How Realistic Am I Being About Trading Full-Time
by Trader Rich
During my workout today, I crunched some numbers in my head to see what it would take for me to be able to trade full-time. I've tried to find these answers on forums like Moneytec. I know a lot of you may visit forex forums but I don't find them beneficial one bit. There is too much garbage to sift through. Someone on Moneytec asked if it is possible to trade Forex full-time and it wound up being a very long thread with no real answers. It was full of people stating that it was possible, others stating that you needed a million dollars in initial capital to do it, and pessimists stating that it was not at all possible. Now it may be that this is not an easy question to answer. I will attempt to run something by all of you and you are free to bash it at will. My assumptions may be conservative or even unrealistic. How would I know the real answer to this question because I have not experienced it yet.
Here are my assumptions:
- You are consistently profitable now
- You have a trading system that wins 60% of the time
- You make 10 trades a week
- Each winning trade averages a profit of 30 pips
- Each losing trade average a loss of 30 pips (Yes, this is a 1:1 risk/reward)
- You start with $10,000 in trading capital
- You do not risk more than 3% on any trade
- You are trading a standard 100K lots
- You will not pull any capital out of your trading account until you reach your full-time goal
The first thing you have to ask yourself is how many lots do I need to trade to make a standard of living that I am accustomed to? I live in the New York City area and for me to maintain my standard of living, I would really need to make $2400 a week. If I make $600 a week trading 1 lot, then I really need to be trading 4 lots at a time to do this full-time.
- 1 lot = $600 per week
- 2 lot = $1200 per week
- 3 lot = $1800 per week
- 4 lot = $2400 per week
- 5 lot = $3200 per week
You are starting with $10,000 in capital, can only risk 3% on each trade, therefore you can only trade 1 lot initially. Based on my assumptions, you are making $600 a week. How long will it take to be able to trade 2 lots?
You will need $20,000 to start trading 2 lots so you must continue to trade 1 lot until you make $10,000 more. Making $600 a week, it will take 17 weeks or roughly 4 months to reach your 2 pip allowance.
Now you have $20,000 and you're trading 2 lots per trade. I need to trade 4 lots and preferably 5 lots a trade to make a living doing this full-time. Trading 2 lots at a time, I'm now making $1200 per week. How long will it take until I can trade 3 lots?
You will need $30,000 to start trading 3 lots so you must continue to trade 2 lots until you make $10,000 more. Making $1200 a week, it will take roughly 8 weeks or 2 months to reach your 3 pip allowance.
Now you have $30,000 and your trading 3 lots per trade. How long will it take until I can trade 4 lots?
You will need $40,000 to start trading 4 lots so you must continue to trade 3 lots until you make $10,000 more. Making $1800 a week, it will take roughly 5 1/2 weeks or a little over a month to reach your 4 pip allowance.
So now you have $40,000 in your account and your trading 4 lots at a time. You are averaging a profit of $2400 a week. How long did it take you to trade full-time?
About 30.5 weeks, a couple of weeks more than a 1/2 a year.
Is this correct? I want anyone and everyone to rip this theory apart!!!
Obviously the key here is you have to be profitable before embarking on this journey. Just being able to do that could take years and years.