Many people who are looking to start trading want to be able to trade for a living. The problem is that it is not so simple to actually make this a reality, unless you do the right type of research and put in the right type of effort. Here we will look at a few pointers that must be taken into account if you want to become successful enough at trading for it to be a profitable venture.
Funding Your Trading
In order to be able to trade for a living, you need to have sufficient funds. It is not likely that you will be able to start trading with a small amount, say under $10,000, and be able to make enough profit immediately to be able to continue trading and to live on from month to month. Whatever you do, do not use your rent money to pay for your trades or rely on your trades to pay for your rent. This will cause stress and anxiety, resulting in emotional trading. Rather, you should set aside enough money to live on for a year until your trading becomes profitable. On top of this, you need to have a commodity account with sufficient funding. If you are aiming for 20% profits and you want to make $50,000 per year, you will need a commodity account with $250,000 in it.
Have a Trading Plan
Never start to trade without a solid trading plan in place. You wouldn’t start a business without a business plan and this is no different. Write your trading plan down and practice it in a free account before you consider trading with it. This will give you a chance to tweak it and improve it. Once you start making consistent profits with your trading plan, you can begin trading. Include risk management and money management in this plan.
Treat Your Trading Like a Job
Trading is serious business. Many people see trading as a way to make some extra money quickly or a way to make a living without too much effort. If this is the way you view trading, you are unlikely to succeed. In fact, trading needs to be approached like a job. Just like you would do your research about a new job, put in time and effort learning the ropes and make changes to improve your outcomes when working in a new position, the same effort needs to be put into trading. Do research about the markets constantly, set up a trading plan and constantly review and improve it. And keep on practicing.
The Bottom Line
It is a good idea to trade part time for at least 6 months before you move to trading commodities for a living. This will give you time to work on your skills and improve your trading plan with less of a financial stress. Make sure to have plenty of funds available both for your trading account and to cover your expenses and with work, you can be successful.