Every other time that I have had a meeting with a Live Trader, there was that same emotion of wishing “Wish that I could make a living out of it” and would respond with a grimace. That was not to offend but looking at the current situation of trading. Making a right amount from trading is very much possible, and there are suitable cases where ordinary aspiring people have made it possible to take up trading as the primary source of income, but the number of such successful people is very low.
When you are in the business of trading, you can either feast over your achievements or perish in it. It might seem more or less like sales, but it’s much harder than that. The burden of the monthly draw itself is gruesome one, and to top it up the market might even pull down your 2 or 3 months paycheck. The struggle then begins to level the amount with the paychecks of the months coming up.
Considering these factors, it is best recommended for an individual who is planning to take up trading as a career to have a backup income source. It can be a little revenue, but should not be reliant on the market fluctuations. The need for this revenue stream to serve as the steady and reliable amount for basic life needs and also to be a matter of relief in the times of drawdown which are sure to push you into it at times.
Another idea of looking into this issue is by creating a better goal with trading i.e., to trade for life. This is one of the most prominent skills that can be attained to sustain it in the market.
I had once published a graph chart which I called as the scariest financial chart. A simple idea is spoken out loud in the chart, which says that the actual lifespan will be much longer than what we expect it to be and at that time, the money we have will be much less than we hope to have. One of the fundamental reasons for coming to such a conclusion is the devastation of investment options due to ZIRP and QE. Looking at the practical side of things, you can see that a majority of the bonds are creating only zero yields and this situation is expected to continue for a long time. The prospects of looking into real estate investments is also dwindling with the asset conversions becoming very slow and you will end up with your investments running down the sinkhole. The final hope is in stocks, but I have a gut feeling that it is not going to hold on. Probably the Dow will be 30,000 in about 15 years and Nikkei may range the trades and turn around at a mere 18,000 leaving the investors helpless.
According to me and my experience, all the hype about S&P returns are all fake. Only those who keep buying the accounts in any situation every year for a lifetime will be able to gain any profit whatsoever from this investment method. Making a profit would not be possible if you buy them at the highs. Years back, a community member had bought 529 accounts when his kids were in school to prepare for their college. They were rather proud to have made a wise investment. But they made a mistake of buying at the highs at the start of 2000. Now 16 years later, they were dumbstruck to see what they have gained in their ‘wise investment.’ Deducting all the concerned fees, their gain was only 2.1% yearly. Thank God, they hadn’t relied on it as a source of retirement income.
The world has changed drastically over the years, those outdated norms are not going to work in today’s world.
In my trading experience, I have seen people make around 50 to 100 pips on a constant basis. Consider earnings of 50 basis points that means 25% in a year. When you cut down all the drawdowns and other related service costs, the percentage can be estimated at 12% considering that there are no other anchorages and with expected reduction of less than 5%. The breaking of the trust can be evident with the recent breakdown of Carl Icahn and Bill Ackman by about 18%.
The base factor is that being organized is not the key for the next generation. Do not attempt to break the clock, make the most of your life and live it now. Live in harmony with the financial market, learn and take back from it effectively. Only by trading for life will you be able to receive financial safety over your investments in the coming millennium.