5 Things to consider before becoming a full-time trader
Today most people have access to the internet. This has made a major impact on the securities market and brokerage firms. During old times when internet access was limited, even opening an account for share transactions was difficult. Now you can open a Demat account within a few minutes for free of cost. If you want to buy or sell a share, it just a few seconds work.
All these have increased huge interest among common people towards trading and their participation has increased tremendously.
But there various kinds of individuals trying their hands in trading. Some of them do have a financial background, and some of them don’t. But trading is getting popular not just for earning extra income but even full-time trading. But there are a few things that are needed to be kept in mind before you start your career as a full-time trader.
1) Are you really Passionate?
- You cannot be successful or reach a certain level in whatever you do without passion. It all starts with being passionate about what you really like doing.
- Some people think it is so cool to be a day trader…you make money everyday…you think people make a lot of money lakhs or crores…and it’s not true.
- If you want to be a full-time trader just because you think you will earn a lot of money with minimum efforts. it’s not true
- So if you are really passionate about trading then only go all in or be a part-time trader/investor with your current job.
2) Financial Security
- If you want to become a full-time trader then you should have at least 3 years of financial security or backup. This means suppose if your monthly expense is close to 50,000 then (50,000 * 36), this much of capital you should have, excluding your trading capital.
- The reason behind this is, you should not have stress that I have to earn this much amount in a month. This will help to avoid stress and wrong decision in trading.
- So for all these reasons you should have some financial backup because trading is not like a job where you will earn regularly. Many times you may have to face losses.
- Discipline is an important part of trading. Without this, there will be huge changes that you will end up making losses.
- This will come through regular practice and experience.
- Because in trading you have to take care of minor to minor details to be successful. And this comes through discipline.
4) Practice and more Practice!
- Before getting into full-time trading, you have to practice a lot and this practice should be with your current job.
- It should not be like that, you left your job then getting into practice.
- You have to practice for at least 1-2 years, try all your strategies. Figure out how you will manage your time to do this. Either after your office, before or during weekends.
5) You must have an EDGE
- You must have an edge means that you should have multiple times backtested strategy with a good accuracy rate. And keep in mind that trading is no gambling, it should be done with proper strategy.
- Once you feel confident in backtesting your strategies then try to apply the same strategies in real markets with minimum capital and evaluate.
- If you think you are able to manage all the 5 points mentioned then you can try to think about being a full-time trader.
We at Tstock Mantra Investments by Amruta Tushar Ghone provide complete Financial Planning for an individual i.e., Mutual Funds, Insurance planning, Retirement planning, and so on.