Hi There, My Bio:

[curtisj76 10]

Hi everyone, just joined today. My bio:

 

34, married with 3 children, ages 9, 6 and 2.

 

Worked in the financial industry for around 7 years and then decided to go back to school. Double majored in finance and accounting. Got a job right away at a firm and have worked there for 1.5 years. Only problem is that my family would have to move and nobody wants to. Also, I'm a HUGE family guy that enjoys spending time with my children. Decided to try and trade for a living. If we be careful with expenses my wife can support us, we just won't be able to spend very much. The bright side, no more busy tax seasons and commutes!!! Be able to hug my kids before they leave for school and tell them hi when they get home.

 

I've been investing since 1999 and my wife and I haven't missed a Roth payment ever. First mostly with mutual funds but now am all stocks. Have been doing really well the last few years. I'm only planning on investing stocks cuz that's all I know. I have a feeling many traders fail because they trade in an area that they really know nothing about. SCARY!

 

My plan is to start up an LLC to trade in. That way I can eliminate the wash rule, etc. I want this up and going by January. I believe it will be a multi-member LLC as the single will be disregarded come tax time. Need to talk to a lawyer.

 

Coming up with the capital is not a huge problem. My wife and I have worked hard and saved our whole marriage. I have around $200k if I really wanted it, however it's mostly all in Roth IRA's and in 1 Trad IRA. My Roth contributions have been about $80k so I'm gonna take out that. Minus the 10% penalty I'll net $72k. I'm also gonna take a loan from my insurance policy for $28k at 8%. This will give me $100k to start with.

 

My goal (if possible) is to take all my profits and pay the loan back ASAP. Which I guess would be to earn 28% for the year 2012. Actually a little higher to pay Uncle Sam. I thought if I could average $150-200 a day this would be possible. Doesn't seem much with a $100k account but I know it's a lot harder than that.

 

Plan on working roughly 230 days in 2012:

 

365 total days

(104) 52 weekends

(15) Holidays

(16) Vacation/sick days

230 trading days

 

My computer needs an upgrade or I guess used as a backup if I get a new one. I'd like to build one myself as I don't think it would be hard to figure out. Also would like around 3-4 monitors as working with only 1 is a pain. I'm not excited about dropping a couple grand on pc stuff but I guess it's a needed tool in my toolbox. I currently have DSL but have recently given the thought of switching to cable. Furthermore, maybe having both is the best option but dang that seems expensive.

 

ANYWAYS, I'll write some more later as the chances of someone reading this novel diminishes with each additional sentence. Thanks for reading and PLEASE, any advice/comments are welcomed.

 

Curtis

[gosu 10]

A lot of red flags in your post. It appears you have thought things through but on a superficial level at best.

 

After a quick read of your post, these are some questions I would consider.

 

Why form an LLC? I've been trading full-time for 13+ years and have heard all the arguments and still don't see how the additional compliance burden brings any benefits. If I were trading OPM, it would be different. At the end of your post you state your concern over spending a couple thousand for a decent computer and getting a backup internet connection. Yet you're willing to pay a lawyer for consultation and to set up an entity and have increased compliance costs. Makes no sense to me. The wash sale rule is a non-issue.

 

Do you have any experience trading successfully? You say you've been investing in your IRAs and have done well the past few years. Have you been trading your IRAs? You mention something about making $150 to $200 per day which implies you want to do intraday or short-term trading. What's your experience in this area?

 

Why $100,000 to start? You are going to get hit with a steep penalty on the early IRA withdrawal and on top of that go into debt for another 28K to fund your trading account. Either you have a lot of confidence in yourself or you are reckless. Since I don't know if you can trade or not, I can't say for certain which is the case. However, I can surmise from your comment about the difficulty of extracting $150 to $200 with a $100,000 account that you don't have much trading experience. Therefore, I am leaning toward reckless overconfidence on your part.

 

Post more details, especially about how you intend to extract $150 to $200 per day on a $100,000.

[curtisj76 10]

Thanks for the reply. Let's start with the LLC if you don't mind.

 

It is my understanding that it is better to be a “trader in securities” in the eyes of the IRS. However, it is also my understanding that it can be difficult to be considered this. I think I also read that you can't even qualify for this until you have a years worth of trading under your belt. The benefit is (not my words):

 

"Meeting "trader in securities" status allows you to treat your trading as a business and deduct all necessary and ordinary business expenses. What's more, you are able to elect the Mark to Market method of accounting. This method of accounting allows you to overcome the $3000 a year loss limitation and eliminates wash sales. In other words, you are able to dramatically slash your tax bill."

 

Setting up the LLC I can elect the mark-to-market right away eliminating the wash rule. I can then also deduct additional expenses on a schedule C. Then of course the LLC would go on to a 1065.

 

Why do you believe the wash rule is a non-issue?? Are you a stock trader? Just wondering as I think this doesn't apply to Forex.

 

I've been trading well, made around 40k in the month of November. I'd call it swing trading. The only problem with the IRA's is that I'm getting the occasional phone call from Scottrade due to me free riding. I've had very good success with stocks, but by a more traditional buy and hold approach. I like the idea of day trading and not holding any positions at night. I believe it will lesson some of my gains but at the same time reduce risk. By having a trading plan and STICKING to it my goal is to eliminate the large losses.

