A user asked me an interesting question : "I’ve been studying trading for a while, I have good and bad days now but i am positive. I can feel my experience is growing and I like trading. I’m trying to figure out when I should start trading full-time. How much income should I expect to earn from trading?”
Today’s topic: At what point can trading provide your full-time income?
This is a very common and excellent question to ask yourself in order to define your trading goals.
An overview of this lesson:
1. Prerequisites to trading for a living.
2. Capital requirements.
3. Getting this capital and how to manage it.
4. Conclusions and recommendations.
Topic in focus:
After acquiring knowledge and experience trading, you feel ready to take the next step towards financial freedom. When should you leave your job and start trading full-time?
Beginning traders typically transition through a common cycle of experiences:
Desire: Get rich quick. The beginning trader starts with little to no knowledge or experience.
Reality: The beginning trader loses some or all of their starting capital (most of us have been here).
Quit or Grit: Many beginning traders quit. Those who persevere with passion and motivation push forward.
Structure: Continuous learning, testing, and gaining of experience.
Confidence: Results confirm that you have the skills necessary to profit long-term.
Question: Is it time to start trading for a living?
How much monthly income can I reasonably expect to earn when trading for a living?
How much starting capital would allow me to trade for a living?
Let’s do the math:
Talking about Forex or Crypto, Stocks or any other market, by utilizing a good trading system, money management, and emotional control, an average monthly profit target of 5-10% of your trading capital is achievable.
Requisite trading capital:
To understand when you can make a living from trading full-time, living expenses and tax/reporting laws should inform your monthly profit objectives. Let’s look at two simple scenarios:
Regarding monthly living expenses, Trader A requires $1,000, while Trader B requires $5,000.
With $1,000 in monthly living expenses, Trader A requires $10,000 – $20,000 trading capital.
With $5,000 in monthly living expenses, Trader A requires $50,000 – $100,000 trading capital.
Is this too much, or too little perhaps? Let’s examine this and explore solutions if you lack the requisite starting capital.
How to increase your trading capital:
With a focus on expectations vs. reality, psychology, common issues, and solutions, we examine two scenarios:
1. You don’t have the requisite starting capital but still expect to achieve your monthly profit objectives.
2. You do have the requisite starting capital and want to start trading full-time immediately.
1. You don’t have the requisite starting capital but still expect to achieve your monthly profit objectives.
Expectations: You have $1000 – $5,000 and expect to make 100% profit monthly which you will use for living expenses.
Reality: Stop. Get this out of your head. While you may be able to achieve such results one or more times, with such high risk it’s only a matter of time until your deposit drops to $0.
Psychology: Unreasonably high expectations inevitably lead to failure and bad self-esteem at best, denial at worst. Without a high morale, you may well decide to quit trading when you’ve only just started down the road. Has this happened to you? Please mention it in the comments if you’d like. You’re not alone.
Solution: Patience! If you don’t have the requisite starting capital this is not the time to leave your job, it’s time to accumulate. You must keep your income stable until you grow your capital to a point where 5-10% growth represents your monthly profit objectives. There’s more (very simple) math in the conclusion of this article regarding how long this will take so keep reading!
2. You do have the requisite starting capital and want to start trading full-time immediately.
Expectations: Earn 5-10% of your trading capital per month.
Reality: This is achieveable and sustainable BUT – you must be prepared for DRAWDOWN. What is drawdown? Drawdown is the unavoidable period when your capital diminishes because your strategies aren’t giving positive results.
Problems: Every legitimate trading system/strategy has drawdown. Are you prepared for it? Growing your capital by 5-10% per month on average also includes months where you earn 1%, -5%, -10%. Even -20% is still a valid drawdown for any functional system. On the flipside, there will be months where you’ll surpass your monthly objectives and maybe earn 15% or 20% instead of 5%.
Psychology: Are you prepared to see your starting capital decrease? These situations can induce volatile emotions and push you into making mistakes like panic trading. Remember that emotional control is an inextricable part of professional trading and this skill is honed with practice and patience.
Solution: If you’re just making the transition to trading full-time and want to use all of your capital, consider backing up a bit. Pretend that you only have part of your trading capital, perhaps 25-50% of it. Use only an amount which will not impact you emotionally when you’re at a loss. Using this reduced starting capital, attempt to reach your monthly goal of a 5-10% increase. Use this time to train your emotional control and strategies. Patience will pay off here. By the time you reach your requisite starting capital you will have more experience, improved emotional control, and greater capital. Using this method will make everything easier.
Conclusions and Recommendations:
A stable 5% average growth will double your starting capital in 15 months.
You would get to 10x your starting capital in 48 months – that’s 4 years.
