Making a living trading stocks/options and other investments.... and general advice

[mataspeed]

Yes I've played cashflow 101 and 202. That is the same concept I'm trying to learn to do and make that a part of my life style. My family are already investors, but they are mostly investing in real estates which is great. They own several properties in several states and are making great successes with that.

They've got their retirement plan covered, by the time they need to retire they would have so much passive income from their RE and so much money stored from selling those RE they can retire and have a happy life.

That is my plan exactly, to use the stock market for generating start up cash to invest in RE and businesses. Yes its true with my generation we are easily distracted by all the marketing on doodads and all the sex marketing on TV to get in to a relationship early in life. I don't know about the other youngsters but I was never into spending much on doodads. My family is quite strict about finances, and they've passed that on to me. My mom won't go into a restaurant without a coupon lol.

I would love to read your biography books lehayes and Stocktrading101 =) If you ever decide to write one.

I believe you can be successful with anything as long as you love what you're doing and are persistant. Going to college getting a professional degree is just another investment. I know some people who have done so and haven't made use of it and are still poor + in debt for their education expenses. If you've read RK's books. The E and S quadrent are limited, in freedom and in earning potentials. I want to get into that B and I quadrent and achieve freedom with unlimited earning potential. (And less tax) Many have tried, most have failed, most are just stepping in the front door. It's my goal to be the few that are living within it and with much more freedom than can ever been achieved within the E and S.

Thanks for your advice and opinions, its been helpful =)

[WallStGolfer31]

Although I respect these other guys opinions, I have some different advice for you.

If you want to succeed in life you, you gotta be the best, or **** close to it. I just follow my dads lead, the guy went to NYU for his undergrad, his masters, and his PhD. On top of this massive education he has common sense (which isn't too common) he knows very little about the markets, but he has some really good guys doing it for him, and that has paid off.

The thing is if you aren't an expert in something, hire someone to do that. If your looking to get a will, you don't write it yourself, you get a lawyer, etc, etc, etc. There are numerous examples.

Go to college and get a in depth learning experence about finance, hell, in time you can maybe start your own venture capital firm or something. It's all about stepping it above what others are doing. Work closely with a goodprofesor and he will set you up on the right path. I have the GPA, the past leadership experence etc to get into top 30 grad schools (where all the wall st big boys recruit at) my edge? He knows the admissions people at these schools, he knows the heads of finance dept's etc, I'm not too worried about getting in. Work hard, andthings will turn out alright....

[Yee Sian]

What I found is that my trading took a whole different meaning to it, because no more was it just, "trading my savings for side money". It became, "I have to pay rent this month, medical insurance, my car, food, etc" and as a result I found myself putting alot of pressure on to just "make it" each month.

"If you can't afford to lose, you can't afford to trade.

Trading a small account and living off of it at the same time is like eating your own fish bait.

If you suspend trading for a while, at least until you get an independent, stable income, you can still continue to work on your trading method." - Ed Seykota

[mataspeed]

Haha thanks FirstConsul, I don't plan to trade with real money untill I've traded on the simulator successfully first. That would be pretty pre-mature to go in with real money without being successful with virtual money. I've attended classes on "how to write off your expenses" already so I've got an idea how ^^.
I agree real estates offers many advantages, I plan to study that too after.

[Tyrael33]

Originally Posted by mataspeed

To me the stock market seems is a good way to make a living, I'm young so I'm not afraid of a higher risk. Stock options pretty much surprised me, being able to recieve gains I would never thought be possible for such a little investment. Seeing 50-100% even 200% gain in a few days up to a week, putting in 200-400 dollers in a stock option is CRAZY. The risk seems small to me seeing the potential gain and with more experience and knowledge I can only imagine the possibilities.

Risk is almost always 100% propotional to return in this game. I want to be very straightforward: if you put large sums of money in deep out-of-the-money options to leverage your results you are going to get raped. You cannot keep betting the farm for very long and survive. One of the greatest traders of all time, Jesse Livermore (he's the biggest icon to ever trade; I don't very selectively pick my examples) lost his stake 3 times prior to his mid-20s before he learned this and he could pick them better than anyone here has.

You cannot take $25,000 or less and hope to safely make even a very modest living, especially as a rookie. You have almost 0 chance, and anyone who leads you on otherwise is probably a fool or a poser. I'm not the kind of person to throw down the gauntlet often but it is very serious that you don't get too excited and hurt yourself. Follow this advice and you have a reasonable chance of getting rich in the markets: get a good enough job that you can consistently put away cash to your account(s), be a continual learner, have a well-rounded risk management system, and don't plan/think/daydream about making money--think about not losing much money. Ever hear the joke of the Optimist Club members who tried to beat the train? Positive thinking doesn't work in the markets.

