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  #11 (permalink)
 
Big Mike's Avatar
 Big Mike 
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GaryD View Post
I'd like to add a twist. @Big Mike and @Private Banker, anyone else who does it full time, if you found yourselves in that situation today, not completely broke, with let's say $50,000.00 total available to you to live, eat, trade... would you get another job, or would you trade?

I can't imagine that situation so it's hard to really comment. I am pretty diversified, and am not married, so I can't really see any sudden event that would lead to such a thing.

But, hypothetically, and giving it about 10 seconds thought, yes with 50k I would continue trading. If it were 5k then I guess I would probably kill myself, because I am never going to go back to a "normal job"

Mike



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  #12 (permalink)
 
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 Private Banker 
La Jolla, CA
 
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GaryD View Post
I'd like to add a twist. @Big Mike and @Private Banker, anyone else who does it full time, if you found yourselves in that situation today, not completely broke, with let's say $50,000.00 total available to you to live, eat, trade... would you get another job, or would you trade?

I'd probably just take $25,000 out as a safe cushion and then trade the remaining $25,000 while significantly reducing my position size. Just knowing I had some cash to cover any poor months would be good piece of mind. I wouldn't recommend this for everyone obviously but that's what I would do personally.

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  #13 (permalink)
 lancelottrader 
west palm beach florida usa
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Speaking from experience, I was in a fairly comfortable position a few years back and had made a few hundred grand in some real estate investments . I went into trading with the delusional idea that I would master it fairly quickly like everything else I have committed to succeed at.
After about three years, my savings started to dwindle and I still wasn't profitable. I had also been out of the work force for at least 6 years as well. Unfortunately, my lifestyle was also pretty expensive as well with my home and several automobiles. Honestly, I really didn't plan well. Also, by then I had lost well over 100k , mostly from my inability to control certain behaviors while trading. I was able to sell my house last year and have a bit of money in the bank.
So, for me, I have had a looming timetable. I have needed to master my trading or go broke... I don't really see too many jobs I could get at this point that would even cover half of my expenses.
The good news is that this ultimatum has forced me to find a system that really works for me. I found 3 setups that work consistently...I know what market conditions that are conducive to my style and how to recognize that early on..and I only take trades when all my parameters are met. I feel pretty confident now that I will be able to support myself through my trading. But a year ago, I was in a constant state of anxiety of my future. Not a fun way to live.

I honestly don't know if I could have gotten to this level without "having a gun to my head" and being forced to figure it out. I see that my charting and trading style seems to be different than what most people do. I feel like the added pressure made me innovate my trading and not listen to what everyone else does. However, the stress and pressure I have endured has been tremendous. Knowing what I know now, if I could go back, I would have never put myself into this position. But again, it's surprising what you can accomplish when you feel you have no other options.

Failure is not an option
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  #14 (permalink)
 
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 GaryD 
Orlando, Florida
 
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josh View Post
@GaryD comes to mind, as in the past he has talked about how he has struggled with having a "regular" steady money-generating job and yet trading at the same time. Without the steady job, while it might force some into terrible performance, it might force some into straightening up and to get their act together, considering the alternative.


My ride has been bumpy, to say the least, but I did come into trading thinking it was going to be easier than it is, meanwhile was losing money so fast in my real estate holdings. I had roughly 25% down on my deals, but kept 90% of our net worth at use, thinking that real estate was a safe business, had been doing it since 1993...

So as I worked on learning to trade, our assets kept depreciating, turning up the heat on my trading, until finally it hit me that despite the loan modifications, deed in lieus, short sales, heavily discounted and sold deals, unwinding $20m in loans was too much for me, and I was still $1m upside down when I filed for bankuptcy. Trading the whole way.

I started a new business, within a year had built it up very well, put money away, and then thought I was rady for full time trading last year. But as the deadling got closer, and I was still dealing with some feelings of loss of self-identity, I caved under pressure and had to get out. I saw that when there is a requirement to trade, it becomes so much different.

