There is a great allure to ditching the office and venturing off to make a living on your own. Trading is a great way to earn a living, but it isn’t all roses and it isn’t easy. If you are considering trading as a primary income stream, or have recently begun a career as a stay-at-home trader, it needs to be thought of as a business. In essence, you need to become your own boss and make sure you do what needs to be done–which includes potential research, developing a trading plan (this should be completed before any trades are made) finding trade setups and following your trading plan. Simple enough, but it isn’t quite as easy as it sounds. Here are some of the trials I have faced, and overcome, over the last decade as an independent trader…as well as some perks which will hopefully motivate you to endure the tough times.
- Myself! I originally traded for a firm, but then decided to go off on my own. I misjudged how much discipline it takes to get out of bed each morning, and actually work, when you don’t HAVE TO be somewhere. I floundered for a couple months, until I created a routine for myself. Just like your normal morning routine which gets you out of bed and into the office, you need to create a similar routine for getting out of bed, and making your way to your computer to trade. I established firm rules about getting up at the same time every day, eating breakfast, checking emails and then trading at the same time each morning…just like being at work by a certain time. The routine greatly helped get me get used to working for myself and building my disciple.
- Distractions! While I absolutely love to trade and watch the markets, let’s face it, there are a lot of distractions at home, especially when there is no boss around to tell you to get to work. As mentioned when I decided to trade independently from home, the first few months were filled with distractions—I ended up sitting on the beach, I watched TV, surfed social media, wrote articles–all sorts of things, other than trading. Once again, creating a routine for the day helped.
I check emails and “internet things” before starting to trade. I then trade for about 1 to 3 hours. Then I write for an hour as I enjoy writing about the markets. Then I take a couple hours off, eat and go to the gym or out for a run. When I get back I put in another hour of writing and about 15 minutes looking through charts which may set-up well for the next trading day. All in all, I force myself to put in about 4 to 5 hours of “work” a day. Less than that I find I can lose focus, more than that I also lose focus, and end up getting distracted anyway. So I found a compromise, and developed and a routine that lets me do my job, but also have time and freedom to enjoy my life…which is what trading is all about anyway.
- Risk Control! When you trade from home, and are trading your own money, no one is going to prevent you from making a disastrous split second decision. You know there may be consequences, and your spouse may even monitor what you are doing, but in a split second a bad decision can cost you everything. Deeply understand this. When you trade for yourself there is no back stop, except for the back stops you put in place. I apply risk controls on myself–I don’t risk more than 1% of my account on a trade, and I stop trading if I have lose more than 3% of my capital in a single day (or roughly three trades in a row). You’ll come up with your own rules, but DO create them. Trading is a business, one bad day doesn’t matter. There is always tomorrow…as long as you keep the bad days small.
- Isolation! Working by yourself can get kind of boring after a while. This is an easy fix though. During your couple hours off during the day, leave the house. Engage in lots of other social activities, or you may even opt to join trader chat rooms/discussions online while you trade to give yourself some social contact while you work from home.
I won’t spend much time going over the perks, since that is why most of you want to trade in the first place.
- Time: For the most part, you don’t need to sit in front of your computer all day. Typically a few hours or less is all it takes to day trade. Most of the day the price action isn’t great, so trade a time where you find the best opportunities, and leave the crappy times for other traders to lose money on.
- Freedom: Working for someone else you don’t ever feel fully in control of your life. When you work on your own you have that freedom. Keep in mind though this is a double edged sword in some ways. When you work on your own there are no excuses, and no one to bail you out if things go awry. Freedom is also dependent on being able to make enough to money to live, but most new traders struggle and can’t do this.
- Money: Many traders start trading to get rich. I highly advise against this attitude. If you can make a living as a trader you are in the top of 1% of the traders in the world–already a tall order. Strive for trading consistency instead, and a high quality of life, which includes lots of free time to do things you love and also wake up each morning to do something you love to do –trade!