If there’s a career that attracts both finance people and anyone looking for a change in career or cash flow, its proprietary trading. Being a proprietary equity trader provides you with a stable income where you can millions for your firm and each a percentage of it.
One of the questions I get asked on a regular basis is “can you make living trading stocks?” It’s no surprise because the idea that you could quit your job and support yourself just by trading stocks is fascinating to most people. Being a proprietary equity trader seems like a fantasy, but Trader2B has solved that problem. Trader2B gives day traders a chance at the market. Every year, novice Proprietary equity trader, grow their paper trading account by taking the leap of faith. Some make it, but the vast majority just blow their accounts up.
Nevertheless, it’s easy to be drawn by the idea of making a quick profit as a proprietary equity trader, but it’s not only day trading that makes you financially stable. Understanding the market and knowing how to apply your trading plans is the root of making more money. Here’s how to make a stable income from day trading.
The reality is that being a proprietary equity trader is a tough job, one that requires a specific skill set and risk tolerance that most people don’t have. Start with a fund you can afford to lose. Don’t trade with your rent money or emergency fund.
Financially, I always suggest having one year’s worth of income set aside before you start. This is not the bankroll that you will trade with, but the money that you will use to pay your living expenses. Having this financial cushion will give you peace of mind, allowing you to begin your new career without the pressure of having to trade to “make the rent.” Psychologically you will need to steel yourself for the income inconsistency that will surely accompany the first few months of your trading. Dedicate a fund for your day trading and understand that it is possible to lose it.
You may be eager to quit your day job to become a Proprietary equity trader but slow and steady does the job. You may run out of luck and the market may get rough especially during a recession. Take it slow until you become consistently profitable and then you can assess whether you want to leave your job and concentrate on trading.
What’s your trading method?
Being able to trade for a living successfully means reaching a level of excellence that most people will never reach. It’s the difference between being a movie extra and an Oscar-winning actor. It’s important if you want to pursue trading for a living, to go into it with your eyes wide open. To begin with, you need to have a sound trading methodology. One that takes advantage of volatility, yet always keeps risk management as its core principle. Ideally, this methodology should have been tested over time, in all different market environments, and with real money. Decide what security you want to buy and sell but the stock market is very active with low or no commission, unlike other trade. Ensure your trading stock has good volume, moderate volatility, newsworthiness and some familiarity.
Recommended: How to Become a Successful Day Trader
Dear Proprietary equity trader, never stop learning
Next, you want to spend some serious time educating yourself about everything you can relate to trading. It’s important to emphasize this — you want to be a day trader, not an investor — so find the best books about trading. Put in the hours necessary to give yourself a strong understanding of day trading.
Push for consistency
The goal when trading for a living is of course to have a reliable and consistent revenue stream, but that will take time to achieve, and having to bear the daily fluctuations of your income can be tough on the psyche, so be ready for it. But ultimately the biggest hurdle you will have to overcome in order to make living trading stocks is an emotional one.
Trading by nature consists of losing more than winning. A successful trader knows that they will lose small on more than half their trades. The profits on their winning trades will make up for their losses. This runs counter-intuitive to our human nature, where we want to “win” as much as possible. If you don’t come to terms with this concept it can wreak havoc on your emotional well-being. These are just some of the things you have to be aware of if you are going to try to make living trading stocks. And though the odds are against your success, if you are one of the few who can master this art, it will reward you in a way that no other job or career can.