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Trading for a Living Part 2 – Why should you trade for a living?

Why should you trade for a living?

We have all had a friend or a family member at some point who has come to us with their brilliant new plan of quitting their job on Monday, begin trading for a living by investing all their savings on Tuesday and being filthy rich by Friday – just in time for the weekend. Of course, this seldomly works out and when it ends badly it gives day traders a bad name.

So, how viable is it really to begin trading for a living?

Theoretically, so long as you have a working pc, laptop or smartphone and a half-decent internet connection you should be able to place trades on the market and get some amount of money from it. However, there are a tremendous number of other factors one must consider before taking the plunge of quitting their job and begin trading full time.

Firstly, is it possible to trade for a living? Are the people on the internet who claim to make R10 000.00 a day actually doing it? While I am not sure about those internet scams, I am sure that it is definitely possible to make a full-time career out of trading in your own personal capacity. Just don’t think that it is necessarily going to be less work or easier than a regular job.

So, lets take a look at some of the benefits and drawbacks of trading for a living… For starters, you will be your own boss. You are in charge of how you want to work and there will not be anyone around telling you what to do. However, that means you will have to take responsibility for anything that goes wrong and you will need to be self-disciplined enough to make sure you reach your targets, goals and accomplish any tasks that you might need to do. You will have to start holding yourself accountable. Also, while some of your colleagues might have frustrated you immensely, it can be reassuring at times to have someone around. Trading for a living is a very solitary lifestyle that can become quite lonely at times.

Another benefit is that you get to set your own working hours. Since there is almost always a market open somewhere in the world, you can fit your work in and around your other commitments – like sipping on cocktails in Bali or surfing in California. You can work when you want to and for how long you want. An added bonus to this is that you get to work in the comfort of your own home, or in some quaint café in Paris (if you are that way inclined). No more hours of wasting petrol in bumper to bumper traffic on the N1, no more parking costs or train fairs or over-priced suites that come in the dullest grey you have ever seen. You won’t have to waste your days in a stuffy office, just wishing it was Friday already. Simply wake up whenever you want, slip into your most comfortable clothes and make that 20 meter daily commute to your desk with a fresh cup of coffee – and not that bland rubbish office coffee, I’m talking about that good stuff you hide on the top shelf so that your spouse and kids don’t drink it all.

But, and there is always a but, there are some real drawdowns to this lifestyle such as an inconsistent salary. One day you might make R20 000 and the next day you lose R9000. You will not have a stable salary to rely on. If something comes up and you have a rather large, unexpected expense that month, how sure are you that you are going to have the cashflow to deal with it? On top of that, if you get sick and you can’t work for a bit, you aren’t going to make a cent. No paid leave, no company benefits and no security blanket.

Essentially you are running your own business, and in this busines there is no career progression. The only thing that you can improve on is your own earnings. Sure you can potentially make millions and then it wont matter but the only way you get an increase every year or a bonus for Christmas is if you become a better trader and you make more money on the market. Another important aspect to consider, and this comes with a bit of speculation, is that on some trading forums it has been noted that ones employability decreases after spending a significant amount of time trading for a living – but that happens to anyone who spends enough time out of the corporate world.

One of the greatest challenges you are going to face in this journey to becoming a successful day trader is the battle against bots. Automated trading systems, bots and algorithms make up for 60% of market volume these days. They are taking over the market and sure, there is definitely still a place for thinking, breathing, sentient humans but, you will have to work twice as hard to maintain an edge.

While there might a few drawbacks, its up to you to decide if the benefits outweigh them. Obviously, there are many more factors to consider but at the end of the day it is what you make of it. Even with the difficulties you will encounter, there are ways of working around them and it really all comes down to how flexible you are willing to be and are able to be.

For example, you don’t need to make as much if you live in (or move to) a low-cost, low-tax country. Cutting down on living costs can also make a big difference, as “making a living” on something in essence means that income covers expenses. Trading for a living is by no means a get rick quick scheme and if you plan well, do your research, put in the work and give yourself a bit of time to do this right, then you will have a much higher chance at succeeding than failing. That is why your education and support, especially in the first year or two, is so important. Find the right mentors that know what they are doing so that they guide you. Don’t trade blind, know where you are and where you are going. Find people that can teach you about trading psychology, risk management, the difference between a trading system and a trading strategy and so on. All these things are vital to becoming a full-time trader.

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