 

Why 100k? I figure the more I have the more conservative I can be. $200/day is a lot "easier" to get with 100k rather than 50k or less. 2/10ths of a percent is what I'm after. I'm not looking for huge gains, rather CONSISTENT smaller gains/losses. Must eliminate the large losses.

 

Trust me, the IRA penalty goes against every ounce in me, but with my recent Nov success, taking out 8k doesn't seem so bad. I'll take a 32k month. I'll never have another month like that most likely, at least not anytime soon.

 

Lastly, back to the $150-200 "goal". It's just that, a goal. I just want to be in the game 2 years from now. I actually thought I was being level minded, maybe not. I just know I've seen some crazy numbers thrown around. People that want to make way more than me with a 1/10 of the capital.

 

Anyways, I think that's everything. If necessary, slap me into the real world. I really appreciate any thoughts/suggestions.

[JTurner77 10]

Welcome. I wish you the best in your trading.

[SIUYA 11]

as i know nothing about IRAS etc not being American.....maybe I am missing something....but if it has tax implications why touch it all

Why not get a little bit of extra margin via the broker at a much cheaper rate if required?

[gosu 10]

Thanks for the reply. Let's start with the LLC if you don't mind.

 

It is my understanding that it is better to be a “trader in securities” in the eyes of the IRS. However, it is also my understanding that it can be difficult to be considered this. I think I also read that you can't even qualify for this until you have a years worth of trading under your belt. The benefit is (not my words):

 

"Meeting "trader in securities" status allows you to treat your trading as a business and deduct all necessary and ordinary business expenses. What's more, you are able to elect the Mark to Market method of accounting. This method of accounting allows you to overcome the $3000 a year loss limitation and eliminates wash sales. In other words, you are able to dramatically slash your tax bill."

 

Setting up the LLC I can elect the mark-to-market right away eliminating the wash rule. I can then also deduct additional expenses on a schedule C. Then of course the LLC would go on to a 1065.

 

Why do you believe the wash rule is a non-issue?? Are you a stock trader? Just wondering as I think this doesn't apply to Forex.

 

I've been trading well, made around 40k in the month of November. I'd call it swing trading. The only problem with the IRA's is that I'm getting the occasional phone call from Scottrade due to me free riding. I've had very good success with stocks, but by a more traditional buy and hold approach. I like the idea of day trading and not holding any positions at night. I believe it will lesson some of my gains but at the same time reduce risk. By having a trading plan and STICKING to it my goal is to eliminate the large losses.

 

Why 100k? I figure the more I have the more conservative I can be. $200/day is a lot "easier" to get with 100k rather than 50k or less. 2/10ths of a percent is what I'm after. I'm not looking for huge gains, rather CONSISTENT smaller gains/losses. Must eliminate the large losses.

 

Trust me, the IRA penalty goes against every ounce in me, but with my recent Nov success, taking out 8k doesn't seem so bad. I'll take a 32k month. I'll never have another month like that most likely, at least not anytime soon.

 

Lastly, back to the $150-200 "goal". It's just that, a goal. I just want to be in the game 2 years from now. I actually thought I was being level minded, maybe not. I just know I've seen some crazy numbers thrown around. People that want to make way more than me with a 1/10 of the capital.

 

Anyways, I think that's everything. If necessary, slap me into the real world. I really appreciate any thoughts/suggestions.

 

Read your reply and just a quick response:

 

Regarding, trading through an entity, trader tax status, mark-to-market:

 

First, you already know you don't need an entity for trader tax status. In your case, you are contemplating a partnership (you mention 1065), which will be problematic if your wife is a partner because the test will be applied at the entity level and she's getting a W-2 from her employer.

 

Second, the actual benefits of trader tax status is overblown, at least in my case. The primary benefit is expenses are deducted on Schedule C rather than as deductions on Schedule A subject to 2% of AGI. Personally I don't deduct anything that is of mixed use - personal/trading - and that includes the home office deduction, utilities, etc. Hardware I expense under section 179 and I've been going over 5 years between replacement. This year my expenses on Schedule C are under $1200. Commissions dwarf every other cost and they are not counted as expenses but are accounted for as an adjustment to the sale price or cost basis, so trader tax status is irrelevant there.

 

Third, for me, electing mark-to-market to treat gains and losses as ordinary rather than capital is a blunder because it would take away the benefit of 60/40 long-term capital gains treatment for section 1256 contracts. I trade index futures only. Obviously, if you contemplate large losses from trading AND you have other income to offset, then the election might make sense. Just consider that the election for all practical purposes is irrevocable.

 

Fourth, the wash sale rule doesn't apply to index futures, but even with stocks it applies to losses and just a deferral of losses in the form of a basis adjustment on your tax return at the end of the year. For me, trading comes first, taxes come last. I never let tax considerations affect my trading decisions, which is why I said it was a non-issue.

