How to Live Without a Day Job: Insights from a Prop Trader
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Chapter 1: The Dream of Freedom
Have you ever envisioned a life devoid of the daily grind? Many of us share that longing. Let's reflect on that desire together.
Imagine not having to rise at the crack of dawn, preparing for another day in the office. Instead, picture waking up without the pressure of squeezing into crowded public transport, surrounded by others lost in their devices, all preparing to tackle the 9-to-5 routine. Every time I think about my commute, I dream of a life where I can work from anywhere, free from conventional employment.
My first encounter with trading came through YouTube, where it appeared deceptively simple. Just sketch out some demand and supply zones, draw trendlines, and wait for the right moment to enter a trade. I thought all it took was a modest $500 to start, and soon I was trading forex with a level of ambition that was perhaps unwarranted. Initially, I saw success, doubling my investment. Elated, I imagined quitting my job in mere months. However, reality soon struck as I faced losses that wiped out my gains.
Despite my setbacks, I remained determined to master trading. I immersed myself in YouTube tutorials, yet my accounts continued to dwindle. Have you ever experienced similar frustrations?
I sought guidance from various sources, including Babypips and Reddit, and explored options like copy trading and account management services. Unfortunately, these ventures only added to my losses—amounting to five figures over two years. Eventually, I committed to a mentorship that helped me achieve profitability.
Time for Success?
After much effort, I developed a trading strategy that yielded a 34% win rate and an average return of 2.6R. I entertained the thought of borrowing money to fuel my trading ambitions, convinced that my backtesting indicated a reliable 10% monthly return. Yet, I eventually realized that my optimism might be misplaced.
Reflecting on my early enthusiasm, I understood that a trading strategy is only a fraction—about 30%—of what defines a successful trading career. Many straightforward strategies exist, but the allure of finding a "holy grail" with high returns can distract us from the fundamentals.
Understanding Trading Psychology
If strategies account for only 30% of success, what comprises the remaining 70%? As you've likely inferred, it's the often-overlooked realm of trading psychology.
The emotional toll of trading can be significant. Consider how you feel after a string of losses—disappointment, frustration, or even hopelessness. After losing several trades, it’s easy to abandon your plan and make reckless decisions in an attempt to recover your losses. This can be a dangerous path.
Without a well-honed trading mindset, sustaining a career in trading can be challenging.
Trading as a Full-Time Career
Transitioning to a full-time trading career brings unique challenges compared to relying on a steady job. Without regular income, financial pressures mount. For instance, if your monthly expenses are $2,000 and your job provided $5,000, you would feel secure. However, in trading, uncertainty reigns.
To successfully trade for a living, you must first ensure your strategy is consistently profitable. Additionally, your psychological resilience must be fortified, and your capital should be sufficient to accommodate regular withdrawals while still allowing for account growth.
Before hastily submitting your resignation, take a moment to assess your readiness. Have you been trading live for at least a year? Your strategy should be robust enough to withstand various market conditions.
Financial Preparedness
Having your personal finances in order is crucial before diving into full-time trading. Transitioning means sacrificing a stable income and relying solely on trading profits, which can fluctuate. This is particularly risky during drawdown phases.
Picture facing financial obligations while lacking income for months; the ensuing stress could severely impact your trading performance, leading to poor decision-making.
It’s wise to save at least a year's worth of living expenses. The more you can save, the better. This cushion will alleviate financial pressure and enable you to focus on trading without the constant worry of making profitable trades.
Taking It Slow
The prospect of leaving the 9-to-5 grind for a trading lifestyle can be thrilling. You gain autonomy and freedom from rigid schedules and workplace norms.
Personally, I prefer a cautious approach. Balancing my full-time job with trading allows me to engage with the market without jeopardizing my financial stability. I focus on higher timeframes, which accommodates both my trading goals and my current employment.
I'm also tackling funded account challenges and receiving consistent payouts, ensuring I have a safety net before committing to full-time trading. While it may take longer to transition, I value the time and freedom that comes with such a move. If trading full-time means enduring daily stress, I'd rather maintain my current pace.
Embracing Accountability
It's easy to claim you’ll be accountable for your trading decisions, but how many actually follow through? Reflect on your trading journal—if you maintain one—and assess how often you stray from your rules. Trading can be a solitary journey, devoid of oversight or support.
Having an accountability partner or mentor can transform your experience. You gain someone to discuss strategies with and hold you responsible for your actions. Trading can feel isolating, but discussing your decisions with a mentor often reveals blind spots in your approach.
Consider a mentee of mine, whom I'll call Andy. Despite his knowledge of stop losses, he frequently neglected them, leading to significant losses. Through our mentorship, he recognized his gambling mindset and has since developed a solid grasp of both technical analysis and risk management.
If you aspire to elevate your trading skills and pursue financial independence, consider my mentorship program. Keep in mind that slots are limited.
Chapter 2: Insights from Successful Traders
In this video, the trader shares their journey of withdrawing $120,000 in profits from prop firm trading, detailing their strategies and insights.
This video explores how to effectively manage six-figure prop firm capital with copy trading, offering valuable tips for aspiring traders.
Originally published at http://keeleytantrading.wordpress.com on May 21, 2023.