How to be a trader and earn income passively from other sources

[kingking 10]

I am still trading part time and only trade the morning session of the US index futures. I keep a full time day job (in Asian) but am eager to learn more way to increase my income. I just wonder how traders utilize their time to make extra bugs besides extracting money from the market. Is there a way to get passive income while one is trading the market?

 

Would love to hear some concrete ideas for my insights. Thanks

[brownsfan019 17]

I am still trading part time and only trade the morning session of the US index futures. I keep a full time day job (in Asian) but am eager to learn more way to increase my income. I just wonder how traders utilize their time to make extra bugs besides extracting money from the market. Is there a way to get passive income while one is trading the market?

 

Would love to hear some concrete ideas for my insights. Thanks

 

King - this is not what you want to hear, but if you are going to treat this as a part-time hobby, you will be paid accordingly at least at the beginning. Trading is a FULL-TIME endeavor IF you want to be good at it. And you realize it can take YEARS to get there. And a whole bunch of other stuff...

 

Point being that if you are just casually trading when time permits, that's fine if it works for you, but I highly doubt you will reach the point where asking how to make extra money is a concern...

[kingking 10]

Brownsfan019

Thanks for the reminder. I am keen on becoming a full time trader. At the moment, I need to refine my trading style and use my time wisely to learn how to trade.

My reason for emphasing on passive income is that I do not want to focus my time on it . I simply seek for channel that can generate income passively that can run on its own once set. In reality there may not be any channels for generating passive income at all. Thus, the best way for me is to refoucs on how to trade. I however do not mind to hear more comments on this issue from fellow traders in this forum

[wsam29 10]

There is nothing wrong with trading only the first half of the US session.

 

You'd be surprised how much more you'd keep by not trading as much.

 

There is nothing more brain screwing then giving up a plus day from a trade you did not have to take. Possible reasons, you were bored, wanted to prove yourself right, etc. You already made your money, why keep trading?

 

Trading full-time does not mean you park your ass in front of the computer from 930-1615h. Some do it, but I cannot stand it. Two hours a day is good enough for me. The market is bound to do something in two hours between 1000-1200h.

 

I'd hold that full-time job until you are COMFORTABLE with the fact that your income will not be stable like a 9-5er. Have so much saved up that you can endure some months where you don't make anything and live off that savings. If that scares you or you cannot financially do that, its gonna be tough trading full-time.

 

I was fortunate to learn with OPM, other peoples money, but I also do not have what many people my age have because of the path I took.

 

If you can have a string of losing trades, not think that is the end of the world, take a break from trading, go over and think about the mistakes you made, make a note not to repeat those mistakes, you're mentally getting there to trade full-time.

 

Its tough enough figuring yourself out how to trade, you don't want to cloud your mind with ways of generating other sources of income at this stage. Once you know you can generate winning months after months, then start to think of other means of income other than trading.

[brownsfan019 17]

I agree wsam, it's not necessary to sit in front of the computer all day, no doubt. But, as you said, to be looking for other business opp's, while trading and working is a bit much to be doing all at once.

 

Basically King, the options for 'passive' money are:

1) Conservative - savings, checking, cd's, money markets, etc.

2) Moderate - mutual funds, etf's

3) Aggressive - all those great online opp's out there

 

In each of these situations, you turn your money over and someone else does something with it, whether it is 1) a bank 2) a fund manager or 3) a scammer.

 

There's probably other things that could fit in here, but here are the basics with very low minimums, if any.

[Nick1984 10]

brownsfat019 when it comes to savings etc the income generated is negligible. If your earning 6% on your savings your not making very much so your going to need a lot of capital to generate a meaningfull income. CD's are wholesale instruments that require wholesale investments as well and they dont generate income per se cause they're just sold at a discount to receive face value upon maturity.

 

When it comes to mutual funds this is a great way of generating passive income. We call them managed funds here in Aus btw. Most funds have income distributions twice a year which can either be banked or reinvested. If you set up an installment gearing plan where you put up some of your own equity and keep on borrowing bit by bit against it to accumulate more and more then over the years the funds value has the potential to return a nice bit of income.

 

Don't forget also that by regularly investing in mutual funds you will be dollar cost averageing so that over time you will end up buying more units as prices are low and less when prices are high! You can even use the income from your distributions to help pay off interest payments on your loans.

 

Property is another great investment. Sure it is capital intensive but thats what neutral or positive gearing is there for! If you want regular income then dont even think about negative gearing cause you dont want to take a loss (unless you want to offset some really really big capital gains tax from your trading!). If you can positively gear a property then the income from rent should just be enough to cover interest expenses etc with a lil bit left over. You can then borrow against the property's equity and invest in another home. I don't know about the tax laws where you live but here in Australia the interest payments used to fund investments are tax deductible so thats another bonus.

 

Edit: Talk to a tax specialist from your home country to get an indication of how to minimise your tax situation and also remember to invest your funds according to your own personal risk preferences. Seeing as you want to trade futures then it seems that your most likely an aggressive investor anyway

 

Good luck mate.

[Knyyt 10]

Idea being thrown out:

 

You know some brokers out there trade "Mechanical Systems" for the individual. One idea i have tossed around to start for the next year is to set-up several accounts with these "brokers" ( after DD ) of course, and let these accounts grow individually. Heres the setup i was thinking about.

 

Set-up 5 accounts.

Fund each account ( or trading system ) with 10K.

Specify the max# of contracts to be traded for each system.

Specify when the account reached a "X%" drawdown, the account would

be closed. ( I am thinking around 35% or so )

 

One obvious aspect of this is that they would need to be proven systems with long term track records that trade longer term to reduce the commisions + drawdowns.

 

At the end of each year, clean out the accounts back to the starting funding level. (That is, if the "system" HAD profits). Then, could re-invest in a "new" system, etc etc and just keep rolling it over. Sounds almost like a glorified mutual fund with high expenses, ( or maybe similar to a hedge fund? )

 

 

Food for thought only...

 

Knyyt

[dalby 10]

i think one can ABSOLUTELY be a successful trader, and only trade part time

 

but never think of it, or treat it as a hobby. it's a business, whether you spend 1 hour a week trading, or 80

 

that mindset is critical.

 

as for ways to "passively" make money - well...

 

I sweep profits every week from my futures account and place it in bonds, money market, dividend paying stocks, etc. those all provide a source of passive income

 

I also mentor other traders, which also provides income.

[TinGull 10]

Bake bread and sell it to a local food co-op It doesn't take too long to tend to bread, really.