Hi,
From my experience, I will tell now what I have learned as a trader to start trading for a living.
Before you go for a trading career, first consider the following facts.
1. Family support is the most important factor. Your family should know what you are going to do. To survive for a long run, one's family should constantly encourage him and should stand by him in thick and thin of life. So it is advisable that one should not start this career with family money. So to survive this stage, one should opt for a trading job in a proprietary trading firm so that one can learn it with others money and without risking his own capital.
2. It will be better if you have an another source of income (minimum 5000/-) from other source like house rent, fixed deposit interest or even some part time job.
3. From the very begining, first decide which type of trader (jobber, arbitager, positional trader or day trader) you are or for what type of trading your personality suits. As per my view, the current condition is not suitable for jobbing for beginners. For arbitrage, it is better to go for a job.
4. Ininially it is better to go for positional trading (spanning from 1 day to 5 day) or Day trading (1-2 positions per day and no overnight position).
5. If you opt for a trading job, then you must know that it is the most unstable job and your status will be the lower hierarchy of a company. I have seen very few people with good educational back ground in trading.
6. When you opt for a trading career, you must know that, in trading like any other business, there are two parts, one is income and the other is expenditure.
In expenditure, there are two components one is fixed (Your monthly expenditure, Trading cost (software charge, internet, equipment cost) and the other is variable (transaction cost like STT, stamp duty, brokerage etc.). Why it is variable? That means more you trade more will be the tranasaction cost. That means even if you manage to close a month with no profit no loss level, then also you have to bear these costs. If it is a borrowed money, then there will be a chance of interest payment along with principal repayment. So never ever dream about trading to start with a borrowed money. Apart from that, there is a hidden mine field called LOSS. If you continuosly make loss for two to three months, then it will make a severe dent on your principal.
So there are four ways(Your monthly expenditure, Trading cost (software charge, internet, equipment cost),transaction cost and interest payment if any) where you will make loss. Here I am ignoring loss.
Now consider the income part, It is only profit. Unfortunately, it is not fixed but variable. That makes the trading most difficult job. So have some back up money to take care of these expenditure for few months.
7. I have seen from my experience, 95% of the retail trading client accounts(unless they add more margin money) are smashed within the first three months and it is a universal phenomenon.
8. In trading, each and every new position is a potentially mine field. So every position has the capability to potentially wipe out all your trading capital unless you take some rigid money management position. Even if you make consistent profit for two years, there is no guarantee that you will make profit in the third year.
9. Once you start trading as a full time job, then definitely it will be very very difficult for you to switch from trading to other profession. In early part of the trading,in case in adverse situation,you may switch immediately but as day passes, it will be much more harder.
10. Trading is a very very lonely job. Gradually you will cut off from society. So you have make special effort to keep your social contact intact. One thing you must keep in mind that unless you are successful, society may not give respect to your profession.
I am telling you these things not to discourage but to have strong mindset towards trading. Trading is not for weak persons. You should be daring in this profession with some precautionary measures.
Wait for my next post,
Till then
Good Bye
From my experience, I will tell now what I have learned as a trader to start trading for a living.
Before you go for a trading career, first consider the following facts.
1. Family support is the most important factor. Your family should know what you are going to do. To survive for a long run, one's family should constantly encourage him and should stand by him in thick and thin of life. So it is advisable that one should not start this career with family money. So to survive this stage, one should opt for a trading job in a proprietary trading firm so that one can learn it with others money and without risking his own capital.
2. It will be better if you have an another source of income (minimum 5000/-) from other source like house rent, fixed deposit interest or even some part time job.
3. From the very begining, first decide which type of trader (jobber, arbitager, positional trader or day trader) you are or for what type of trading your personality suits. As per my view, the current condition is not suitable for jobbing for beginners. For arbitrage, it is better to go for a job.
4. Ininially it is better to go for positional trading (spanning from 1 day to 5 day) or Day trading (1-2 positions per day and no overnight position).
5. If you opt for a trading job, then you must know that it is the most unstable job and your status will be the lower hierarchy of a company. I have seen very few people with good educational back ground in trading.
6. When you opt for a trading career, you must know that, in trading like any other business, there are two parts, one is income and the other is expenditure.
In expenditure, there are two components one is fixed (Your monthly expenditure, Trading cost (software charge, internet, equipment cost) and the other is variable (transaction cost like STT, stamp duty, brokerage etc.). Why it is variable? That means more you trade more will be the tranasaction cost. That means even if you manage to close a month with no profit no loss level, then also you have to bear these costs. If it is a borrowed money, then there will be a chance of interest payment along with principal repayment. So never ever dream about trading to start with a borrowed money. Apart from that, there is a hidden mine field called LOSS. If you continuosly make loss for two to three months, then it will make a severe dent on your principal.
So there are four ways(Your monthly expenditure, Trading cost (software charge, internet, equipment cost),transaction cost and interest payment if any) where you will make loss. Here I am ignoring loss.
Now consider the income part, It is only profit. Unfortunately, it is not fixed but variable. That makes the trading most difficult job. So have some back up money to take care of these expenditure for few months.
7. I have seen from my experience, 95% of the retail trading client accounts(unless they add more margin money) are smashed within the first three months and it is a universal phenomenon.
8. In trading, each and every new position is a potentially mine field. So every position has the capability to potentially wipe out all your trading capital unless you take some rigid money management position. Even if you make consistent profit for two years, there is no guarantee that you will make profit in the third year.
9. Once you start trading as a full time job, then definitely it will be very very difficult for you to switch from trading to other profession. In early part of the trading,in case in adverse situation,you may switch immediately but as day passes, it will be much more harder.
10. Trading is a very very lonely job. Gradually you will cut off from society. So you have make special effort to keep your social contact intact. One thing you must keep in mind that unless you are successful, society may not give respect to your profession.
I am telling you these things not to discourage but to have strong mindset towards trading. Trading is not for weak persons. You should be daring in this profession with some precautionary measures.
Wait for my next post,
Till then
Good Bye