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

[mataspeed]

Hi, first off, let me introduce myself. I'm 18 years old, just graduated from highschool. I've been interested in finances since 17. So far I've read books by Robert Kiyosaki. His ideas of living life outside the E(Employee) quadrent and outside the S(Self-Employed) quadrent, and making an income as a business owner and as an invester appeals to me.

I've educated myself on finances and stock trading and options so far. I'm also interested in real estates, I've attended several seminars about "THE strategy in real estates or THE strategy in stock trading/options trading" Although some seminars have good information and have potential in actually helping you achieve success. Most of them are just advertising a lifestyle everyone wants, and trying to sell one system to get you there. I believe these systems have the potential to work for some. But I believe the biggest and the most powerful strategy would be the one you've created for yourself with the knowledge you gain.

Since I've graduated from highschool I've been very interested in the stock market. Not so much so in real estates or any other investments that require a big sum of money yet(but I am also quite interested in that too). Currently I'm doing virtual trading online using investopedia for a few months now and have made interesting gains with stock options. Although I've lost some but I improve and learn from each loss and am more confident each time I trade.

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.

I'm going to be attending college, thinking of changing from focusing on Computer Programming to Finances instead since it would increase my overall leverage(which is knowledge). My parents are willing to invest money in me, to get me started, but I dislike the idea risking their money and not my own money. So I'm going to get a job to get income to invest in options using the money I make with options to diversify more and putting them in other larger investments. (preferbly real estates)

Sorry for the long read, I have so much I'm trying to communicate. 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?

I don't plan to work 40 hours a week for 5 days each week with 2 weeks vacation and hoping that next paycheck comes in. Living on passive income seems possible. I want to achieve that, what are you currently doing? Have any of you here been able to achieve freedom from that paycheck?

I'm aware of taxes, I hear Uncle Sam taxes money made with stock more than money made in a job? Is that correct? What is the percentage? I know putting money under a company name and being able to write off expenses is the best way to use your money before its taxed. I'm curious what are you doing now that is successful for you?

Thank you for reading, I know its a lot of stuff.


Sincerely,

A Young Adult with Many Questions

[Yee Sian]

This should have gone under the "Introductions" section Sorry for not having welcomed you earlier, I am not very observant about the number of posts made by people

[Yee Sian]

“I now fully believe that losing all of your money is one of the best things that can happen to a beginning trader. Because it teaches you respect for the market. It is much better to learn the lesson that you can lose everything when you don't have that much money than to learn the same lesson later on.”

“I think paper trading is the worst thing you can do. If you are a beginner, trade with an amount of money that is small enough so that you can afford to lose it, but large enough so that you will feel the pain if you do. Otherwise, you're fooling yourself. I have news for you: If you go from paper trading to real trading, you're going to make totally different decisions because you're not used to being subjected to the emotional pressure. Nothing is the same. It's like shadowboxing and then getting in the ring with a professional boxer. What do you think is going to happen? You're going to crawl up into a turtle position and get the crap beat out of you because you're not used to really getting hit. The most important thing to becoming a good trader is to trade.”

“Many people approach investing too casually. They treat investing as a hobby instead of like a business; hobbies cost money. They also don't take the time to do a post-trade analysis on their trades, eliminating the best teacher: their results. Most people prefer to forget about their failures instead of learning from them, which is a big mistake.” - Mark Minervini

[JGotti]

“We believe that according the name "investors" to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a "romantic”

-Warren Buffett quote

[mataspeed]

Hmm your qoutes are insightful Yee Sian. Gets you thinking.

JGotti, your trying to say investing and day trading are two different things I see. The difference between day trading and investing would be, the risk and return.

More risk, more return.

Less risk, less return.

Unless of course your dealing with real estates and tax leins.

Right now at my young age I want to score with the big returns, then I will put that money into less risker investments.

[JGotti]

who said investing doesnt come with high returns and low risk? Value investing is one those options , we must remember that rome wasnt built in one day and most wealth was built over time

from your post i see you want the action on wall street by trading
trading is fine and from what i know it takes great deal of time and training paper trade on investopedia for a while and try it before jumping in with real money, lets not rush things since the market will always be there

[Stocktrading101]

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?

I did exactly this, and perhaps my experience can help you make one yourself. After completing my freshman year in college I realized I was spending more time trading than I was going to classes, so I dropped to trade full time. 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. The other problem I had was that I only had $10k stowed away, so for me to be ok I really needed to make 10% a month (or $1,000), month after month, and what I realized is yes that is feasible, but what happens when I have bad months?

