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As a CPA servicing day traders, I can tell you about my general experiences working directly with part-time traders, some of whom have converted to full-time traders.
Over the years, I have also worked with many professional traders on Wall Street who have left their jobs to pursue their own money management and trading businesses full time.
In general, it is not as easy as it seems. Many traders freeze up a little when they know all is at risk and they no longer have a salary.
Many traders we talk to have lost very large sums of money (over $100,000) and they are still encouraged to spend more time, effort and capital trading. They think they have "learned their lessons" and can make back the money and more. Seasoned traders know this type of thinking is a mistake.
Successful traders are very excited about their new found wealth. They are caught up in the mania first hand. In fact, as a group Internet traders are helping to make the Internet trading mania.
As a tax preparer and advisor to professional traders since 1978, I have seen many very successful traders go from boom to bust within a year. Traders fall into an easy thinking pattern that everything they touch turns to gold. We have seen successful wise traders get rich, increase their overhead (quitting your job is a form of increasing your overhead), and invest in private businesses or other markets that they are not knowledgeable about. Overnight, their underlying markets of expertise (example the currency markets in 1994) can drop off a cliff and then they are stuck with high overhead and other unwise investments. Panic sets in, depression and in some cases it takes years to recover.
On a positive note, I am very bullish about the Internet trading trend and firmly believe that the Internet is making a level playing field. Non-professionals have access and availability to the same tools, research and programs that the pros have used.
If you visit my company's Web site, you will see that we are very bullish on Internet Traders. We analyze their history of Internet Traders, discuss the trends, provide tax information, software tools and more. greencompany.com |
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