How To Trade For A Living?
Have you ever thought what is it like to be living life without a day job?
I'm sure many of you have the same experiences as me. Let's take a trip down the memory lane.
A life without a day job. That's nice. You don't have to wake up at 7am to prepare your day, dragging your feet to the washroom to washup. 7.45am you're out of your house, getting ready to squeeze in the public transport. Looking around you are people similar to you, scrolling through their phone, watching Netflix, or closing their eyes trying to get some last minute rest before the 9 - 5 grind begin. I sure think about it every time I need to go office instead of working from home. I have a dream of enjoying a life without day job, and I don't want to leave it as a dream.
When I found out about trading on YouTube, I thought how easy trading was. I just need to draw some demand and supply, some trendlines and wait for breakout. Take a long or short based on the confirmations given and I'll be rich.
Next moment, I'm in the live market with my $500 account buying and selling 10 lots of forex pairs. I got lucky on my first few trades, turning that $500 into $1,000. I feel like a god. This is so easy. I'm gona quit my day job in a few months time. What happened next is as you guessed it. I blew up the account with a few losses.
Over the next few months, I tried to take trading seriously. Absorbing all the content on YouTube every single day. Time and time again, I blew my accounts. Maybe trading isn't so easy after all. Think about how many times have you blown your accounts so far?
I tried looking around, from Babypips to Reddit to Forexfactory. I was introduced to copy trading, signals, expert advisors and account management services. I tried them all, losing 5 figures of money in total in a span of 2 years. That's a story for another day.
I took trading really seriously a few years back after signing up for a mentorship which took me to profitability eventually.
Time To See Success?
I worked hard and eventually came up with a strategy with a win rate of 34% and average return of 2.6R. I thought of borrowing money to fund my trading "career", or even just trade full-time without a safety net. My backtest results showed me an average return of 10% every single month. In my mind, I thought that I could be really rich by compounding all these profits. I can't remember why, but I realized it wasn't a good idea.
It was a good decision I didn't go ahead with my plan. What I failed to considered was that a period of drawdown and losing streak can damage my trading psychology. I did not have any live experience back then. On paper it sounded nice, having an average return of 10% every month, I could literally double my account once every few months.
The problem here is that like many of you, I was overly optimistic with my backtest results. You have to understand that a trading strategy accounts for only 30% of your trading career. There are actually many profitable trading strategy out there that are very simple. However, as simple as they might seem, we just like to think that the grass is greener on the other side, always wanting to find the next holy grail with high win rate and high returns strategy.
Meat Of Your Trading Career
If a trading strategy only accounts for 30% of your trading career, where do the other 70% go to? If you've been reading attentively, you will know that the answer is trading psychology.
Trading psychology is an underrated skill that many traders and investors ignore. Even if I give you a profitable strategy, if you do not have a trained trading psychology, you will turn it into an unprofitable one and call me a scammer.
Do you remember how do you feel when you lose a trade? Do you feel sad, angry, and demoralized? How do you feel when you lose 3 trades in a row? Let me ask you again, how do you feel when you lose 5 trades in a row? You start to deviate from your trading plan and start taking bigger positions, hoping that the next trade will help to cover the losses you've made. I don't have to remind you that this is a recipe for disaster.
Without getting your trading psychology in tip-top condition, you are unlikely to survive trading for a living for long.
Trading For A Living
Trading as a full-time trader is very different compared to when you're trading with a full-time employment income. Without your day job, you do not have a steady stream of income. Let's say your monthly expenditure is $2,000 and your day job gives you a steady income of $5,000. You have nothing to worry about. You are not afraid of not able to pay your bills on time, you do not need to be afraid of not having enough money for groceries. You still have leftover money to have fun and invest.
You don't stress over having a steady stream of $5,000 monthly. As long as you don't screw up, you are unlikely to get fired from your day job.
Trading for a living is different. First, you have to ensure that your strategy is profitable. Second, you have to ensure that your trading psychology is strong enough for you to survive in the live market. Third, you have to ensure that your capital is large enough for you to make constant withdrawal, AND compound your trading account at the same time.
