Trading full-time might be very interesting for others but experienced traders understand reality in the process. If you are thinking to be a full-time trader, pay attention to these 5 things beforehand –
#1. Right Amount of Experience:
Experience matters in every field. When it comes to trading it’s regarded as the most powerful asset. As markets are always changing, you need to have experience to tackle the change. Whether you are in equities or commodities, experience plays a vital role in succeeding as a trader.
Trading in a bullish or bearish context is quite simple but when the markets are volatile and uncertain experience is the weapon for tackling it.
For example, during the economic crisis of 2008, every piece of news made markets move up and down. When many traders lost money during that phase, professional traders made a killing in the markets. So, experience is necessary to twist and tweak your trades when market takes a u-turn.
#2. Ready to take up challenges:
Nothing comes easy when you really want to have it, so prepare yourself for the dark side of full-time trading. In this process, losses are inevitable but you need to know how to deal with it and move forward both psychologically and financially.
Some days you may earn right after the market open but some other days you might wait for whole day and end with nothing! This happens even if you’re a good trader who can understand the markets, take positions according to a strategy which has an edge.
The primary nature of market is volatility and randomness it can turn around at any point of time. The sooner you understand this aspect and learn to deal with losses, failed expectations; you are ready for trading full-time.
#3. Risk Management Skills:
In trading, risk and reward go hand in hand. But the risk must be according to your risk tolerance level and risk appetite. What if the market turns upside down? How we deal when our trades starts backfiring? How do we recover from a losing streak? This is why you need to have a full proof risk management plan in trading.
Some critical aspects of risk management you need to focus are:
• Amount of risk you need to take on each trade;
• The risk level for your stop-loss orders;
• Where to exit the trades and how to exit them;
• Maximum size of your trade and whether to increase it or not
• Contingency plan if you face a consistent losing streak
You won’t get 100% result on every trade, but with proper risk management we can end up in positive side even in times of losing streak.
#4. Income Requirement:
This is the basic question every full-time trader asks himself now and then. You need to pay your bills, rent and everything from the profit you make from trading. So, isn’t that a lot of pressure on you? Would it affect your psychology and performance? The way out is to save and plan the finances.
As a trader, you will have excellent periods where you will see unbelievable profits but also you’ll experience days which might shatter you completely. So, for maintaining a livelihood from full-time trading, you need to save from the profits, so that you can use those savings during your bad days.
Compound Interest is a weapon you can use; it can make your savings grow! When you invest part of your profits in some Fixed return vehicles, it will help in managing your financial commitments.
#5. Success in Part time Trading:
How much consistency you had while trading part-time? Did you made profits from most of your trades? Did you have discipline while trading as a part-time trader? If not, then don’t expect an overnight miracle as a full-time trader.
You need to understand whether you can see consistent results or not, whether you can be disciplined or not etc. before you start full-time trading. Give yourself a time period, do part-time trading until you see the results.
If you can be a successful part-time trader, then you can promote yourself as a fulltime trader!
Conclusion
These are some advice I offer students who aspire to be a full-time independent trader who enroll in my mentorship program. (Of course having a good mentor can help you in becoming a successful trader in many ways)
Whether it is full-time or part-time trading, you need to devote yourself for understanding the reality of trading and Markets. Because guessing, wishful thinking etc. won’t give any results. You need to understand the markets and must be able to adapt the changes in marketplace. Only then you are a successful professional trader.
