Can I Make a Living Through Online Trading?
This is an often-asked question of me. It's really an impossible to answer question. When people ask me that question, I will always respond with "Sure it is, but how badly do you want it?"
There seems to be this (incorrect) assumption that trading is "easy" money. Simply punch in your orders in the morning before you head off to work, and by the time you come home, your portfolio will be swimming in new riches. People even take it a step further and figure that "online trading" would be a dream job that would allow them to make buckets of money without expending too much of their energy.
This couldn't be further from the truth. If you are seriously considering trading for a living, then you need to ask yourself these follow questions. Be honest with yourself. I know that the prospect of trading full-time sounds very exciting, but you need to make sure that everything is in place before you make that leap.
1. Am I prepared to work more than full-time hours to make it in the trading game? All of the successful traders that I know put in more hours than a full-time, 9-5 job. If you think that you can make a success of yourself working 30 minutes a day, then you are dreaming. Becoming a successful trader requires focus and hard work. Sure, when you have multi-millions, then you can afford to trade thirty minutes a day. But until then, you need to accept the fact that if you are to be a success, then you need to dedicate 10-12 hours per day to perfecting your craft.
2. Do you have the trading capital to make it? Some people think that they can start with $10,000 and make it as a "day-trader". Not if you are planning on this being your full-time income. If you are going to do this full-time, then you would need at least (at the very least), $50,000 to give yourself a chance. More would be preferable. If you have less but still want to trade, then why not trade before and after work until you can build up your bankroll.
3. Do you have six months worth of expenses set aside, outside of your trading capital, just in case? You can not include the six months in your trading capital. If you go bust, you need a cushion. If you don't have six months of expenses set aside, then make sure that your significant other has a steady job that could cover expenses, just in case.
4. Do you have the proper tools to make it as a trader? You wouldn't expect a plumber to arrive at a job site without his tools would you? Trading is no different. In order to compete, you need the proper set-up, which includes quotes, a proper monitor setup and access to real-time news (if you are a news trader). If you trade via technical analysis, then you will need the proper charting package. The point is - you need the proper tools to make it.
5. Do you have the support of your family? If you have a doubting spouse then your job will be ten times harder. Do you want to bust your ass all day and then have your spouse give you a hard time when they get home from work? Make sure that you convince your family that this is a viable living before you make the leap. It'll make it a lot easier on you. If you are single, then you obviously don't have any problems here.
6. Can you go back to your job if need be? Instead of quitting, why not take a year long sabbatical if you can? There is nothing wrong with a plan B.
To answer your question, can I make a living through online trading? The answer is an emphatic YES, but only if you are willing to treat the job seriously. If you expect to half-ass it and hang out with your buddies all day in the park playing football, then expect this to be a monumental failure. If you are serious about the venture and plan on treating it like a full-time job, then you definitely have a chance of making it.
Filed under: Stock Market Education