Before you say "this is easy" and submit your resignation letter, please take a few moment to understand the importance of this. Are you already trading live at least for a few years? You must ensure that your trading strategy can survive all kinds of market condition - a year is a good gauge to begin with.
Personal Finances
Aside from your trading, it's good that you make sure you have your personal finances in order. Jumping to trading live means that you will forgo your monthly recurring income and solely relying on trading for income, which is not consistent. This is even worse if you are in a period of drawdown.
Imagine you have bills to pay, mouths to feed and debt to pay off. Without any income for a few months, you will feel the stress and pressure start to kick in. This will inevitably affect your trading psychology, leading you to overtrade or even taking trades that don't fit your trading plan.
The most important thing is to ensure you have at least 1 year's worth of your living expenses saved up. Of course if you can save more, it will be better. This is to cover your basic necessities and to pay off mortgage, bills and potentially any medical needs that might arise in the future. Having this stash of money in your savings account will take pressure off your back as you do not have to worry about not profiting from the market. During period of drawdowns, you will be less affected and pressured to make the "right" and "profitable" trades.
Taking It "Slower"
I know it's very exciting wanting to trade for a living by ditching the 9 - 5. You don't have to report to anyone. You don't have to wake up early and squeeze on the public transport. You don't have to adhere to a working culture that you don't like.
I don't like to take too much risk. What I'm doing right now is on top of my 9 - 5 job, I trade. To fit my current lifestyle, I'm trading on the higher timeframe instead of scalping on the seconds or 1 minute timeframes. This allow me to still have a consistent monthly cash inflow while allowing me to trade and build my account size. At the same time, I'm also tackling funded account challenges and have been consistently getting payouts. I want to make sure that I have a decent safety net before transitioning into a full-time trader. It might take me a few more years, but I would rather not having stress and pressure which might screw up years of my progress. It is the time and freedom I will have while trading full-time that I value. If trading full-time means feeling stressed out everyday, I'd rather not do it.
Taking Accountability
While it's easy to say that you will be accountable for your own actions and trades, how many of you are actually taking accountability? Look at your trading journals (if you even have one), look at how many times have you deviate from your trading rules? It is not easy following your own rules when you're alone. No one is watching you. No one is there to look out for you. No one is there to encourage you. No one is there to punish you. You have to do it yourself. It is a lonely path.
Having an accountability partner or a trading mentor changes everything. Not only do you have someone to talk to, but you have someone to be responsible for. Trading can be a lonely journey as you're the only one clicking on the buy and sell buttons. Talking to your mentor can help you discover flaws in your personality or habits that you never knew you had.
Now, imagine you have a habit of taking trades without confirmation but you're oblivious to this. By explaining your thought process of taking a trade to a mentor, you will realize this is a problem that you didn't know you had. Just by eliminating this habit, you see your win rate increase. Profitability doesn't comes from winning more trades. Sometimes, all it takes is just to take fewer losing trades.
I'm currently coaching a mentee - let's call him Andy. Andy has been trading for a few years in the indices and forex markets. Often times, he will make quite a sum of money, only to lose them all back into the market. Why? A doesn't make use of stop losses. He knows that this not a good way to trade. He knows. But no one is there to keep him accountable for not using a stop loss. He does not have a concrete trading plan to follow.
Before the start of our mentorship, Andy admits that he has a gambling mindset which made him lost a lot. This is close to 7 figures of losses, which is really A LOT. Friends and families asked him to stop with his nonsense and stop dreaming about achieving financial freedom through trading. Right now, Andy has a solid grasp of technical analysis skills, as well as risk management. His trading psychology improved greatly from when I first get to know him. He is currently backtesting a profitable trading strategy with a guided trading plan. He will be trading live once he has all the necessary backtested data for him to be confident in trading the live market.
Stay consistent. Stay safe. Success is just around the corner.
If you enjoy such content, feel free to click the like button and subscribe for more.
Let me know what are your thoughts and learning points in the comments below so others can learn from you too!
Please let me know what kind of topic you would like to read next :)
Happy weekend!
