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In part 1 of this article I started to look at the financial implications of giving up the day job to instead start trading full time for a living. For day traders, certainly practising is easier if your intended market is not your home market, for example if you want to trade the US and you live in the UK where you can come home and paper trade in the evening.

There are other try before you buy options open to the day traders who want to practise trading their home market outside of normal hours though. Trading full time can give you enormous amounts of free time, but if you have nothing to fill that time with you can quickly lose the plot ' I've seen it happen and it's not pretty.

Is It Worth It?

Nobody can tell you if trading for a living is for you, it's something you have to find out for yourself.

In part 1 of this special I started to look at the financial implications of giving up the day job to instead start trading full time for a living. There are more than just monetary considerations as we will see later, but for now, there are some more costs to ponder.

More Costs!

Let’s move on to equipment. Presumably you or ever have a PC and internet connection by virtue of the fact you are reading this on the internet. But are these both up to the job of trading full time? for all that the specifications for both hardware and ISP will depend largely on your trading style, but if you’re relying on a 100Mhz Pentium II and a dial up service, you’re setting yourself up for failure. So stockpile for quality equipment, meed to keep it up to spec, and quiver for some repairs too – expect the unexpected.

Many traders make the mistake of saying “This will do me whilst I start out, and I’ll get something when I make some real money”. This is quite simply false economy, you are unlikely to ever make real money with a substandard setup (and this applies equally to substandard software and data feeds). This is a cut-throat specialization and 95% fail, you must give yourself every amenity you can. You wouldn’t enter the Indy 500 in a go-kart with the intention of marketing a compulsive gambler car when you’ve won a few races, and the same thing applies here.

Earnings

When you’ve more this all together, you have a pretty good picture of how much money you need to generate from your trading in order to live. Does your past performance suggest you will be able to meet this target? It’s tempting to say “When I go full time I’ll make much more”, but how do you know this is the case? Perhaps you can take a couple of weeks holiday and try it out – if you don’t make enough in that two weeks then you’re not ready. A few weeks really isn’t enough time to know if you’re going to succeed though. An ideal next step then is to cut your day job hours to part time and trade maybe two or three days a week. This way you know you have some money materialization in, you get to trade for real, and if it all goes horribly wrong you are probably transmuted placed to get back into full time employment than someone who quit the working world completely.

The option of part time work is a luxury many of us don’t have however. So does it have to be all or nothing – trade or work? Why not keep the day job and trade outside your working hours as well. If you are trading and end of day strategy, then this is easily accomplished fact by doing your research in the evening and placing the arrogate combinations of Stop and Limit orders with your broker. For day traders, unmistakably practising is easier if your intended market is not your home market, for example if you want to trade the US and you live in the UK where you can come home and paper trade in the evening.

There are other try preferably you buy options open to the day traders who want to practise trading their home market outside of normal hours though. eSignal allows you to download tick data for any symbol and play it back in real time or speeded up so you could trade the whole day in an hour. Other vendors have similar offerings, and if you have an IB use you can use AutoTrader to record tick data during the day for playback into a demo version of SierraCharts or QuoteTracker for free.

The foundational line here is that erst you take the plunge, you need to have done everything in your power to prepare yourself for what lies ahead. It will still be harder than you ever thought, but it will be nigh on impossible with no preparation whatsoever.

Other Considerations

There are a few non-financial aspects to consider early going full time with your trading. If you have a family, how will the diversification impact them? Do you have the space to work uninterrupted during the day? It’s important that the family don’t hog that for you are at home you are compulsively to take the kids to school, or walk the dog. Make sure from the start that everybody knows the ground rules and that you can separate your working time from your free time effectively.

Consider also the social impact of leaving your full time employer. Again, if you have a partner or family are you going to drive each other nuts living being in the same house all day? Relationships can be tested to the limit! Or if you live alone, are you going to drive yourself nuts existing on your own all day? Trading full time can give you enormous amounts of free time, but if you have nothing to fill that time with you can quickly lose the plot – I’ve seen it happen and it’s not pretty.

Is It Worth It?

Nobody can tell you if trading for a living is for you, it’s something you have to find out for yourself. I’ve seen traders go through highs and lows to boggle those of any stock chart, but for most it has proved to be a good move. The long list of benefits are all there for the taking, as with any ring the changes of blunder or indeed any major life change, as long as you go into it with your eyes open, and moreover all prepare, then there is no reason why it cannot work for you.

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