There comes a time in almost every stock trader’s life when they entertain the idea of stock trading for a living.
Many of us look upon the life of a stock trader as one of great flexibility and freedom.
We may see ourselves trading from some remote location or even our own private yacht.
Before we embrace the fantasy too much let’s embrace the facts. Stock trading for a living is a business and it should be run like one to be successful. Many of the same rules and levels of preparation which will make you successful in other types of businesses.
When you plan to trade stocks for a living this means that you must make enough profit over and above expenses to cover all of your day-to-day living expenses in everyday life.
Keep in mind that the money you make from stock trading will most likely not come in as regularly as the paycheck you are used to getting every other week. In fact, a successful stock trader may not make a profit for many months. This means the successful stock trader understands the more sporadic nature of profits from his stock trading business and has made the necessary adjustments in lifestyle to adjust to them.
This brings us to our next point…cash reserves. Cash reserves are important for those months when the business does not turn a profit even though the business may be very profitable overall. If you plan on stock trading for a living then having cash reserves is very important.
First you need sufficient working capital for your stock trading business. Second you need money to live on while you are growing your stock trading business.
Even before you concern yourself with working capital and living expenses you should have a proven method for generating a profit in the stock market. If you don’t have this none of the other factors will matter.
By honing your stock trading skills while you have the certain cash flow of your day job you will be able to think and act more objectively. Stock trading while under financial stress rarely if ever leads to anything but a disastrous conclusion.
Take your time, make your plan, and prepare yourself to be successful in stock trading.
To Your Stock Trading Success!