Consider:
1) Most experienced investors (including professionals who have done way more homework than you) would be satisfied with 10% per year.
2) According to many people who have been on the floor of exchanges (i.e. where active traders work) about 90% don't survive (the Market Wizards books consistently have this question answered in such a way.)
3) Get out a calculator and multiply your pie-in-the-sky hopes (it's okay, I had them at first too) like this: money to trade with*return per year (in the form of 1.1 for +10% 2 for +100%)^years you will be trading. For example, $25,000 * 2(i.e. +100% per year)^50 which equals a 20 digit savings which should strike you as completely unreasonable (Gates has an 11 digit savings.) Obviously once you reach a certain size liquidity would keep you from compounding at that rate, but the point still remains.
4) Nobody wants to feel like a complete fool--which you will by losing your stake, and have to tell your parents that you gave away their hard-earned money.

Originally Posted by mataspeed

Now to the point, I'm wondering about your opinions on living off on just trading stock and stock options as income. I don't know if anyone has ever done it but these so called "day traders" is that what they are doing? Have you been successful with the market and how long have you been trading the market? There are ups and downs, are you able to manage that and come up positive?

First of all, a day trader is defined as someone who enters and exits positions in a single day. Second, a lot more than day traders make a living just off the markets. In one of the Market Wizards books Ed Seykota checked his trend-following (i.e. he held onto positions for weeks and perhaps many months or even years) automated trading program for 15 minutes in the morning and was done (as far as executing trades is concerned.) Trading is not like most other jobs: sitting on your hands is often much more profitable than being very active. Some people can do very well day trading but it is a notoriously hard way to trade, especially if you don't have a big enough stake and a good enough broker to get very low commissions.

[geniv2]

hi, I'm new to this forum and a newbie day trader.

I have a question for you guys, I was reading this thread and wondering..

what is "RE" "RK" and "Cash Flow 101/201" that you guys are talking about.

For mataspeed I have one thing to say. don't always look at the bright side and consider the consquences if you lose.

This is my story:

I never had much experience trading nor have any formal training in trading. I'm a computer technician. and I opened up my trading account may of last year but traded very little. on average one per few months. My trading account have $15k. and for the year I didn't make or lose.. break even. (I went in live and never spent the time on a trading simulator)

My story started mid april of this year. I decided to day trade. buy and sell in a matter of hours or day. I came up with a system that net me small gains daily. it worked for alittle but but I got greedy and put in more money to bump my investment to 25k..

I gained and lose. I have a friend that does risky trades.. and he's not too smart with the market but he made about 100k over the past few years doing his risky style.

I followed his style because I was greedy and impaitent. and a few times I made like 1.7k in one or two days. 3.8k in a week or so on one trade. so I would gain using his advice/same movies. but I would make my own trades and lose the gains (my problem was greed and impatience)
prett much I was up and down.. a few thousand dollars.

Then one day I followed his move and bet alot of money on a high risk 50/50 chance trade and also on a another one of those of my own.

The results of those two trades turned out for the worst and caused me to lose half of my investments ($12,500). And my friend to lose $37k.

How did this happened? we got cocky after winning in some risky trade ideas and got reckless. If you think about it. if you put a large sum of your $ on risky 50/50 type trades you can win say 5 straight time in a row but sooner you will lose the 50/50 and lose alot of your money.

Now I'm just licking my wounds at doing what works and more careful. and thank the lord I am able to make back about $1500 so far using the original tatic that I came up with when I first start doing daytrading and making small sums every day.

For Mataspeed, I don't claim to help you make money as I've lost big. but I offer you advice on how not to make the same mistake I made

- HAVE A GAME PLAN and follow it. control your emotion and operate based on those rules or you will lose money.
(I say will sell a stock when it hit a certain price. . when it did hit the price I got greedy and didn't follow the rule. it went up higher and then dropped back down to a loss)
- be patient.
- DON'T BE GREEDY. there's nothing wrong with leaving a position on a small gain.
- Don't always look at things rosy. look at the bad side of things and take that into consideration when trading.
(like in your case you have xxx amount of money to trade with and you thought about making a living with it.. also consider the consquence that you can possibilly lose your money)

hope this helps.

[mataspeed]

Thanks, I don't plan on trading with real money untill I'm successful virtually. I have years and years, I'm not in a hurry.

[Yee Sian]

We will be watching out for you All the best in your endeavors! Of course, it is ideal for our emotions while trading our real life account to be the same as that of our investopedia account. Take note of the feelings you go through while buying/selling your stocks, as well as those you go through while holding the stock in the stimulator.