank for a 2 year gap).

When you meet people and tell them you're a "daytrader" and they see you're driving an M3 with a V12, they'll most likely assume you're a drug dealer on the side.


Best of luck to you in finding what you want!

[thalestrader]

Disadvantage: There may be no pursuit so contrary to the natural inclination of our emotions as is trading. By day trading, you are subjecting your psyche several times each day this stress. Discipline is largely the ability to withstand the urge to act so as to relieve this emotional pressure, and instead control the pressure so that you can execute and manage your trades.

Daily I recall the passage in Reminiscences where Livermore describes how most folks will allow a loss to run and grow larger and larger as they "hope" the loss will come back and and get smaller, maybe even let them out at breakeven, while at the same time, they cut short a profit as they "fear" that the profit (which they did not have when they woke up that morning) will get smaller or evaporate completely; when what a trader needs to do is cut the loss short out of fear the loss will get larger, and let the profit run in the hope that it will get larger.

In the end, one might conclude that it is not fear and greed but fear and hope which fuel the markets, and fear and hope of the wrong things no less. If you can control your emotions, profits come easily. If not, then at best you will find yourself overtrading trying to scalp for a few ticks here and there, or perhaps not trading at all, afraid "to pull the trigger," fearing any loss whatsoever. I have spent time in both places over the years.

It has been years since I have had any problem pulling the trigger. If anything, I usually find myself having to talk myself into waiting for my entry rather than jumping the gun. But I still have days where once I'm in a trade, I find myself needing to get up, go outside, and walk around the block as a way of forcing me to "sit on my hands," and keep me from moving my stop too close and cutting my profit short.

Trading is the hardest thing I have ever done.

Good Luck to you,

Thales

[Dinerotrader]

Thanks Thales.

I believe you have mentioned that you have a second field of work along side trading. What has kept you from making daytrading your only business?

As Brownsfan has said before, daytrading is one of the few businesses where making more money can be simply accomplished by adding more shares/contracts to your trades if your strategy is profitable. Alternatively, in most businesses, making more money requires more work/hours/sweat from the person. Based on this do you think you can become very wealthy as a trader once you find the right profitable strategy by just adding volumn to your trade lots? What keeps profitable traders from becoming wealthy retirees very quickly?

You gave one large disadvantage, do you have any advantages to add? Thanks for your input.
Cheers.

[thalestrader]

Originally Posted by imorgan »

I believe you have mentioned that you have a second field of work along side trading. What has kept you from making daytrading your only business?

I simply have other business interests that I have worked to develop over the years, and I am happy with my life. There is no activity in which I am currently engaged that I wish to shed.

Originally Posted by imorgan »

As Brownsfan has said before, daytrading is one of the few businesses where making more money can be simply accomplished by adding more shares/contracts to your trades if your strategy is profitable.

I would only caution that one really ought to pay attention to one's position size relative to equity relative to risk. Focus on learning to trade and on risk:reward, and the profits will take care of themselves.

Yes, more money can be made by simply adding contracts, but more money can be lost as well.

Originally Posted by imorgan »

Alternatively, in most businesses, making more money requires more work/hours/sweat from the person.

If you knew the number of hours of work, sweat, tears, frustration, emotional and psychological pain as well as financial loss that I had endured to get my trading to where it is today, you might not find it so appealing an endeavor. I was not a natural born trader.

Originally Posted by imorgan »

Based on this do you think you can become very wealthy as a trader once you find the right profitable strategy by just adding volumn to your trade lots?

As I said, learn to trade, focus on risk:reward, understand position sizing, and the money will take care of itself.

Originally Posted by imorgan »

What keeps profitable traders from becoming wealthy retirees very quickly?

Ed Seykota is famous for saying everyone gets whatever it is he wants from the markets. This implies that folks trade for many reasons other than the money. Money is just the way we keep our own score. Would you be in a hurry to retire from an activity the performance of which gives you great pleasure and happiness? If you are in it for the money only, I suspect your chances for success are greatly diminished.

Originally Posted by imorgan »

You gave one large disadvantage, do you have any advantages to add?

It allows you to share. And, if I may borrow a phrase, "sharing is caring." If you succeed, it will give you the means to help folks. We, my family, give an anonymous, weekly donation to a local ecumencial food bank. I'd encourage anyone here who has more than they need to find it in their hearts to give just a small portion of their excess to help those less fortunate.

