Trading with spare money and trading full time to make a living is very different…

Guest contribution experience by a trader who tried to quit his job to try his hand trading full-time -:

Back in early September I decided to quit my full-time job to trade full time. Whilst I wanted to get straight into trading, I still worked the 17 weeks’ notice (8 full time, 9 part time). Over the 17 weeks that I started trading I made some money, lost some of my profit, made some more…etc. but on the whole did well with the time I had. All looked good for the change. I began trading full-time at the start of the year.

I have found out the hard way, the difference between trading part time with ‘spare’ money and trading full time to make a living. Your mindset changes completely. Anyone can walk along an 8″ wide scaffolding board if it’s on the floor, you could walk along it 100 times and never step off it. But put it 100 foot up in the air and it`s a different ball game. Fear, nervousness, what if’s fill your mind and make it 100 times harder to walk the plank. Full time trading, I find, is a bit like that. With no safety net of a regular income, it is very hard to trade rationally or intelligently. Emotions kick in and your decision process is very different. It also takes over your life. At times when I should be spending time with my family, I have been keeping an eye or my mind on my trading. I have even been dreaming about my open positions. I could carry on and ‘play it to the bone’, but in my heart I know how it is going to end. I will either make or lose money, but I know either outcome will be an extremely stressful life. Not the life I wanted. Maybe I’ve been very naive. So, I am going back the company I left last month. I will still trade, but much less and with less.

I have not documented this in writing for any sympathy. If I had read something like this when I was thinking of full time trading, maybe I wouldn`t be writing this now. I would even welcome some “Simon Cowell type” advice/comments. I tried it and now I know, I can live with that. But, I could not have lived without trying.

Editor Note: The fact is trading for a living is far harder than anyone initially imagines. I can guarantee every trader has at one stage or other as experienced these emotions. We all lose as well as win – its just keeping the scales tipped in your favour that’s the tricky bit.

My advice is not to give up your day job at least not at the start. People think it’s easy to make money as a full time job, you’ll be wrong. If you think to trade a full lot (i.e £10pp) you should really have about £35K to play with. At £10pp yes, you could make 30 points a day to make £300 per day. With your funds your should work out how much you can trade with and the stop losses you will use. To make money in this game you do need a reasonable stop loss, but you should also know when to cut your losses on a losing trade.

Most day traders lose long-term. That’s a hard fact. You’ve got to treat this like going to the casino, but with better odds (if you’re any good!). Only take to the casino what you can afford to lose, and leave your credit card behind. If you lose your pot, save up a bit and restock. Hopefully that won’t happen and you’ll be able to build up a nice amount of equity, but the point is, you need to be able to save up when you lose – which you will at some point, everyone does, particularly at the beginning. And you can’t save up without a job. This is too risky a trade to guarantee your bread!

Aside from the fact that family comes first the 17 weeks may not have been long enough to get used to the extra stress. To get round this problem I stopped making discretionary trades and now only trade when I know what the odds of a win are. This comes from testing, testing and more testing of ideas. I don’t make the big calls and frankly my set ups are boring and repetitive, but they work. One key thing to consider is how much money you really need to start up trading for a living. You need quite a lot to cover for the lean times.

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