Today I am so calm though, and the full-time trader discussion has entered the house once again. We have enough saved to survive for a few years, my near-psychological-meltdown from all the pressure caused me to take a long (months) deep breath, and then look at what was the biggest issue I had with trading. It was uncertainty. ??

So I thought about that a lot, how there really is uncertainty in most things entreprenurial, and how I had been in business for myself since 1992... "Uncertainty" was too loose of a term, and did not correctly identify what was really going on. Ah-ha moment.

I had believed I was completely comfortable with uncertainty, re-invested everything that came to me. And never, ever, felt concerend about it. in 15 years, I had NEVER lost money on a deal. Complacency, ego, combined with mu known history of things caused me to not have any fear about money. But then in the very short 4-5 year period that followed, it caused me to doubt everything I did, not believe in anything risky. I had been "taught a lesson".

Culture shock of the mind. That was my biggest problem.

So far this year, having come back to trading, I decided to become a student again, learn as much as I could so that I always had some sense of what was going on. I decided not to pressure myself with making money, and instead treat trading like I was a psychology test pilot, seeing how things felt, and addressing the feelings more than the trading, which has lead to some very eye-opening insights.

My way of now testing the waters of trading for a living was to buy a Jeep Wrangler just a few days ago, with the "game" being that I will pay for it soley from my trading account, until it is paid off, or the account runs dry.

I think it is a great test to see if I have transitioned from feeling stressed out by feeling pressured to trade, to it being something I really just enjoy and have developed a good understanding of, which I believe is the case. It is just enough of a taste of having to pay bills.

My wife is ok with the idea, it provides something more tangible out of the trading, other than an account balance that can change from day to day. The thought of growing a trading account that is only accurate while I am flat has a similar taste to her as the real estate collapse we are just barely out of. She saw our Personal Financial Statements every few months, for years. Commercial development loans renew annually and we had to both sign it, so she always saw our worth on "paper", but never really saw the money. She knew the bills were getting paid, she saw me take "draws", or "loans", or pay for things out of equity lines, but to her it was all debt. And, eventually she was right. lol!

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  #15 (permalink)
 
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 mattz   is a Vendor
 
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At first, I thought this is rather an obvious answer, however as I dug deeper into this in my mind, I realized the implications of this question. If we treat trading as a business, the question will become whether you can come up with rationale decision under financial stress and/or lack of financial means. Whatever business you are in, if you are left with a “fistful of dollars” would you make rational decisions assuming you don’t have many moves as each wrong move brings you closer to bankruptcy?

I assume each answer is a reflection of our experiences, so anything I say is a reflection and convictions that I hold.
So my answer is this: I don’t believe that desperation would ever lead to good decision making especially in trading. The “must make it” part could behave as a very heavy burden psychologically when you trade a leveraged asset like futures that at times behaves erratically, lacks patterns and consolidation patterns.

My experience shows that having a security leads to better decision making and rational steps for building a trading plan. Lack of funds, again in my opinion, leads a trader to imaginary level of trading where a trader wants the market to go to on the upside, or tank on the downside, as the need to make $$ grows with each trade. The propensity of developing revenge trading is higher when you must make it financially.

I am not proposing that blind arrogance will lead to a winning method, but I don’t want to get off topic here.

I propose to learn trading and trading live cash when you are in a comfortable state of mind. Trading not only brings out inner fears, but it also materializes them. Sorry to burst bubbles, but when some say that you should not trade for money, maybe this is one of the situations that it applies to.

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  #16 (permalink)
 
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 deaddog 
Prince George BC Canada
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With only 50 grand Iíd be looking for another job. I guess it depends on how much it cost you to live.

Iím not sure what others realize for an annual return, but I am happy with a return in the neighborhood of 50%. (I didnít come anywhere close to that last year)

How do you survive the inevitable bad year when you have to live off your capital?

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  #17 (permalink)
 
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 Patrick S 
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Big Mike View Post
I can't imagine that situation so it's hard to really comment. I am pretty diversified, and am not married, so I can't really see any sudden event that would lead to such a thing.