I'm sure many of you have the same experiences as me. Let's take a trip down the memory lane.
A life without a day job. That's nice. You don't have to wake up at 7am to prepare your day, dragging your feet to the washroom to washup. 7.45am you're out of your house, getting ready to squeeze in the public transport. Looking around you are people similar to you, scrolling through their phone, watching Netflix, or closing their eyes trying to get some last minute rest before the 9 - 5 grind begin. I sure think about it every time I need to go office instead of working from home. I have a dream of enjoying a life without day job, and I don't want to leave it as a dream.
When I found out about trading on YouTube, I thought how easy trading was. I just need to draw some demand and supply, some trendlines and wait for breakout. Take a long or short based on the confirmations given and I'll be rich.
Next moment, I'm in the live market with my $500 account buying and selling 10 lots of forex pairs. I got lucky on my first few trades, turning that $500 into $1,000. I feel like a god. This is so easy. I'm gona quit my day job in a few months time. What happened next is as you guessed it. I blew up the account with a few losses.
Over the next few months, I tried to take trading seriously. Absorbing all the content on YouTube every single day. Time and time again, I blew my accounts. Maybe trading isn't so easy after all. Think about how many times have you blown your accounts so far?
I tried looking around, from Babypips to Reddit to Forexfactory. I was introduced to copy trading, signals, expert advisors and account management services. I tried them all, losing 5 figures of money in total in a span of 2 years. That's a story for another day.
I took trading really seriously a few years back after signing up for a mentorship which took me to profitability eventually.
Time To See Success?
I worked hard and eventually came up with a strategy with a win rate of 34% and average return of 2.6R. I thought of borrowing money to fund my trading "career", or even just trade full-time without a safety net. My backtest results showed me an average return of 10% every single month. In my mind, I thought that I could be really rich by compounding all these profits. I can't remember why, but I realized it wasn't a good idea.
It was a good decision I didn't go ahead with my plan. What I failed to considered was that a period of drawdown and losing streak can damage my trading psychology. I did not have any live experience back then. On paper it sounded nice, having an average return of 10% every month, I could literally double my account once every few months.
The problem here is that like many of you, I was overly optimistic with my backtest results. You have to understand that a trading strategy accounts for only 30% of your trading career. There are actually many profitable trading strategy out there that are very simple. However, as simple as they might seem, we just like to think that the grass is greener on the other side, always wanting to find the next holy grail with high win rate and high returns strategy.
Meat Of Your Trading Career
If a trading strategy only accounts for 30% of your trading career, where do the other 70% go to? If you've been reading attentively, you will know that the answer is trading psychology.
Trading psychology is an underrated skill that many traders and investors ignore. Even if I give you a profitable strategy, if you do not have a trained trading psychology, you will turn it into an unprofitable one and call me a scammer.
Do you remember how do you feel when you lose a trade? Do you feel sad, angry, and demoralized? How do you feel when you lose 3 trades in a row? Let me ask you again, how do you feel when you lose 5 trades in a row? You start to deviate from your trading plan and start taking bigger positions, hoping that the next trade will help to cover the losses you've made. I don't have to remind you that this is a recipe for disaster.
Without getting your trading psychology in tip-top condition, you are unlikely to survive trading for a living for long.
Trading For A Living
Trading as a full-time trader is very different compared to when you're trading with a full-time employment income. Without your day job, you do not have a steady stream of income. Let's say your monthly expenditure is $2,000 and your day job gives you a steady income of $5,000. You have nothing to worry about. You are not afraid of not able to pay your bills on time, you do not need to be afraid of not having enough money for groceries. You still have leftover money to have fun and invest.
You don't stress over having a steady stream of $5,000 monthly. As long as you don't screw up, you are unlikely to get fired from your day job.
Trading for a living is different. First, you have to ensure that your strategy is profitable. Second, you have to ensure that your trading psychology is strong enough for you to survive in the live market. Third, you have to ensure that your capital is large enough for you to make constant withdrawal, AND compound your trading account at the same time.
