10 Questions to ask yourself: Should I Be A Trader?
Trading is a capital and emotional intensive profession.
Ask yourself a series of questions and conduct a self-assessment if you should become a trader.
Should I be a Full- Time Trader?
Recently, owing to the the current crisis, a lot of people found themselves free. And what better way to spend your time than venture into the stock market. While some may have failed and returned back to their old jobs, some have done well and are thinking to take a dive into becoming a full-time trader. Here we present a list of questions which you can ask yourself before becoming a full-time trader.
If the answer to most of the questions is YES you can consider taking up full-time trading as a career.
1. Are you consistently profitable when you trade? Are you consistently profitable for atleast 6 months? If you want to replace your income with full-time trading it is essential to be consistent with your profits.
2. Is your trading capital 50x(50 times) your monthly income target? Your trading capital needs to be atleast 50 times your previous monthly income or your target monthly income. Why 50x? So that you can expect to make around 2% per month and replace your existing income. While 2% might sound less, in reality, after drawdowns, taxes and other fees, this is what is a realistic goal.
3. Do you have detailed knowledge of the market and instrument you are trading in? If you're trading options, you need to know everything there is to know about options. Do not enter the market with half-knowledge. You will be butchered.
4. Can you dedicate most of your time to trading? Trading, at the end of the day is a full-time business and needs to be treated like one. You need to dedicate most of your day into fixing your strategy, psychology, risk management to name a few.
5. Do you have good emotional stability to handle occasional losses? Most successful traders will tell you, if you're able to handle losses well, you will be able to excel. Knowing when to cut losses, avoiding revenge trading, keeping a level head while talking trades, all play a very important part in maximizing profitability.
6. Are you passionate about trading? It goes without saying that if you're not passionate about trading, you will find it very difficult to make it. If you're only after the money that comes with trading, you're in the wrong profession. Trading offers the luxury of clicking a few buttons and making money. But, when to click, why to click is what you can develop with passion. If you're casual, the market will eat you up.
7. Are you equipped with good Risk Management Strategies? As a trader, your primary job is managing risks. You need to know what risk will reward you better and if it's worth taking a risk. You need to know how to ride profits, but at the same time protect it too. You also need to know, losing a lot of money on a single trade is like committing trading suicide. Your capital needs to be very dear to you.
8. Do you know any one who can mentor you and guide you for an extended period of time? A trading mentor, who genuinely cares for your success and helps you find your edge is something that can accelerate your learning.
9. Can you afford to lose all your trading capital? Most successful traders have blown up their capital. Not once, but multiple times. You need to be prepared to lose all your money. If you're too attached to your money, success will be hard to come by with trading.
10. Are you willing to learn and improve yourself every single day? Any career will be benefited if you put in efforts efforts every single day. This is particularly true with trading.After a bad day, you need to put your head up and stay strong and continue learning. Your efforts will compound, all you need to do is trust your process.