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When should you quit your job when trading

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  • When should you quit your job when trading

    One of the most common questions I receive about trading is "how long will it be before I can quit my job?"

    I can tell you that it's not as simple as the general public thinks. The average "non-trader" thinks you can quit your job as soon as you start making $1000 per week. That is a disaster waiting to happen but I'll get into that in a second.

    First of all, let's explore the reason most people get into trading. Most people get into trading to either get rich or get richer. Knowing that sets the stage for the way you should plan out the usage of the trading profits. Bottom line is you can't get rich if you quit your job as soon as you start making money.

    Let's do a hypothetical scenario that explains why you shouldn't quit your job too soon.

    Let's say Joe has a regular job and he trades on the side.

    Joe has a $100,000 account and he decides to quit his job at the end of the year. His last day at his regular job is December 31st. He will begin his career as a fulltime trader on January 1st

    Joe starts the year off great!!!. He makes around $1000 per week. In theory, he should end the year with $152,000 but that is a very simplistic view of his situation that doesn't account for living expenses, taxes, and trading losses.

    Joe started the year with $100,000

    He made $52,000 for the year

    His total should be $152,000

    He spent money on his mortgage/rent, gas, groceries, electricity, insurance, and $6000 in trading losses. His real year-end total is now $100,000.

    So he started the year with $100,000 and ended with $100,000 and he still hasn't paid taxes.

    He files his taxes and the accountant sees that his income was $46,000 ($52K - $6K in losses). He now has to pay $12,000 in taxes on his trading gains. Read this part carefully...THE IRS DOES NOT CARE THAT YOU SPENT THE MONEY YOU MADE ALL YEAR TRADING. THEY STILL WANT THEIR CUT.

    Now his year-end total for his first year as a professional trader is now $88,000 ($100K - $12K tax payment)

    So I just showed you how a guy can make money all year and still take a loss.

    Making a living as a trader isn't as cut and dry as people may think. There is a lot of thought and calculating that has to go into it.

    To answer the original question, you should quit your job once you are consistently making $5-$10K per week

    I worked a "regular" job for YEARS before I decided to quit and live off of my trading funds. People who knew I was in the markets just assumed I was no good at trading because I was still working a regular job...People are stupid and most will never build any kind of wealth. Ignore stupid poor people.
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    "Step into the arena and hold on to your hat. Don't get discouraged if you don't make 8 trillion dollars in your first month. Trading is not a get rich quick scheme. Realize that trading is a skill and just like any other skill it takes time to learn. Have convictions in your decisions in life and trading. Ignore the comments and "advice" of those that have never traded a day in their life."

    College is here to read more about the college scam!

    Good KARMA and positive energy abound.

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  • #2
    Thanks for this article. I was kinda wondering about this, I knew there had to be some kind of formula.