"$50,000 question" - a matter of philosophy...
Here's a thought that I hope will clarify where I am coming from on this:
My view is that the current market is an extrodinary one - a once-in-a-lifetime opportunity. I do not think that it will last forever. Maybe another week, another month - another year or two - I do not know. But I am certain that it will not last, say, for 10 years. (And if it does, it will experience one or more serious corrections - enough to wipe many traders out - between now and then.)
How can I best take advantage of this extrodinary market?
I feel that I can best take advantage of it by pyramiding profits as quickly as possible. My primary goal is to increase my trading capital. The more trading capital I have, the more I can take advantage of the advantageous market environment, and the more money I can make.
If at all possible, then, I do not want to take money out of my trading account. None. I pay my trading expenses - quotes, computer, etc. out of my "day job" income, as well as, of course, my daily living expenses. I am fortunate enough to have enough left over to also add to savings, which is separate from my trading account. Because I am a consultant, it's important for me to have some money to fall back on, and that I keep separate from my trading account. I currently don't add to my trading account, because I feel that the security of a separate savings account is important both as a practical matter and in terms of how I approach the market. (I would do so, however, if I felt that my savings were in excess of my potential emergency needs.) What I do in the market is not life or death, and so I can trade more agressively.
To quit working my day job, and live off of my trading account, it seems to me, would be egotistical and counter-productive - unless, of course, I felt that it would increase my trading profits sufficiently to more than make up for the drain of the expenses.
My experience, when I have had an opportunity to trade full-time, is that my returns have NOT been increased a bit. (Though the commission income earned by my broker HAS. :) )
Given that, I must conclude that the only thing to be accomplished by quitting my day job would be to stoke my ego, at the expense of reducing my trading capital.
Further, I am a software engineer - I have a job that requires constant updating of skills. A 2-year hiatus, for example, would probably end my career.
Under the circumstances, day-trading full-time does not seem a rational thing to do. I would consider it only if my living expenses represented a small percentage of my trading capital - say, 10%. For me, then, that demands $500,000 in capital.
I would do it then, not because I feel that it might increase my profitability, but because it might gain me a bit of sleep and relaxation - something that I am willing to pay a reasonable price tag for.
As it is, though, the ONLY thing that I seem to lose by keeping up both IS a bit of sleep. And I don't mind that because, I feel, extrodinary times will reward extrodinary effort.
Again, everybody's situation, needs, and temprament are different - adjust accordingly!
(Attention: east coast residents - your milage may vary.) |