 

 

Regarding making $150 to $200 per day on $100,000:

 

Intraday trading is a different game than what you've been playing. Why go into debt for 28K just because you believe you'll have an easier time picking up $150 to $200 per day on $100,000 versus $72,000? The reality is that is a very modest goal if you know how to extract and can be done with $25,000. If you don't know how to do it, you won't be able to do it with $200,000.

 

Since your cost of capital is very high, you might consider putting just a small amount at risk in an account and maximizing leverage. For a retail account, to avoid the PDT rule, that would be $25,000. If you look beyond strict retail trading and into pseudo-retail firms that offer greater leverage than 4-1, the starting capital may even be smaller.

 

Best of luck.

[phantom 16]

Hi Curtis,

 

Jesse Livermore once said that it is easier to make a million dollars when you know how to trade than it is to make one hundred dollars when you don't know how to trade...

 

My suggestion to you? Get a 30 day simulation account and trade for a couple of weeks just to see if you can make any headway to profits BEFORE you launch your financial plan or say no to your job offer.

 

 

Luv,

Phantom

[curtisj76 10]

as i know nothing about IRAS etc not being American.....maybe I am missing something....but if it has tax implications why touch it all

Why not get a little bit of extra margin via the broker at a much cheaper rate if required?

 

Can't have margin in IRA's. Can't trade very often or I'll keep getting my hand slapped. That's why I've been swing trading. That's why I wanted to set up a non-qualified margin account. I was up around 1.4k on a trade last week but I didn't sell it cuz I would have gotten another dang phone call. If it would have been in my trading account I would have sold in a second. Now the 1.4k is gone. DANG IT

[jwdodge01 10]

i was where you are at in 2000 and with the info you provided, i say don't do it without getting a lot of help with the pychological aspect of trading.

 

the tax entity, software and indicators are great things to discuss on these forums, but will do little to make you money. I spent 5 years and 150k looking at all those externals, before reaching to the point of understanding the mental aspect of trading. then another 2years making it a viable business.

 

if you still want to get into trading, spend the money get the best computer, internet setup, open a minimum futures account (usually 5k, and expect that to be gone as a cost of education), get help with the mental aspect of trading through one of several programs on-line, (you may or may not get what you pay for) and start by sim trading the euro futures contract (not forex!!) for a couple of hours at night.

 

with the best equipment, a trading plan and phycological training or coach, the only thing that remains a variable is in your head. you will quickly know your appetite for taking those small losses and willingness to flow with the market. the night trading can easily generate $200 if you have the right mindset for trading.

 

there is no easy or fast way to get from where you are to the magic of consistent profits, but it can be done.

 

wishing you many great trades

[curtisj76 10]

Read your reply and just a quick response:

 

Regarding, trading through an entity, trader tax status, mark-to-market:

 

First, you already know you don't need an entity for trader tax status. In your case, you are contemplating a partnership (you mention 1065), which will be problematic if your wife is a partner because the test will be applied at the entity level and she's getting a W-2 from her employer.

 

Second, the actual benefits of trader tax status is overblown, at least in my case. The primary benefit is expenses are deducted on Schedule C rather than as deductions on Schedule A subject to 2% of AGI. Personally I don't deduct anything that is of mixed use - personal/trading - and that includes the home office deduction, utilities, etc. Hardware I expense under section 179 and I've been going over 5 years between replacement. This year my expenses on Schedule C are under $1200. Commissions dwarf every other cost and they are not counted as expenses but are accounted for as an adjustment to the sale price or cost basis, so trader tax status is irrelevant there.

 

Third, for me, electing mark-to-market to treat gains and losses as ordinary rather than capital is a blunder because it would take away the benefit of 60/40 long-term capital gains treatment for section 1256 contracts. I trade index futures only. Obviously, if you contemplate large losses from trading AND you have other income to offset, then the election might make sense. Just consider that the election for all practical purposes is irrevocable.

 

Fourth, the wash sale rule doesn't apply to index futures, but even with stocks it applies to losses and just a deferral of losses in the form of a basis adjustment on your tax return at the end of the year. For me, trading comes first, taxes come last. I never let tax considerations affect my trading decisions, which is why I said it was a non-issue.

 

 

Regarding making $150 to $200 per day on $100,000:

 

Intraday trading is a different game than what you've been playing. Why go into debt for 28K just because you believe you'll have an easier time picking up $150 to $200 per day on $100,000 versus $72,000? The reality is that is a very modest goal if you know how to extract and can be done with $25,000. If you don't know how to do it, you won't be able to do it with $200,000.

 

Since your cost of capital is very high, you might consider putting just a small amount at risk in an account and maximizing leverage. For a retail account, to avoid the PDT rule, that would be $25,000. If you look beyond strict retail trading and into pseudo-retail firms that offer greater leverage than 4-1, the starting capital may even be smaller.

 

Best of luck.

 

First off, THANK YOU for your time and thoughts.

 

I guess we are just looking at this totally opposite. I say write off everything you can. Heck, you can even depreciate a % of your house. At least for me, this would have no impact on any potential capital gain. Why not tax a deduction for utilities, etc.? For example, if someone did have 2 internet connections, you could probably conservatively deduct 1.5 of the cost? That all adds up.