If it sounds like a lot think about this – in 4 years you will get your trading capital and a HUGE AMOUNT OF PRICELESS EXPERIENCE AND NEW KNOWLEDGE.
Because over these 4 years you have been trading with a proper money management technique, you have learned multiple trading strategies, but also have gained a considerable amount of trading experience that will aid you in the future.
How about an average of 10% growth? An average 10% monthly growth will double your starting capital in 7 months. A sustained 10% growth per month will allow you to make 10x in 25 months. That’s only 2 years.
So, to keep it simple, with a targeted growth of 5-10% per month, it should take you 2-4 years until you reach the capital which will allow you to start trading for a living.
Is this an exact estimation? NO! It depends on many things, but the main factor is yourself. You will have the time to learn about trading, create your trading plan, fine tune your strategies and train your emotions. You will face drawdown periods and your emotions will make you doubt your system. Again, money management is going to play a key role in your journey to your goal.
For some people it will take less time, for others it will take more. It depends also on your available time, your dedication and even your natural abilities. For some it may be easier, others will need more training. But the ones who consistently use good trading practices will succeed.
Recommendations. As usual, my personal creed is that you should focus on safe trading. This will allow you to reach your desired deposit size, even if it takes a little longer. Trying to make super profit will increase your risk, and increased risk is the path to liquidation – you’ll blow up your account eventually, it’s just a question of time.
I notice that more and more people are losing patience and want to have results overnight – of course the crypto bull run has helped feed this type of thinking and it is no secret that I am very much against it – impatience and rushing into trading pushes you into making mistakes, taking bad trades, and panic trade without a clear plan. This can only lead to disappointments. And it does, I see it over and over again.
I suggest that you follow 3 targets while building up your deposit which will allow you to make your living from trading alone:
1. Protect your deposit.
2. Earn stable income in the long run (5-10% per month).
3. If there is an opportunity to make extra profit, use it, but keep following proper money management.
To make 100, 200, 300% per month, it’s not such a cool thing if the next month will get you to 0. But to make even 5% month by month, year by year is the path of a real professional.
I have a few questions for you:
Do you have a goal to trade for a living and be able to do it at your own pace?
Do you think a 5-10% average growth per month is an achievable target?
Would you be satisfied if in 2-4 years you would be able to trade for a living – or is it too slow for you?
For those who trade stocks – do you think this is possible? Slower? Faster?
Do you have anything to add to this post?
Please share your answers in the comments!
Today’s topic: At what point can trading provide your full-time income?
This is a very common and excellent question to ask yourself in order to define your trading goals.
An overview of this lesson:
1. Prerequisites to trading for a living.
2. Capital requirements.
3. Getting this capital and how to manage it.
4. Conclusions and recommendations.
Topic in focus:
After acquiring knowledge and experience trading, you feel ready to take the next step towards financial freedom. When should you leave your job and start trading full-time?
Beginning traders typically transition through a common cycle of experiences:
Desire: Get rich quick. The beginning trader starts with little to no knowledge or experience.
Reality: The beginning trader loses some or all of their starting capital (most of us have been here).
Quit or Grit: Many beginning traders quit. Those who persevere with passion and motivation push forward.
Structure: Continuous learning, testing, and gaining of experience.
Confidence: Results confirm that you have the skills necessary to profit long-term.
Question: Is it time to start trading for a living?
How much monthly income can I reasonably expect to earn when trading for a living?
How much starting capital would allow me to trade for a living?
Let’s do the math:
Talking about Forex or Crypto, Stocks or any other market, by utilizing a good trading system, money management, and emotional control, an average monthly profit target of 5-10% of your trading capital is achievable.
Requisite trading capital:
To understand when you can make a living from trading full-time, living expenses and tax/reporting laws should inform your monthly profit objectives. Let’s look at two simple scenarios:
Regarding monthly living expenses, Trader A requires $1,000, while Trader B requires $5,000.
With $1,000 in monthly living expenses, Trader A requires $10,000 – $20,000 trading capital.
With $5,000 in monthly living expenses, Trader A requires $50,000 – $100,000 trading capital.
Is this too much, or too little perhaps? Let’s examine this and explore solutions if you lack the requisite starting capital.
How to increase your trading capital:
With a focus on expectations vs. reality, psychology, common issues, and solutions, we examine two scenarios:
1. You don’t have the requisite starting capital but still expect to achieve your monthly profit objectives.
2. You do have the requisite starting capital and want to start trading full-time immediately.
1. You don’t have the requisite starting capital but still expect to achieve your monthly profit objectives.
Expectations: You have $1000 – $5,000 and expect to make 100% profit monthly which you will use for living expenses.
