Day trading for a living what you must know
I want to talk about day trading for a living what you must know and the reason for this is that I see right traders getting Leo into day trading because of the freedom it promises right the lifestyle the fast cars the babes the trading by the beach and yada yada but to be honest right to me that’s BS because because that doesn’t exist in reality and in today’s episode I want to break down to you what it takes right to date rate for a living number one you must have an age in the markets so oftentimes right when traders they want to date rate for livings because they are sick and tired of their full time job right here pause the heliacal XD in the politics they hit everything and they wanted a tread for a living and upon the time they have probably have experienced had a taste of treating possibly on higher time frames and you’re not making money but their mindset is you know it doesn’t matter right if i become a day trader i have a better chance of success because I know I have more trading opportunities because I can watch the markets longer right so I can you know make more money but no it doesn’t work that way right if you’re not making money on a higher time frame chances are if you go down to the lower timeframe you’ll crash and burn even faster an example is let’s say you’re driving a car a toyota car at 70 kilometres per hour if you can master that toyota car at 70 kilometres per hour what makes you think you can drive a Ferrari at 300 km/h you probably you know suffer right you suffer worse fate you’re crashing but and even a faster rate so this is the same for trading if you can’t do well on a higher time frame chances are when you come down to the lower timeframe you’ll suffer a worse fate okay so number one you must have a niche in the market right in having an edge in the market that’s not stem from spending more time watching the markets right your age rate comes from two things your win rate and your risk to reward right combine these two together right that will define your trading expectancy okay and if you have a positive training expectancy then you have an H in the market so I similar to the coin toss example that we spoke about previously number two transaction cost is a killer in day trading let me explain let’s say every treaty put on right is ten dollars my cell is ten dollars let’s say you put on a hundred trees a month and one year you have 12 months so debt is about $12,000 in transaction cost let’s say you start off with a $50,000 trading account on a 12 percent on a $12,000 transaction cost you’re looking at 24 percent a year just to break even on your day trading account okay let me repeat that once again right you under $50,000 account if you have a $12,000 a year in transaction cost you need 24 percent a year just to break even meaning you don’t make a single same after taking into account transaction costs okay so this is why as a day trader you need to find the lowest-cost broker right because the lower your transaction cost the faster you can get to profitability the higher your transaction costs right the more it will erode your each point number three you must have adequate capital size it baffles me how traders think that they want to treat full-time on the $10,000 trading account doesn’t make sense doesn’t make sense or anything that on a 10k account if I make five here your obvious 5k a month that’s a 50% return a month do you think you can make 50% every single month you must be dreaming right it doesn’t work that way you must have adequate capital right if you want to treat full time right let’s see let’s say you know you’re a pretty good date trader let’s say for example you do 50% a year on a $10,000 that come that’s $5,000 a year it’s not really even much to start with could probably convince survivor in most countries but now let’s say you know you don’t have a $10,000 car let’s say you have $100,000 account no that same 50% is not worth $50,000 all right oh and let’s see instead of 100k come let’s say you have a 500 key account known 50 percent on a 500k account it’s $250,000 a year so can you see how capital science plays a huge role in your trading career this is like poker right the one at the table the one who has the most number of chips right the most dollar highest dollar value of chips in front of him that person right has in each over the other players because he has a larger capital base and it’s the same for trading right now larger your capital base the more money you can make right and the better your chance of survival again assuming you have an H in the markets because you can see that the larger capital base right the transaction cost will now become a smaller percentage right they eats into your written okay so that’s number three right you must have sufficient capital size number four you need to cover at least twelve months of living expenses that is you know have that kind of money set aside so let’s say you need three K man to survive ideally you wanna have 36 K a month set aside that doesn’t you know come from your own trading account reason for this is that market moves in cycle sometimes the market are favorable to you you’ll make money but hey when market change right when your strategy doesn’t adapt to it right that’s where you go into a drawer now and when you’re in the drawdown you lose money and how do you survive the last thing you want to do it take money from your trading account to feed your livelihood because when you pick up money from your trading account you reduce the capital size all right it makes it even more difficult to make money when you have a small amount of money to start with so this is why to help you with your own psychological mindset you want to have a pool of money set aside that you know that hey no matter what happens over the next three six or 12 months I know I’m covered I don’t have to touch the money from my own trading account and that way it will help your trading psychology immensely and number five opportunity cost what do I mean by this let’s say you know you make $50,000 a year day trading it’s a pretty decent fifty thousand dollars a year but you have to also take you to a cover and the opportunity costs right off day trading let’s say you know you make 50k a year day trading and maybe you treat two of hours a day well you could have you know be working for someone else working full-time maybe ten hours a day and you can make seventy thousand dollars a year so that is the opportunity cost to you as a day trader right the amount of money that you could have made elsewhere and this is something that most traders don’t think about right and something you should definitely consider okay so with that said right I want you to think deeply about day trading for a living right what I’ve shared with you is based on it’s based on facts the numbers don’t lie okay number one you must have any age number two transaction cost us a killer pay attention to it reduce it as much as possible number three you must have adequate capital size larger your capital base right the better are your survival number for half at least 12 months of living expenses cover and number five always thinking about the opportunity costs right that you are potentially missing out as a daytrader so with that’s it I have come towards the end.