 

As far as the wash sale, I won't be having any LT gains so it will all be OI. Your "fourth" point has me very intrigued. I'll have to dive into the deferral and look for a good example. That was probably the biggest factor I was considering. If the wash sale rule isn't as big of a deal as I was originally thinking I can just trade the first year and then a year later or whatever I can make the election. This would save me the initial set up cost with the LLC and also my tax bill each year.

 

I'm debating paying the loan back, still not sure. I'll be the first to admit that I'm no expert in any of this. The main reason like I said earlier is I was hoping to take less risk on. I'd still have to take out some Roth money but at least there wouldn't be the loan in the back of my mind.

 

thx again

[curtisj76 10]

Quick update:

 

So far the new year has been GREAT. Almost too easy and haven't had a losing trade yet. Just using 2 stocks, mostly 1. I'm paying the loan back but to keep my trading account funded I'm liquidating some Roth contributions. I've been trading with 45k but I'm gonna bump it up to 75k. This will allow me to day trade some and maybe swing trade with some other.

 

Not really using any indicators or "fancy" stuff like that, just looking at the chart. Just looking for support/resistance and trends. I shorted a couple stocks for the first time ever. Pretty cool to make money when she's coming down. Sorry to sound like a newbie.

 

Today I was getting maybe a little too confident. Thought I was maybe over trading today and "trading just to trade" but the trades made sense to me and they all worked out. Maybe I was just confident with what I was doing and listened to my brain/gut.

 

Anyways, so far so good. The losses will come obviously, hopefully later than sooner. Best of luck this year!

[joshdance 10]

Intraday trading is a different game than what you've been playing. Why go into debt for 28K just because you believe you'll have an easier time picking up $150 to $200 per day on $100,000 versus $72,000? The reality is that is a very modest goal if you know how to extract and can be done with $25,000. If you don't know how to do it, you won't be able to do it with $200,000.

 

Bingo. Being undercapitalized is only really relevant if you are maxing out leverage or taking on more risk than necessary. If you can't make $100 with $25K, then adding another $75K or $1M won't help. Knowing how to trade comes first.

[joshdance 10]

Almost too easy and haven't had a losing trade yet. Just using 2 stocks, mostly 1.

...

Today I was getting maybe a little too confident. Thought I was maybe over trading today and "trading just to trade" but the trades made sense to me and they all worked out. Maybe I was just confident with what I was doing and listened to my brain/gut.

 

Anyways, so far so good. The losses will come obviously, hopefully later than sooner. Best of luck this year!

 

I wish you the best in your trading for 2012. I am hoping for your sake that you did not have a case of beginner's luck this week. I don't know what stocks you watch, but the equities markets as a whole were very kind this week, FWIW. Not really any surprises, nothing too tricky, just balanced, range-bound movement and quite friendly. If it felt "almost too easy," take my warning now and know that it was, and that it will not be this way every week. I would strongly suggest that you limit your max losses to around 30K, in your situation. Since you have a family and have worked hard for your savings, it would be a shame to lose more than that. Remember, you can always simulation trade. Realize that it takes most traders a very long time to really get it, and one week isn't a very long time. I hope very much that you will be highly exception and not really lose money, but since you have not traded before, I am concerned that you are putting $100K into a game you do not yet understand.

 

Best of skill and success to you in the coming weeks, please keep us posted!

[curtisj76 10]

I wish you the best in your trading for 2012. I am hoping for your sake that you did not have a case of beginner's luck this week. I don't know what stocks you watch, but the equities markets as a whole were very kind this week, FWIW. Not really any surprises, nothing too tricky, just balanced, range-bound movement and quite friendly. If it felt "almost too easy," take my warning now and know that it was, and that it will not be this way every week. I would strongly suggest that you limit your max losses to around 30K, in your situation. Since you have a family and have worked hard for your savings, it would be a shame to lose more than that. Remember, you can always simulation trade. Realize that it takes most traders a very long time to really get it, and one week isn't a very long time. I hope very much that you will be highly exception and not really lose money, but since you have not traded before, I am concerned that you are putting $100K into a game you do not yet understand.

 

Best of skill and success to you in the coming weeks, please keep us posted!

 

Thanks for the reply.

 

The stock I did the best in was ok for the week, nothing great. I was making good trades when the stock had not only a positive day but also a down day. There's nothing better than making 1% on a trade when the stock fell 3%. Back in my buy/hold days I would have ending up down the 3%. I'm looking for small, consistent gains.

 

I've been investing in the stock market for over 13 years and 7 of those I had 2 jobs that revolved around investing/stock market. I know trading daily is a different animal but I believe I have a solid foundation to start learning. I'm a quick learner and am willing to put the sweat into the game.

 

Yes, 75k is a lot to start out with. I've been doing very well with 45k right now. However, getting some additional money out of my Roth IRA's helps me with Reg T. I have a paper gain of about 5k right now in my IRA that if I sold yesterday I'd get a dang phone call from Scottrade warning me cuz I've only had the stock 2 days . Getting a little more money allows me to be more flexible and get in/out easier which in the end will give me less risk.

 

I am aware that it will be MUCH harder than this. My wife is getting all excited buy I keep telling her that I will lose some trades soon. One of the best things I have going for me is that I'm good with money and I know how to run a business. I've already taken all of my profits and put them in a separate account. I'll be attacking this with a very conservative approach.

