Individuals who just started trading forex for a living or intend to face financial challenges
Face it. If you are a young adult and have not already found a sponsor for your forex trading, you are going to encounter the following:
- Need to raise a sufficient trading capital to
- Have ample margin
- Not over rely on forex leverage
- Withstand drawdowns
- Feel sufficiently secure so that drawndowns do not affect psychology and subsequently trading performance
- Cope with daily expenses
- Prepare for a rainy day
- Prepare for losing streak
Trade forex for a living and get a part time income
Fluctuating performance, unstable trading income
If you intend to trade forex for a living, you might consider to get a part time income. That is because when you have just started trading for a living and your forex trading performance is not very steady, your chart might look like this.
When your trading performance looks like that, it is not going to sustain in the long run. Your income fluctuates and may not be sufficient for living expenses. These eat into your trading capital. Unless your performance improves, at some point in time you are going to give up. Furthermore, the pressure on you to perform will aggravate if you have financial dependents, or unsupportive spouse or parent. The other ugly solution to this problem is to find someone to pick up all your living expenses, even providing an allowance.
Introducing a part time income
If you trade forex for a living but include a part time income component (maybe an hourly rated job), you now have a ‘minimum wage’ that might bear part or even all of your month expenses. The situation improves that so you have longer sustainability until your forex trading performance improves. One part of trading that is going to improve drastically is your trading psychology. With less pressure, successful trades might also increase.
A variable part time income
This chart visualises a variable type part time income (in purple) instead. We could still include the stable part time income ‘minimum wage’ thing (green) or we could ignore it now. But a variable part time income (maybe a project based job or contract for service assignments like teaching) could now help to smoothen the forex trading performance curve. For a smoother ride.
100% winning forex trades and your personal limitations
It is important to dispel the myth that professional traders win money all the time. Professional traders still lose money some times. But because of higher winning outcomes, ability to ride the right trend and cut losses early, professional traders outperform new ones. Fluctuations can happen to anyone’s performance because the financial market is by itself cyclical and noisy in nature. In order to win in the long run, all new traders have to do is be prepared to run a marathon, be realistic with expectations and let the success happen in due time.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.