Reality: Stop. Get this out of your head. While you may be able to achieve such results one or more times, with such high risk it’s only a matter of time until your deposit drops to $0.
Psychology: Unreasonably high expectations inevitably lead to failure and bad self-esteem at best, denial at worst. Without a high morale, you may well decide to quit trading when you’ve only just started down the road. Has this happened to you? Please mention it in the comments if you’d like. You’re not alone.
Solution: Patience! If you don’t have the requisite starting capital this is not the time to leave your job, it’s time to accumulate. You must keep your income stable until you grow your capital to a point where 5-10% growth represents your monthly profit objectives. There’s more (very simple) math in the conclusion of this article regarding how long this will take so keep reading!
2. You do have the requisite starting capital and want to start trading full-time immediately.
Expectations: Earn 5-10% of your trading capital per month.
Reality: This is achieveable and sustainable BUT – you must be prepared for DRAWDOWN. What is drawdown? Drawdown is the unavoidable period when your capital diminishes because your strategies aren’t giving positive results.
Problems: Every legitimate trading system/strategy has drawdown. Are you prepared for it? Growing your capital by 5-10% per month on average also includes months where you earn 1%, -5%, -10%. Even -20% is still a valid drawdown for any functional system. On the flipside, there will be months where you’ll surpass your monthly objectives and maybe earn 15% or 20% instead of 5%.
Psychology: Are you prepared to see your starting capital decrease? These situations can induce volatile emotions and push you into making mistakes like panic trading. Remember that emotional control is an inextricable part of professional trading and this skill is honed with practice and patience.
Solution: If you’re just making the transition to trading full-time and want to use all of your capital, consider backing up a bit. Pretend that you only have part of your trading capital, perhaps 25-50% of it. Use only an amount which will not impact you emotionally when you’re at a loss. Using this reduced starting capital, attempt to reach your monthly goal of a 5-10% increase. Use this time to train your emotional control and strategies. Patience will pay off here. By the time you reach your requisite starting capital you will have more experience, improved emotional control, and greater capital. Using this method will make everything easier.
Conclusions and Recommendations:
A stable 5% average growth will double your starting capital in 15 months.
You would get to 10x your starting capital in 48 months – that’s 4 years.
If it sounds like a lot think about this – in 4 years you will get your trading capital and a HUGE AMOUNT OF PRICELESS EXPERIENCE AND NEW KNOWLEDGE.
Because over these 4 years you have been trading with a proper money management technique, you have learned multiple trading strategies, but also have gained a considerable amount of trading experience that will aid you in the future.
How about an average of 10% growth? An average 10% monthly growth will double your starting capital in 7 months. A sustained 10% growth per month will allow you to make 10x in 25 months. That’s only 2 years.
So, to keep it simple, with a targeted growth of 5-10% per month, it should take you 2-4 years until you reach the capital which will allow you to start trading for a living.
Is this an exact estimation? NO! It depends on many things, but the main factor is yourself. You will have the time to learn about trading, create your trading plan, fine tune your strategies and train your emotions. You will face drawdown periods and your emotions will make you doubt your system. Again, money management is going to play a key role in your journey to your goal.
For some people it will take less time, for others it will take more. It depends also on your available time, your dedication and even your natural abilities. For some it may be easier, others will need more training. But the ones who consistently use good trading practices will succeed.
Recommendations. As usual, my personal creed is that you should focus on safe trading. This will allow you to reach your desired deposit size, even if it takes a little longer. Trying to make super profit will increase your risk, and increased risk is the path to liquidation – you’ll blow up your account eventually, it’s just a question of time.
I notice that more and more people are losing patience and want to have results overnight – of course the crypto bull run has helped feed this type of thinking and it is no secret that I am very much against it – impatience and rushing into trading pushes you into making mistakes, taking bad trades, and panic trade without a clear plan. This can only lead to disappointments. And it does, I see it over and over again.
I suggest that you follow 3 targets while building up your deposit which will allow you to make your living from trading alone:
1. Protect your deposit.
2. Earn stable income in the long run (5-10% per month).
3. If there is an opportunity to make extra profit, use it, but keep following proper money management.
To make 100, 200, 300% per month, it’s not such a cool thing if the next month will get you to 0. But to make even 5% month by month, year by year is the path of a real professional.
I have a few questions for you:
Do you have a goal to trade for a living and be able to do it at your own pace?
Do you think a 5-10% average growth per month is an achievable target?
Would you be satisfied if in 2-4 years you would be able to trade for a living – or is it too slow for you?
For those who trade stocks – do you think this is possible? Slower? Faster?
Do you have anything to add to this post?
Please share your answers in the comments!
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