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In my last my post, I mentioned a few dilemmas that people might face when they want to quit their day jobs and trade full time.  One more thing I would like to add here is that there will be a huge amount of pressure on you to trade for a living. The pressure to make the ends meet every month could take a huge toll on your performance.  If you are making decent money now, however boring your current job is, please think twice.

But if you are making very little, then you have an advantage here. For example, if you are only making 30-40k a year, your opportunity cost will be much lower than someone that makes 70k or more. You do have to factor this into your total cost since the probability of your failure is high.  OK, let’s make this as condition 1.

For the love of your family, please do not quit your job if you are the sole bread winner and you have a few mouths to feed.  You should be single or at least you are not the only bread winner. This is condition 2.

The younger you are the better you will be.  It is not ageism.  You could trade well into 80’s if you have the right skills. It is about keeping costs down in the first couple of years of your trading and you might still have the time to turn around if your trading fails. This is condition 3.

You need at least one supportive person during your down times. Those times will hit you hard and fast. You will feel like a total failure sometimes.  During your down times, the last thing you want is a nagging person. My mom nags a lot. I think I would nag too when I am old.  This is condition 4.

50k trading stake in the first couple of years is fine, during which you do not trade for a living. You trade for experience, improve your technical skills and your psychological strength. This is condition 5.

Aside from your trading capital, you need to save enough for your living expenses for the next 2-3 years, which includes your rent, food and health insurance. I will further talk about this another post. This is condition 6.

You need the attitude to work your butt off and the courage to keep your chin up during the down times. This is condition 7.

You need at least a semi tangible and sensible trading plan before you start.   Although the trading plan you design at this stage is not going to stick around for long, you still need a basic trading framework to follow.  This is condition 8.

In summary, here is the list

1. You are making little money from your day job.
2. You are single or not the sole bread winner in your family.
3. You are young.
4. You have 1-2 people who will support you in your down times.  Or at least, no one nags.
5. You have 50k trading stake.
6. You have enough savings for the living expenses for the next 2-3 years. A part time night job might keep you afloat while you are still learning.
7. You have the right attitude.
8. You have a tangible trading plan.

In the next post, we will explore a few options to keep your daily expenses down. Day trading is like opening a store.  It is a business.  At the end of every day, you need to see how much money is sitting in your register.  And then you will do some simple arithmetic operations to figure out your net losses/gains.  Cost control is very important here and the video clip below teachs you “one way” to do just that.