 

Yikes, sorry for the ramble. Not even sure what I just typed. Anyways, thanks again. I hope I can come back with some more good results.

[Handlowiec 10]

Quick update:

 

Today I was getting maybe a little too confident. Thought I was maybe over trading today and "trading just to trade" but the trades made sense to me and they all worked out. Maybe I was just confident with what I was doing and listened to my brain/gut.

 

Anyways, so far so good. The losses will come obviously, hopefully later than sooner. Best of luck this year!

 

Thinking about your comment on Over Confidence. Mark Douglas has some great insight...

 

"When you’re winning, you are least likely to concern yourself with anything that might be a potential problem, especially something that feels as good as euphoria. One of the primary characteristics of euphoria is that it creates a sense of supreme confidence where the possibility of anything going wrong is virtually inconceivable.

 

Conversely, errors that result from self-sabotage have their root in any number of conflicts that traders have about deserving the money or deserving to win. It’s when you’re winning that you are most susceptible to making a mistake, overtrading, putting on too large a position, violating your rules, or generally operating as if no prudent boundaries on your behavior are necessary.

 

You may even go to the extreme of thinking you are the market. However, the market rarely agrees, and when it disagrees, you’ll get hurt. The loss and the emotional pain are usually significant. You will experience a boom, followed by the inevitable bust."

 

Douglas, Mark (2001-01-01). Trading in the Zone:

[john99 10]

No offense to the OP. But are you serious? Is this whole thread a big joke?

You plan on trading for a living with only 75k and you are using brokers like Scottrade?

Some of you say 75k is more than enough to trade with or even 45k. Honestly, how many professional traders do you know that trade that small of an account and make 6 figures? I know ZERO. Yes, maybe a retail guy got lucky 1 year with 45k, but consistent for 3+ years is a rarity. Next comes Scottrade, please do some research on finding a better broker. You must not care about execution speed or commissions. Do you know how much you would save in commissions if you made 100k and you were trading with a real discount broker vs Scottrade.

I am actually shocked to read people like this believe they can trade for a living, (ie- the guy just shorted a stock for the first time ever and his wife is getting excited about the business).

There are so many red flags, I just keep shaking my head.

My suggestion- Go to IB, Keep your day job or part time job. Never use borrowed money like an insurance or home LOAN to trade, and be prepared to lose all of your money you have in the market for when your support and resistance strategy stops working.

[Handlowiec 10]

No offense to the OP. But are you serious? Is this whole thread a big joke?

You plan on trading for a living with only 75k and you are using brokers like Scottrade?

Some of you say 75k is more than enough to trade with or even 45k. Honestly, how many professional traders do you know that trade that small of an account and make 6 figures? I know ZERO. Yes, maybe a retail guy got lucky 1 year with 45k, but consistent for 3+ years is a rarity. Next comes Scottrade, please do some research on finding a better broker. You must not care about execution speed or commissions. Do you know how much you would save in commissions if you made 100k and you were trading with a real discount broker vs Scottrade.I am actually shocked to read people like this believe they can trade for a living, (ie- the guy just shorted a stock for the first time ever and his wife is getting excited about the business).

There are so many red flags, I just keep shaking my head.

My suggestion- Go to IB, Keep your day job or part time job. Never use borrowed money like an insurance or home LOAN to trade, and be prepared to lose all of your money you have in the market for when your support and resistance strategy stops working.

 

Great point on Scottrade. I have IB as well. One of the first rules in trading is keeping the costs lost. When someone attempts to trade because "they need the money" will bring up an entire world of issues the new trader would never have expect. Yes, KEEP YOUR JOB. Start out position trading. Don't take a lucky streak as the way it will be long term.

[Handlowiec 10]

Something by Peter Brandt that is must read regarding the realities of trading.

 

"Successful trading is an upstream swim or uphill run against human nature. It is fair to say that consistently profitable market operations require that a trader learn to overcome strong emotional pulls." - Peter Brandt

 

Six major points from the book Diary of a Professional Commodity Trader

1. Consistently profitable commodity trading is not about discovering some magic way to find profitable trades.

2. Consistently successful trading is founded on solid risk management.

3. Successful trading is a process of doing certain things over and over again with discipline and patience.

4. The human element of trading is enormously important and has been ignored by other authors for years. Recognizing and managing the emotions of fear and greed are central to consistently successful speculation. I make no pretense that I have this aspect of trading mastered.

5. It is possible to be profitable over time even though the majority of trading events will be losers. “Process” will trump the results of any given trade or series of trades.

6. Charting principles are not magic, but simply provide a structure for a trading process. - Peter Brandt

[curtisj76 10]

No offense to the OP. But are you serious? Is this whole thread a big joke?

You plan on trading for a living with only 75k and you are using brokers like Scottrade?

Some of you say 75k is more than enough to trade with or even 45k. Honestly, how many professional traders do you know that trade that small of an account and make 6 figures? I know ZERO. Yes, maybe a retail guy got lucky 1 year with 45k, but consistent for 3+ years is a rarity. Next comes Scottrade, please do some research on finding a better broker. You must not care about execution speed or commissions. Do you know how much you would save in commissions if you made 100k and you were trading with a real discount broker vs Scottrade.