But, hypothetically, and giving it about 10 seconds thought, yes with 50k I would continue trading. If it were 5k then I guess I would probably kill myself, because I am never going to go back to a "normal job"

Mike

I am sure you are kidding when you say you would kill yourself. At least I would hope you are Kidding.
People look up to you @Big Mike. They may take your jesting the wrong way. Someone may be in these very shoes right now and are contemplating a gun to the head.

If you always do what you have always done you will always get what you have always gotten.
Celebrate because you executed your edge. Not because you won.
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  #18 (permalink)
 FB2012 
Munich Germany
 
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Patrick S View Post
I am sure you are kidding when you say you would kill yourself. At least I would hope you are Kidding.
People look up to you @Big Mike. They may take your jesting the wrong way. Someone may be in these very shoes right now and are contemplating a gun to the head.

I agree with that Patrick.
But why not test it. If you have a month where you say to yourself i will try a kind of a adventure vacation.
You can open a new account transfer only 5000$ and make a survival challenge just for fun, but as realistic as possible so all bills have to be paid by that account.
Maybe you will make it, i guess there are for sure some traders on that forum who would be able to pay there bills and make some extra money.
I bet you are one of them.

But which instrument to choose for that challenge ? Daytrading stocks is maybe not possible because of pattern day trading rules.
Trading futures ? Which broker would allow that. I think the initial risk would be to high for that endeavor.
People outside of USA can try that with a CFD broker.
Forex is maybe the way to go.

Maybe it is possible to day trade foreign stocks for day trading without fullfilling pattern day trading rules.

Having read "Viewpoints of a Commodity Trader, Roy W. Longstreet" I found it on Linda Bradford Raschke`s homepage in the readinglist.

The second chapter deals with that question.
The following cite is used as introduction in Roy`s book:
"I have made money from no money. I have lost money with money, and I have made back the money I lost.
Now I must learn to make money with money" statement made by a succesful trader visited by Roy in the summer of 1963.

The next sentences state that in his opinion it is easier to make money without money than to make money with money.

The exact is cite from that book "History is replete with instances that it is more difficult to make money with money than to make money without money."

Larry Williams also claims that he made it several times from 10.000$ to 1 Million in one year.
I do not know his biography but maybe others can confirm that.
Indeed i think Larry was not in that high pressure situation paying his bills from a 10.000$ trading account.

But for a kind of a challenge i think it is possible. So why not ?
To make it as realistic as possible one has to trade maybe from a trailer park residential area.
If somebody can make that I guess he can be considered a master trader.

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  #19 (permalink)
 
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 Big Mike 
Manta, Ecuador
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Patrick S View Post
I am sure you are kidding when you say you would kill yourself. At least I would hope you are Kidding.
People look up to you @Big Mike. They may take your jesting the wrong way. Someone may be in these very shoes right now and are contemplating a gun to the head.

Yes you are right of course.

Mike



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  #20 (permalink)
 calitrader 
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This is a great thread! It hits very close to home for me. I was trading a small account and trynig to live off savings and drawing on the account when necessary. Almost everyday was super emotional. I had some savings set asside for trading at some point in the future so I recently decided to take part of that account to live off. So I recently started 'paying' myself a weekly salary and am back to trading in SIM and getting ready to start back live with 1 lots.(A model like PrivateBanker talked about.) I am not married and live a pretty spartan lifestyle so I can get by on the money I am paying myself. Just that agreement to get a weekly salary fixed alot of psychological issues that were effecting my trading as well as putting my mind at ease. If I get to a certin point in my paycheck accout or have some kind of emergency that requires outside money to start coming in again then I'll need to get a job. Even thought I am only trading 2 or 3 hours a day in PST which i could still hold a tech job it would really through off the focus. So even if full time trading just a season for me, taking this risk is something I have always wanted to do.

Its kinda hard for me to organize the thoughts on this post. Hopefully it makes sense.

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Last Updated on June 27, 2013


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