The concept of taking control of your financial destiny and supporting yourself by trading the financial markets is a dream almost all retail traders have. However, many don’t understand the risks involved in trading the markets full-time. If you wish to be part of the 10% who make money in the markets, the very first thing you must do to have a good foundation is to commit to mastery. Without that commitment, no matter how much you study about trading, you will not succeed.
No matter how many books you’ve read, videos you’ve watched, or markets you’ve traded; if you don’t commit to master, you will not be able to make a living out of the markets. Trading the markets full-time is very attractive, but everyone must understand that it is a tremendous challenge that requires one to adapt and overcome insurmountable hurdles along the way.
In this article, we will provide you some important points that you have to remember before you choose full-time trading as a means to support your lifestyle.
1. Make sure you are financially stable
This is the most important thing you must remember. If you decide to trade the markets full-time, you should be prepared with whatever that’s coming. The market is volatile, it can make erratic swings in a short period of time, make sure you have the money to pay for all the necessary expenses. It is best to save up money that is equivalent to your annual income before you start trading full-time.
2. Have significant experience in the market
You can’t just jump into full-time trading after three or few months of experience. You should especially reconsider if you’ve only experienced trading in a bull market because once the bears arrive, and they always do, you might get slaughtered. There’s no benchmark to how long you need to be in the market before you can go full-time, but we would suggest that you must have at least experienced different market environments several times.
3. Have a well-tested trading methodology
You can’t go to war without having the right weapons, you also can’t make a living out of the markets without having an effective trading methodology. Whatever strategy you choose to apply, a sufficient amount of backtesting will need to be done in order to prove its effectivity. Most importantly, you will need to have a methodology that can adapt to different kinds of market environments.
4. Do not let your emotions control you
There have been and always will be four types of emotions that have lead to financial destruction for traders: Fear, Greed, Hope, and Regret. There’s so much to tackle about these four emotions that it will require a separate article in the future. Just take note of these emotions and make sure you learn all there is to about them. Reminiscence of a Stock Operator and Trading in the Zone are two great books that talk about these emotions.
5. Never stop learning
Once you feel like you already know everything about trading the financial markets, you’ve already lost. To become a successful trader, you will need to become a perpetual learner. The markets do not remain static, they’re always dynamic and change over time. This means a methodology or framework you may be applying now might not work in the next 5 to 10 years. If you always think of yourself as a student of the market, the process of continuous learning with impact you greatly.
Full-time trading also comes with several advantages and disadvantages that you will need to take into consideration. Let’s take a look.
This is the main benefit of trading the markets full-time that everyone is after. Once you go trading full-time, you will have the freedom to do and accomplish other things in life. If you are a family man, you will have more time to spend with your loved ones. However, don’t take this freedom for granted. You will still need to put in early mornings and late nights in order to continuously improve as a trader.
A means to maximize wealth
If you’re doing it correctly, and with a sufficient amount of capital, trading the markets can be a way for you to maximize your wealth. The profits you generate can also be more than enough to supply for your living expenses, but it won’t be easy. The financial markets are the ultimate equalizer of wealth, but it can also take back every single cent you’ve made.
You can be your own boss
You don’t have to work with managers or supervisors. When trading the markets full-time, you’re only accountable to yourself. However, there is still one entity you will need to respect to the highest level; the market herself.
Huge amount of risk involved
When you choose to go full-time trading one mistake will not only wipe out your account, it will also wipe out your means of living. That’s why choosing to resign from a stable job to trade full-time is not always recommended. As mentioned earlier, only take the leap once you have a well tested and defined trading methodology.
It can be emotionally stressful
Trading is not for weak-hearted people, there will be days where you will feel like the market is coming to get you. There is added stress and anxiety involved knowing that you will need to perform at the highest level in order to sustain the lifestyle you are living.
Trading the markets full-time is definitely possible, but it’s not easy. There have been countless of traders around the world who have been humbled by the market throughout the previous decades. If you want to be part of the 10% who make money trading the financial markets, you must be willing to put in tremendous amounts of hard work. Always remember: if you want the things you’ve never had, you got to do the things you’ve never done.
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