I am actually shocked to read people like this believe they can trade for a living, (ie- the guy just shorted a stock for the first time ever and his wife is getting excited about the business).

There are so many red flags, I just keep shaking my head.

My suggestion- Go to IB, Keep your day job or part time job. Never use borrowed money like an insurance or home LOAN to trade, and be prepared to lose all of your money you have in the market for when your support and resistance strategy stops working.

 

I'm switching to Tradestation this month.

 

Not looking to make 6 figures as I am somewhat realistic. However I probably came close to making 75k last year. This first week I've made around 6k. How did you do big guy?

 

Not for a living as of right now as my wife can support us. Just trying to grow account and LEARN.

 

The 75k isn't borrowed, it's 100% mine. I have more if needed.

 

Lastly, phuck yourself. Thanks

[david_uk 10]

Hi everyone, just joined today. My bio:

 

34, married with 3 children, ages 9, 6 and 2.

 

Worked in the financial industry for around 7 years and then decided to go back to school. Double majored in finance and accounting. Got a job right away at a firm and have worked there for 1.5 years. Only problem is that my family would have to move and nobody wants to. Also, I'm a HUGE family guy that enjoys spending time with my children. Decided to try and trade for a living. If we be careful with expenses my wife can support us, we just won't be able to spend very much. The bright side, no more busy tax seasons and commutes!!! Be able to hug my kids before they leave for school and tell them hi when they get home.

 

I've been investing since 1999 and my wife and I haven't missed a Roth payment ever. First mostly with mutual funds but now am all stocks. Have been doing really well the last few years. I'm only planning on investing stocks cuz that's all I know. I have a feeling many traders fail because they trade in an area that they really know nothing about. SCARY!

 

My plan is to start up an LLC to trade in. That way I can eliminate the wash rule, etc. I want this up and going by January. I believe it will be a multi-member LLC as the single will be disregarded come tax time. Need to talk to a lawyer.

 

Coming up with the capital is not a huge problem. My wife and I have worked hard and saved our whole marriage. I have around $200k if I really wanted it, however it's mostly all in Roth IRA's and in 1 Trad IRA. My Roth contributions have been about $80k so I'm gonna take out that. Minus the 10% penalty I'll net $72k. I'm also gonna take a loan from my insurance policy for $28k at 8%. This will give me $100k to start with.

 

My goal (if possible) is to take all my profits and pay the loan back ASAP. Which I guess would be to earn 28% for the year 2012. Actually a little higher to pay Uncle Sam. I thought if I could average $150-200 a day this would be possible. Doesn't seem much with a $100k account but I know it's a lot harder than that.

 

Plan on working roughly 230 days in 2012:

 

365 total days

(104) 52 weekends

(15) Holidays

(16) Vacation/sick days

230 trading days

 

My computer needs an upgrade or I guess used as a backup if I get a new one. I'd like to build one myself as I don't think it would be hard to figure out. Also would like around 3-4 monitors as working with only 1 is a pain. I'm not excited about dropping a couple grand on pc stuff but I guess it's a needed tool in my toolbox. I currently have DSL but have recently given the thought of switching to cable. Furthermore, maybe having both is the best option but dang that seems expensive.

 

ANYWAYS, I'll write some more later as the chances of someone reading this novel diminishes with each additional sentence. Thanks for reading and PLEASE, any advice/comments are welcomed.

 

Curtis

 

Not being an American, I cannot offer any thoughts on US Tax laws but I can offer some thoughts on 'trading' as such.

 

First of all may I ask have you considered trading index futures (such as the ES, the YM or the NQ)? Trading index futures is not difficult. I believe it is far simpler than trying to work out which stock or stocks to trade. But more importantly you can close out your trade whenever you want to -- something that appears not to be the case (from what has been written on this thread) when trading US stocks.

 

You have said your daily target is approx $200 per day and you have something like $100,000 of your own capital available. My short answer is that one most certainly can make $200 per day, day trading US index futures, and especially so if you have $100,000 by way of trading capital available.

 

Just bear in mind that one ES futures contract is equivalent to say an investment basket worth $65,000. Do NOT get 'seduced' by the minimal margins ($500 per ES contract) that are being offered by US futures brokers these days. Never lose sight of the fact that each ES contract means you are playing with $65,000 per contract.

 

You mentioned that you have been swing trading stocks for several years. Providing you get to understand the way in which the ES futures contract behaves (and you get this understanding by watching that market, in real time, on a daily basis for several months if not even years) you may well find that your swing trading technique can be used trading the ES.

 

You may wish to look at several aspects to do with trading, many of which are available for free on the trading-naked.com website (here is a link: Trade Setups and here is another part of the same website: NQoos -TradingNaked " master your setup, master your self" Profitable Trading Techniques for emini futures ).

 

To summarise:

 

(a) $200 per day is certainly achievable with a $100,000 futures margin account. It represents just 4 ES points per day and the ES tends (on an average day) to have a range that is of the order of 20 ES points, if not more.

