This episode takes on a slightly different format to normal. Essentially, it’s a response to an email that I received from a listener…
The email comes from a gentleman who’s 38 years old with a full-time job, his wife is currently studying and he has three kids. He also has the goal to transition out of his current career into full-time trading, though he has a family who are dependent on his income. And that’s the part he has questions about.
Therefore, I asked Alex (@TAGRtrades) if he’d be willing to join me on this episode and share his thoughts on the matter. Alex is a full-time day trader, who has developed skill for trading long side momentum in U.S. equities. He’s also appeared previously on episodes 119 and 157.
Summary of episode:
Starting out and becoming profitable.
- Build good foundations and processes to protect yourself from major blow ups, i.e. daily loss limits.
- Trading a demo account is good for learning your platform, though trading a live account is better practice and experience.
- While books (etc) can be helpful, you’ll learn more from being in the market and “feeling” trades.
- Trial and error, experiment: Take plenty of trades—with very small size and predefined risk—and track results.
- As you gather more data, identify trades that improve/worsen your results.
Swing trading with a full-time job.
- Swing trading can be a practical and viable approach to take, while continuing to work a full-time job—and it’ll allow you to take losses better.
- Make swing trading your “side hustle” and use it to build confidence before making the jump to full-time trading.
- Having a safety net of savings in the bank is most important before transitioning.
- Still set on being an intraday trader? The crypto market could be a good learning ground: easy access, low capital requirements, volatile, 24/7 market.
Swing trading skills to develop.
- Learn basic technical analysis methods, i.e. support and resistance. Use it as a tool for managing risk and making better entries/exits.
- Build skill with repetition—see patterns play out over ‘n over again.
- Don’t try to create a massive playbook of setups right away, or shoot your bullets everywhere. Start with one thing, get consistent, then build out.
Realistic timeline to full-time trading.
- Giving yourself 6-12 months to transition is a short runway and kinda naive.
- You should feel comfortable and confident before making the switch. If you’re not these things, your trading will likely reflect this.
- Not impossible to trade full-time, but very difficult…
Education and mentoring.
- The difference between paying for a service and a true mentor relationship.
- An alternative to seeking a mentor: get a few buddies who are into trading, catch up frequently, exchange ideas, grow together.
- If prop trading, a mentor may be more accessible, as the firm has a vested interest to improve your bottom line.
- The two categories of prop trading firms and the difference between each.
- Don’t be afraid to call or email a firm to show interest and initiative—find out what types of skills they’re seeking.
- Do your research as the culture between firms can vary greatly—some are very focused on development, some will leave you to your own devices.