Before you say "this is easy" and submit your resignation letter, please take a few moment to understand the importance of this. Are you already trading live at least for a few years? You must ensure that your trading strategy can survive all kinds of market condition - a year is a good gauge to begin with.
Personal Finances
Aside from your trading, it's good that you make sure you have your personal finances in order. Jumping to trading live means that you will forgo your monthly recurring income and solely relying on trading for income, which is not consistent. This is even worse if you are in a period of drawdown.
Imagine you have bills to pay, mouths to feed and debt to pay off. Without any income for a few months, you will feel the stress and pressure start to kick in. This will inevitably affect your trading psychology, leading you to overtrade or even taking trades that don't fit your trading plan.
The most important thing is to ensure you have at least 1 year's worth of your living expenses saved up. Of course if you can save more, it will be better. This is to cover your basic necessities and to pay off mortgage, bills and potentially any medical needs that might arise in the future. Having this stash of money in your savings account will take pressure off your back as you do not have to worry about not profiting from the market. During period of drawdowns, you will be less affected and pressured to make the "right" and "profitable" trades.
Taking It "Slower"
I know it's very exciting wanting to trade for a living by ditching the 9 - 5. You don't have to report to anyone. You don't have to wake up early and squeeze on the public transport. You don't have to adhere to a working culture that you don't like.
I don't like to take too much risk. What I'm doing right now is on top of my 9 - 5 job, I trade. To fit my current lifestyle, I'm trading on the higher timeframe instead of scalping on the seconds or 1 minute timeframes. This allow me to still have a consistent monthly cash inflow while allowing me to trade and build my account size. At the same time, I'm also tackling funded account challenges and have been consistently getting payouts. I want to make sure that I have a decent safety net before transitioning into a full-time trader. It might take me a few more years, but I would rather not having stress and pressure which might screw up years of my progress. It is the time and freedom I will have while trading full-time that I value. If trading full-time means feeling stressed out everyday, I'd rather not do it.
Taking Accountability
While it's easy to say that you will be accountable for your own actions and trades, how many of you are actually taking accountability? Look at your trading journals (if you even have one), look at how many times have you deviate from your trading rules? It is not easy following your own rules when you're alone. No one is watching you. No one is there to look out for you. No one is there to encourage you. No one is there to punish you. You have to do it yourself. It is a lonely path.
Having an accountability partner or a trading mentor changes everything. Not only do you have someone to talk to, but you have someone to be responsible for. Trading can be a lonely journey as you're the only one clicking on the buy and sell buttons. Talking to your mentor can help you discover flaws in your personality or habits that you never knew you had.
Now, imagine you have a habit of taking trades without confirmation but you're oblivious to this. By explaining your thought process of taking a trade to a mentor, you will realize this is a problem that you didn't know you had. Just by eliminating this habit, you see your win rate increase. Profitability doesn't comes from winning more trades. Sometimes, all it takes is just to take fewer losing trades.
I'm currently coaching a mentee - let's call him Andy. Andy has been trading for a few years in the indices and forex markets. Often times, he will make quite a sum of money, only to lose them all back into the market. Why? A doesn't make use of stop losses. He knows that this not a good way to trade. He knows. But no one is there to keep him accountable for not using a stop loss. He does not have a concrete trading plan to follow.
Before the start of our mentorship, Andy admits that he has a gambling mindset which made him lost a lot. This is close to 7 figures of losses, which is really A LOT. Friends and families asked him to stop with his nonsense and stop dreaming about achieving financial freedom through trading. Right now, Andy has a solid grasp of technical analysis skills, as well as risk management. His trading psychology improved greatly from when I first get to know him. He is currently backtesting a profitable trading strategy with a guided trading plan. He will be trading live once he has all the necessary backtested data for him to be confident in trading the live market.
Stay consistent. Stay safe. Success is just around the corner.
If you enjoy such content, feel free to click the like button and subscribe for more.
Let me know what are your thoughts and learning points in the comments below so others can learn from you too!
Please let me know what kind of topic you would like to read next :)
Happy weekend!
Prop Firm Funded Trader
Find out more about me here: linktr.ee/kt_fx
Find out more about me here: linktr.ee/kt_fx
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