Personal Life Money Management as trader ( or the real "Holy Grail" in trading )
Being a trader ( full-time), you need to know that without a good Personal Life Money Management System, you can't trade profitable on a long run. Not even if you have a good strategy, a good MM Rules or even if you have a good Open Positions Management.
Let's start with the beginning. Why do you want to be a trader ?
Im sure many of us, started trading to get rich faster, more than "keeping" our economies. Being a trader, we thought we will have faster ( few years ), lots of money to buy houses, cars, expensive holidays, etc.
So the temptation was big. Still is. Think of this: you started to trade profitable, you quit your job ( or other income sources ) and reached $ 100,000 in the last 5 hard years.
How's your life improved with this money ? Would your life, still be the same with this big trading account ?
If you withdraw money from your account could be better. But if you do that ( or started to do that earlier, month by month ) you don't have the same big account for your main income source. And even if you still continue to earn money from trading, by withdrawing it each time for improving your life, you will never be a rich person...Not to mention that someday or from time to time, your trading is not working like it did before...and you "must" withdraw part of it, because you already saw something to buy...a new car...a new house or to pay an expensive holiday you always dream of.
We all know that having "goals" while trading will add negative emotions and will make us to take bad decisions while trading ( "today I have to make $ 1,000" or " by the end of the month I have to pay...$ 3,000 bills" or " by the end of the year I want to buy a new house " ). So we still do it. Is in our human nature to wish more or to dream of. And by doing this we forget the initial purpose of becoming traders: a beautiful and comfortable profession, working from home or in holidays using a laptop, never have employes or clients and earn more money that a regular job or profession. And in the end...becoming rich...and have a totally independent life.
So we must have a balance, an equilibrium. And this is so hard to get. And that's why this lack of patience of becoming a wealthy person while "living your life" and spoiling yourself with what you think you need, make most of the new traders to blow their accounts away. ( " If you buy things you don't need, soon you will sell things you need!" - Warren Buffett ).
The first "battle" is not won, when you started to become profitable, but when you trade and no matter if you earn money, or not, you still keep your lifestyle! And that's the most important thing you should understand, when you want to become a trader and intend to remain "on the market"
( "Being a wealthy person equal the period of time of keeping the same lifestyle, without earning more money - R.T Kiyosaki )
Therefore, there are some good Personal Life MM Rules:
1). Don't start trading, with borrowed money. ( Use economies + investments income from your economies, only )
2). Don't start trading using money, you can't afford to lose.
3). Don't start trading if your life or your family life, depends on the profits unearned, yet. ( monthly goal )
4). Don't start trading with a $ goal in your head, like a "new car" ( "Trade what you see, only" )
5). Withdraw profits initially, only to deposit it in a bank. ( increase "backup money" ). You can keep it into your trading account, if is not tempting you to increase no of lots, without MM Rules.
Also, you must understand that in this profession, you either have initial money to start trading big ( when you are prepared ) or you have time to start it with a small amount and have patience ( years ) to end up "trading for living". If you start with less than $ 1,000, you need years to become full time trader. ( or you can live a cheap life until then - like being student and living with your parents ).
Just to have it in mind: a healthy profit / month = 10-15%. You can make more...or less. But don't expect 100% / month. If you like gambling ( or need it to become rich faster ), better go to a casino and use all your money on a single roulette number. You have more chances, mathematically, to win, than trading Forex with a bad MM. You can have "luck" to trade profitably like this, few months, but you can't have luck each month...to make $ 100,000 faster.
So how can you start trading ?
I can show you how I did it, after many loses that almost made me quit trading in my beginning years:
1). Build a strategy for trading. ( specific signals/confirmation for entry + exit rules )
2). Build the MM Rules according your strategy statistic ( SL, TP, lots, account's exposure %, account's % loss for stop trading )
3). Trade it on DEMO few months ( at least 3, ideal 6 months or better 1 year )
4). Remember profits on demo does not guarantee profits on a real account. ( different emotions )
5). Establish the amount of money you can afford to lose. ( economies )
6). Deposit 50% to bank ( backup money ) and 50% to a Forex account.