After a year of that, those bad months started catching up to me (this was all last year), and just about maybe 5 months ago I found myself with only $1,200 left in my name. It was a realization that the journey I had set out on was harder than I thought, and trading was no longer fun, but my income stream. So what I did was I started blogging for money (I had already been blogging for about 2 years prior, just not for $) to help pay the bills, and started focusing on the fun moreso than the pressure. I started rebuilding and got my cash back up to over $5k, and just about a month ago someone found out about me, and interviewed me for a fund manager position. I smoked the interview, and got a 6 month deal to "see what I can do" while getting paid, which actually I start today oddly enough.

When it is all said and done, I am now a proud "professional college dropout" doing what I LOVE everyday, and even with this job I still have promised myself to have fun regardless of the "pressure" to perform for my now clients. The moral of my story and what has become a huge part of me is to always do what you love, do it for the right reasons, and if you want it bad enough you will succeed. So, when you look into trading and investing as a source of money, or anything for that matter, make sure you never loose focus of why you do it. For me it was a love for numbers and trading, what will it be for you?

Hope that helps you get an insight of the mistakes and lessons I have learned in my life (just a few years older than you), which you can apply while walking the walk in your own life. Never do something for the money, and never let a passion not become a passion. There is way too much fun to be lost any other way !!

[lehayes]

StockTrading101, is right on the money here. I recently wrote out a forecasting plan to take my investing to the level where I could retire from my curremt career path. I knew that to replace my job, I would have to exceed $6000 a month and be stable at it. All in all, that meant that I had to build my account up to $25k and keep it rising before I could do this. I had to schedule my investing to generate profits in a 2 week time limit. I had goals I had to meet monthly to continue to the next level of earnings to eventually reach the $25k level. Once I was at the $25k level, I could then start taking out my $6000 a month.

The plan looked pretty solid, then in Feb, we got a replacement of Allen Greenspan. When Bernancke replaced him, he and his officers began making speeches in the news that would cause a severe down turn in the market for the day. This immediately caused me some headaches. Perfect investments would turn to blood red losses. I found that I had to react quick to prevent the losses. Eventually, I pulled out and had to re-think my plan to protect myself better from the market situation that I now faced. The solution came to me about 2 months ago and I began working on studying the results to see how it came out in the testing. After about 2 months of analysis and testing, I found that my new solution would work fairly well.

Meanwhile, my personal life has had bumps in the road. It will be about 2 months before I can get it back into the market to test it again in real time. If all goes well and the new plan works, I can resume my object and attempt to perform the retirement plan again.

I too am a big fan of RK. I can tell you that you will have to face tax issues on your earnings, for me it will be capital gains tax to cause me trouble. But if you have played Cash Flow 202, you would know that investing while fun and profitable is nothing more than a capital earning system or generator to creating your startup cash for RE investments or business investments. As you are successful in your investing, you should also focus on taking some of that money out and put it into RE or Business to further protect your money. As you know there are many benfits to RE investing. The potential problem with stock investing is that you have to continually feed the fire to make the next months expense payments, but as you use the stock investing to purchase RE with your profits, you will be able to generate your passive cash flow, which will continue to come in every month regardless of whether you do any work on it or not.

Can you live off of your stock investing? I believe you can. You just need to calculate it out and be prepared for bad times. But, if you take the steps above, you can surely live on all your investing methods and not have to consider any other sources. You are young and your expenses are small, this is your advantage. Question is, can you dicipline yourself enough to make it happen. Many young folks I have worked with don't have the patience or dicipline to drive their financial success. They get caught up in relationships or "doodad" spending and forget about their goals. I can attest to this on a personal level. I was one of those young bucks who started learning about investing when I was still a freshman in high school. I took some economics classes and then realized this wasn't what I was looking for to learn about investing. Life took over and I fell into the same traps that RK talks about, relationships, doodads, and other things that ran blocker on my game plan for success. Now late in the game, I am getting back into it.

While I work for a living to keep bills paid, I also working on stock investing to build up my cash to replace my career. Meanwhile, I am also working on a couple of books that I am writing. I also have business plans I am working on with others (2 of them currently) and one business I am building myself (has multiple business entities being constructed). I also work on inventing things when I have the chance, came up with 2 ideas so far that seem to be winners. When some of these tasks start to pay off, I will contribute much of my earnings into RE investing and then the ball will really start rolling.

My answer is to work as many avenues of investing as I can. This will increase my velocity of my cash flow. So far, it is still the same ol' grind, but hopefully, it will all pay off soon.

Oh yeah, the idea of going to the seminars is what most people refer to as seeking the holy grail of investing. The idea is that someone has spent years working out a system that worked for them. When it produces success, they write a book on it, build a software program of it or they establish a seminar and sell it. Bottom line here is that the holy grail of stock investing is different for each person. It is based on their comfort with risk, their corresponding experience or even their education that they currently hold as true. The idea that you have worked out a system for your stock investing simply means that you have found your holy grail. What will you do with it? Lock it up? Share it? Sell it? Or just continue to improve upon it? Whatever you decide, remember that although it worked for you, it might not work for others.