Like any other business, forex trading has its pitfalls that could eat up the hard-earned money of newbies who have jumped into it without enough knowledge and preparation.
If you’re determined to make full-time trading work for you, then here are four simple steps you can take:
1. Ask yourself if you’re ready for full-time trading
Consider the logistics of trading full time.
Do you have enough capital? Imagine months of not getting salary and not making profits while STILL having to pay for your food, rent, utilities, and Netflix and Amazon Prime subscriptions.
Can’t live without your job yet? Can’t afford to take big drawdowns for weeks and still maintain your lifestyle? Don’t do it.
Have you spent enough time trading live? Before you take the plunge, make sure that you’ve found brokers that you can trust and trading strategies (yes, that’s plural) that have yielded you profits across all types of trading conditions.Of course, it goes without saying that you should have experienced being CONSISTENTLY PROFITABLE before trading full time.
Shifting to full-time trading also requires conviction. Do you REALLY want to be a forex trader? You shouldn’t just trade because you know that if you don’t, you won’t have a day job to go back to.
Are you prepared to weather months of not making money? How about doing forex-related research all day every day? If you think that you’re only in it for the profits and lifestyle-friendly hours, then you shouldn’t take the leap just yet.
2. Make realistic goals.
When you’ve determined that full-time trading is for you, then you should start listing down goals and plans.
It’s easy to imagine yourself buying cars, yachts, and private planes in your first two years of trading but we all know that it’s not that easy.
Do some research on other full-time traders and find out how long it took them to make a living from their trades.
Also, base your trading goals on your past performances and the possible market scenarios that you see for the next couple of years.
Based on your profits from when you were trading part time, can you fund a full-time trader lifestyle? How much profit are you expecting in a year? Five years? Do you think they’re realistic?
3. Prepare for a lifestyle change
If you want to be a full-time trader, make sure that you’re psychologically prepared for it and how it may affect those around you.
Unless you’re sharing an office with friends or you plan on trading in co-working spaces, you’ll likely trade at home. Remember that home-based trading is not without its struggles.
Ask yourself the following questions:
- Are you okay with trading by yourself all day every day or do you need more interaction in your daily routine?
- Can you concentrate on trading even when your game consoles are a few feet away?
- Can your parents/spouse/children/housemates give you the time and space you need to set up an office?
- Can you maintain a regular working schedule at home?
If you’ve said “NO” to at least one of these, then you might want to make adjustments before trading full time.
4. Treat trading as a business
The most difficult part of full-time trading is remembering to treat it as a business.Sure you can wear muscle shirts and pajamas in front of your screens but that doesn’t make full-time trading anything less serious than any other source of income.
Establish an office space, minimize distractions, and be disciplined about your “working hours.”
More importantly, keep track of your expenses (spreads, trading platform, broker fees, etc), monitor your profits, and keep a trading journal to track your mistakes and progress.
Making money from trading alone may sound daunting and exhausting – probably because it IS daunting and exhausting!
When you’ve mentally and financially prepared yourself and developed a trading framework to guide you to profits in the long run, then you’ll be on track to achieve financial independence through trading.