Minimum to day-trade for a living: $500,000. Scale this down depending on your yearly living expenses. I am assuming capital of 10 times yearly living expenses. Maybe 5 times, if you are a risk-taker. Some people can probably live on $25,000/year, so I would say rock-bottom, you need $125K.
I think anybody who thinks they can quit their day job and day-trade for a living with $50,000 is dreaming.
Fine if you are already retired, supported by spouse, etc., though.
I just heard a story about a fellow software engineer who quit his job to daytrade: 2 months later he was back on the job - lost all his money...
(True story - co-worker of a friend.)
Living on the west coast is a big advantage, as you can day-trade mornings while maintaining a job. Unless you have a lot of trading capital, the job is the key - it makes it possible to treat your trading capital as risk money. At the same time, you don't have any need to pull money out, and can allow it to pyramid.
To do it for a living, though - I think you should have enough capital so that yearly living expenses are no more than 10% of your capital. As hard as it is to imagine in this market - there are going to be years when you are down. You might even have 2-3 of them in a row. Let's say you are down only 10% a year, for 3 years. Now, take living expenses out of that as well... and you're skating pretty thin.
Think about it this way - let's say your living expenses are $50,000. (Choose whatever number is appropriate for you.) If you only have $50,000 capital, you have to DOUBLE your money just to break even! This is not going to be easy while you are slowly draining the capital to live on.
BTW, as to the advantage of trading full-time? I think it's over-rated, and causes people to over-trade. (At least me, LOL!) I've just been off 2 weeks between contract assignments, and traded every day. You know what I made? Nada. (Though I am up 50% since the first of the year.)
I think that when I trade part-time, I am more satisfied to take gains and walk away, and also keep the open position times down. (My typical trade lasts 5 minutes and earns a point - at least the good ones!) If I have all day, I will get greedy, and hold positions all day.
Probably what I SHOULD be doing is watching The Flintstones during the middle of the day, and coming back an hour before the close. :) |