 

(b) Before you jump in with real money, spend months or more 'paper trading' with a broker-demo-account. See if you can consistently make 'paper money' trading just one ES contract -- see what your results turn out to be on a weekly basis. And keep an accurate record of all your trades each day of the week.

 

© How you play your stop-losses will be an interesting lesson you can play around with, with the demo account. I agree trading paper money is completely different to trading with real money (when you either stand to make or lose real money) but the more time you spend at 'paper trading' will pay dividends in the end. You are 34 years of age and you have plenty of time available for you to learn how to trade index futures. Use that time well (be that reading up articles and or trading as realistically as you can with a demo-account).

 

(d) Entering a position is easy. When to get out of the trade is where the problem arises. If you exit too soon, you may leave too much 'on the table'. If you dont exit when the position turns into a loss (and remember markets tend to zig-zag their way through the day) you stand to lose money BUT do experiment with varying stop-losses. See what happens each week when you use say a fixed dollar stop eg $100 (2 ES points) then try and see what happens when you increase that stop loss, another week, to say $300 (6 ES points). Where you place your stop losses, indeed should you place any stop losses at all, is what can effect your weekly outcome far more than the point at which you enter your trade. Many people say you should never operate without any stop losses -- I actually am not one of those people. I agree stop-losses help you manage / control your 'risk' and you should never ever bet the whole farm on any single trade. But I also say you can control your risk by being cautious in your trading lot size. Especially in the beginning when you start off trading with real money. So experiment with the idea of trading small size but having no stop-losses in place. I think you will be quite pleasantly amazed at the outcome!

 

(e) Apart from the very important question of what your trading lot size should be AND whether and where to place your stop-loss orders, you need to decide where your profit targets should be AND dare I say at what price level you should consider adding to your losing position ie averaging your price. These are all aspects that you can and should play around with whilst using a demo account. And note down the weekly outcome using these differing risk control strategies and evaluate the weekly outcomes.

 

(f) Many people reading this may say I am mad even raising these points. Well I would ask those people, if they were trading stocks (as against futures) do they successfully trade using the equivalent of 2 ES point stops? Do they exit their trades each and every day? And if they dont do that with stocks, why just because you are trading index futures should they exit their trades? Too many index futures traders use their margin account to the full -- that is where they have no choice but to operate using these 'tight' stops because otherwise they would simply get wiped out tomorrow if not already today. If however you trade your futures, as though each contract represents an investment risk of $65,000 per contract, then you will not fall into that honey-trap or 'seductive' $500 margin requirement per contract when day-trading. Trading in 'small size' relative to your margin account means you are controlling your risk differently to most people. And if you only have a profit stop in the market (and not a stop-loss order in the market) there is only 'one leg' of the trade that can get filled -- and that is your profit target. Try this kind of a strategy (which by the way no book or so called expert will suggest to you) on your demo account, and monitor the weekly outcome of using such a strategy and then decide for yourself whether it is actually a workable (or a stupid) strategy.

 

(g) I wish you all the best in your endeavour to becoming an effective index futures trader. If you are willing to put in the time AND if you are willing to challenge the so called accepted norms (and do not forget that most futures traders actually lose when daytrading -- so why follow those so called 'accepted' norms if the final outcome is that you join the 85% losers out there) I think after several years of screentime and real life trading, you may well get very pleased with consistent winning from this amazing life style.

 

(h) Someone once wrote that 'Trading is a hard way to make an easy living' and he was dead right. It is an extremely hard way to make and 'easy living' BUT it can be done and is being done by, apparently some 10 or 15% of all traders who are out there. There is no reason why with patience, study and dedication you cannot also get in amongst the chosen few successful traders who are out there.

 

(i) If you wish to come into a free trading room (I and other traders are there most days) come along to #patterns on the Mirc channel). Some days we have interesting discussions which you may find of interest.

 

But whatever you do, do not think that successful trading comes to anyone in an instant -- quite the reverse it takes years of trying and and can take lots of money in the act of trying.

 

david_uk

[gosu 10]

No offense to the OP. But are you serious? Is this whole thread a big joke?

You plan on trading for a living with only 75k and you are using brokers like Scottrade?

Some of you say 75k is more than enough to trade with or even 45k. Honestly, how many professional traders do you know that trade that small of an account and make 6 figures? I know ZERO. * * *

 

 

I don't know what you mean by "professional" but I funded my first online account with $10,000. I won't reveal exactly how much I made on that account the first year because I am just an amateur and don't want to show up any of the professionals you know who can't make six figures with a $75,000 account. I will just say it was at least an order of magnitude. That was an extraordinary year for me. Of course, there was no such thing as a PDT rule back then.

 

The internet broker I used was not Scottrade but it was just a run-of-the mill kind that didn't even have updating real-time quotes. I had to submit a quote request after logging on to my account and I was allotted only so many free quotes for every $20 commission-paid trade I made. I thought it was the greatest thing in trading at the time. Now it could be that I'm much older than you. When I bought my first stock, I had to phone it in and use day-old quotes from a newspaper. After I placed the order, the broker called me back and told me the price my order was executed at. Sometimes I got lucky and was put on hold and told the price after a few minutes. The commission was over $100 per trade on even lots and this was with a "discount" broker.