Best Wishes,

Thales

[Uli Schmuli]

Pro: Virtually unlimited income

Con: Uncertainty

[Robert337664]

For me, the advantages outweigh the disadvantages. Determine what's most important to you. Trading for a career is a lifestyle change. Depending on which instrument you trade, trading can be done on your schedule. I trade equities between 9:30-12:00 am. EST. take the rest of the time setting up my trades and evaluating past trades.

Most important, Make a Trading Plan. You wouldn't start a business without a business plan, the same with trading. Be specific! What instruments will you trade? Pick 4-5 and get to know them and their characteristics. Under what conditions would you enter a trade & when would you exit. Are you intraday or swing,or both? What is your risk to reward ratio? Base this on your tolerance for risk. Be diligent is setting your stops and stick to them. Don't add to losers, get out, there is always another trade. Let your winners run with trailing stops. Be disciplined enough to STICK to YOUR RULES. Emotions will make you go bankrupt. The trick is to manage your losses. Focus on not losing (controlling) and the profits will come. Accept the fact that you will have losses, everyone does. Distinguish the difference between trader and investor. Warren Buffet is an investor, he buys and holds. Traders flip stocks (long or short) within minutes (scalping), longer intraday (momentum), or overnight up to several weeks (swing). Decide which you are, or what combination. FOLLOW YOUR RULES!!!

Find a good trading platform. I've used a few and currently use tradestation. This is not and endorsement. It works for me, maybe not you. It's strong on equities, not so much on other instruments. Just a personal opinion that fits my style.

If your going to do this for a living, INCORPORATE. An LLC is fine, you may use it with a "C", check with your accountant. Make sure your accountant is familiar with pattern day traders accounting rules otherwise it could cost you. Two that come to mind are Green Trader accounting (Green is the accountants name) and Traders Accounting, both have websites. I use neither, my CPA is familiar with the rules.

Last bit on advice is to paper trade first. Use your plan to be sure it works. Make adjustments as necessary. When you go live begin with small share size (50-100). If your profitable, gradually increase. Depending on your commitment, it could take you a year to become profitable. BE DISCIPLINED, or you will fail and blow your account.

SEC rules require you to have a $25,000 account to day trade equities (4+ trades within 5 days), futures (emini's) can be traded with less investment and can be traded around the clock.

ONLY TRADE WITH WHAT YOU CAN AFFORD TO LOSE. Scared money never wins.

[Gabe2004]

Originally Posted by thalestrader »

Disadvantage: There may be no pursuit so contrary to the natural inclination of our emotions as is trading. By day trading, you are subjecting your psyche several times each day this stress. Discipline is largely the ability to withstand the urge to act so as to relieve this emotional pressure, and instead control the pressure so that you can execute and manage your trades.

Daily I recall the passage in Reminiscences where Livermore describes how most folks will allow a loss to run and grow larger and larger as they "hope" the loss will come back and and get smaller, maybe even let them out at breakeven, while at the same time, they cut short a profit as they "fear" that the profit (which they did not have when they woke up that morning) will get smaller or evaporate completely; when what a trader needs to do is cut the loss short out of fear the loss will get larger, and let the profit run in the hope that it will get larger.

In the end, one might conclude that it is not fear and greed but fear and hope which fuel the markets, and fear and hope of the wrong things no less. If you can control your emotions, profits come easily. If not, then at best you will find yourself overtrading trying to scalp for a few ticks here and there, or perhaps not trading at all, afraid "to pull the trigger," fearing any loss whatsoever. I have spent time in both places over the years.

It has been years since I have had any problem pulling the trigger. If anything, I usually find myself having to talk myself into waiting for my entry rather than jumping the gun. But I still have days where once I'm in a trade, I find myself needing to get up, go outside, and walk around the block as a way of forcing me to "sit on my hands," and keep me from moving my stop too close and cutting my profit short.

Trading is the hardest thing I have ever done.

Good Luck to you,

Thales

I call trading THE LAST NUT THAT I HAVE TO CRACK and yes, it is the hardest thing I have ever attmepted.
Could you tell us how long did it take you to be consistantly profitable (on a weekly basis or any other basis) from the moment you discovered trading?
Also what is the % allocation of the instruments you trade.

Thank you

Gabe