 

A lot of people today take for granted their access to the market and especially the market data they receive for practically nothing. Still, I don't think the game itself has changed all that much except that it's possible to gain or lose much faster now.

[MightyMouse 12]

I don't know what you mean by "professional" but I funded my first online account with $10,000. I won't reveal exactly how much I made on that account the first year because I am just an amateur and don't want to show up any of the professionals you know who can't make six figures with a $75,000 account. I will just say it was at least an order of magnitude. That was an extraordinary year for me. Of course, there was no such thing as a PDT rule back then.

 

The internet broker I used was not Scottrade but it was just a run-of-the mill kind that didn't even have updating real-time quotes. I had to submit a quote request after logging on to my account and I was allotted only so many free quotes for every $20 commission-paid trade I made. I thought it was the greatest thing in trading at the time. Now it could be that I'm much older than you. When I bought my first stock, I had to phone it in and use day-old quotes from a newspaper. After I placed the order, the broker called me back and told me the price my order was executed at. Sometimes I got lucky and was put on hold and told the price after a few minutes. The commission was over $100 per trade on even lots and this was with a "discount" broker.

 

A lot of people today take for granted their access to the market and especially the market data they receive for practically nothing. Still, I don't think the game itself has changed all that much except that it's possible to gain or lose much faster now.

 

I made a tremendous amount of money in the early 80's when there was no scott trade or internet. I began with $5000 and everything was done over the phone. My broker was Hertzfeld & Stern which was later bought by Gruntal. I plotted charts on paper and my sources f data where the NYT, the WSJ and Baron's. I was doing "wrong" things like averaging losers. At the time, the only book I read was a very basic book that explained futures and options contracts. I was trading options of LBO rumers and the gains where spectacular. I lost a great deal of it back, but certainly not all of it.

 

Was it luck? Sure was. Right time, right place, right strategy.

[TheDude 10]

Heres my on a few of the points:

 

making $200 a day can be done easilly, and i'd suggest the OP shouldnt think of going live/starting the business until he can do this most days

 

as for capitilisation, most guys who day trade futures for a living seldom keep more than 50k in their account and swinging 100-200 lots is no prob. the fact is that although retail brokers may ask for say $500 per contracts, the exchange dont ask for anything intraday - so the fcm typically justs wants to make sure youve got some coin should the worst happen - maybe OP should consider futures? it's a lot more efficient on capital than stocks. after a year or 2 ditch the retail broker. they are leeching scum bags.

 

as for the op's chances of success, id say whether he truly thinks he can do it or not, he's right. listening to all this negativity here makes it no wonder so many dont make it.

 

having said that, if the worst does happen, my money will be on the stress of having to make it happen. if he has to pay the bills, support a dame, and 3 kids then thats stress. however if the wife can really support all of this on her own then i say do it.

 

just remember trading is much about the lifestyle choice than the money. if $200 a day makes you happy and gives you that time to be with your kids, then power to you. theres more to life than ferraris and champagne.

[curtisj76 10]

Heres my on a few of the points:

 

making $200 a day can be done easilly, and i'd suggest the OP shouldnt think of going live/starting the business until he can do this most days

 

as for capitilisation, most guys who day trade futures for a living seldom keep more than 50k in their account and swinging 100-200 lots is no prob. the fact is that although retail brokers may ask for say $500 per contracts, the exchange dont ask for anything intraday - so the fcm typically justs wants to make sure youve got some coin should the worst happen - maybe OP should consider futures? it's a lot more efficient on capital than stocks. after a year or 2 ditch the retail broker. they are leeching scum bags.

 

as for the op's chances of success, id say whether he truly thinks he can do it or not, he's right. listening to all this negativity here makes it no wonder so many dont make it.

 

having said that, if the worst does happen, my money will be on the stress of having to make it happen. if he has to pay the bills, support a dame, and 3 kids then thats stress. however if the wife can really support all of this on her own then i say do it.

 

just remember trading is much about the lifestyle choice than the money. if $200 a day makes you happy and gives you that time to be with your kids, then power to you. theres more to life than ferraris and champagne.

 

Thanks Dude. My goal was $200 to start out with which I'm gonna stick with. So far I've realized that you definitely don't need 100 grand to do this. I've realized you can make 4x that amount with half the capital. The additional capital will help I believe control some risk and allow a little more options for me.

 

Trust me, the best thing going for me is money management/budgeting. If my family NEEDED money every month I would NOT be doing this. Will we need to watch our spending? You bet, but we can get by as we did it when I went back to school. We have an emergency fund and my gains from this year just increased it. I'm gonna put all my gains away and build it as much as possible. After it gets to the amount desired I will then try to grow the trading account or use some profits for family needs/wants. Of course this is if I make money. Slow and consistent, not trying to get rich quick like many that enter the game.

 

Anyways, thanks for the support.

[Handlowiec 10]

Curtis, TheDude makes some great points.

 

It sounds like you have a solid background to get back into your career if you decided to do so in the future. it is not many times opportunity comes along where you can give it your all to trade full time.

 

Just keep the confidence in check and apply your risk management as you stated.

 

I wish you the best success in this endeavor!