7). If you lose the established % from account balance, stop trading, go demo and don't come back to real trading until you found out, what went wrong ! Refill the account using the backup money and start over.
8). If you are profitable, don't double the no of lots until the account balance is doubled, as well ( or withdraw profits and deposit to bank account to increase backup money ).
9). If still in profit after 1 year, you can add 50% from backup money to you trading account to double or triple no of lots, using the same MM Rules and keep withdraw profits to bank deposit for building backup.
10). If still in profit after 2 years, you can fill your account with all backup money and you can upgrade your MM to the next level ( from 1% to 2% risk/trade and exposure from 15% to 30% ). Start again to build your backup money deposit, using monthly profits.
You think this is "too much" ? Yet, you go ( or went ) to school more than a decade plus 4-5 years in a college, to start a "normal" profession, followed by 2-4 years of practice ( doctors, engineers, IT programmers, architects, teachers, etc ). Why did you thought that becoming a trader is easy ? If this would be easy...then we'll all be rich and happy. Right ? :)
Still think you can start a trading account with less than $1,000 and in less than 1 year become full time trader ( "trading for living" )?
Good luck, then ! And send me an e-mail in 1 year, to tell me how you did it. Or better, build a website and let us all know about it ! Maybe there are few that done this, with less than $ 1,000 in less than 1 year...But what if you will be on the other 99% that risked all to achieve this in less than 1 year...
Best Regards,
^^_Lord_Ice_^^
Let's start with the beginning. Why do you want to be a trader ?
Im sure many of us, started trading to get rich faster, more than "keeping" our economies. Being a trader, we thought we will have faster ( few years ), lots of money to buy houses, cars, expensive holidays, etc.
So the temptation was big. Still is. Think of this: you started to trade profitable, you quit your job ( or other income sources ) and reached $ 100,000 in the last 5 hard years.
How's your life improved with this money ? Would your life, still be the same with this big trading account ?
If you withdraw money from your account could be better. But if you do that ( or started to do that earlier, month by month ) you don't have the same big account for your main income source. And even if you still continue to earn money from trading, by withdrawing it each time for improving your life, you will never be a rich person...Not to mention that someday or from time to time, your trading is not working like it did before...and you "must" withdraw part of it, because you already saw something to buy...a new car...a new house or to pay an expensive holiday you always dream of.
We all know that having "goals" while trading will add negative emotions and will make us to take bad decisions while trading ( "today I have to make $ 1,000" or " by the end of the month I have to pay...$ 3,000 bills" or " by the end of the year I want to buy a new house " ). So we still do it. Is in our human nature to wish more or to dream of. And by doing this we forget the initial purpose of becoming traders: a beautiful and comfortable profession, working from home or in holidays using a laptop, never have employes or clients and earn more money that a regular job or profession. And in the end...becoming rich...and have a totally independent life.
So we must have a balance, an equilibrium. And this is so hard to get. And that's why this lack of patience of becoming a wealthy person while "living your life" and spoiling yourself with what you think you need, make most of the new traders to blow their accounts away. ( " If you buy things you don't need, soon you will sell things you need!" - Warren Buffett ).
The first "battle" is not won, when you started to become profitable, but when you trade and no matter if you earn money, or not, you still keep your lifestyle! And that's the most important thing you should understand, when you want to become a trader and intend to remain "on the market"
( "Being a wealthy person equal the period of time of keeping the same lifestyle, without earning more money - R.T Kiyosaki )
Therefore, there are some good Personal Life MM Rules:
1). Don't start trading, with borrowed money. ( Use economies + investments income from your economies, only )
2). Don't start trading using money, you can't afford to lose.
3). Don't start trading if your life or your family life, depends on the profits unearned, yet. ( monthly goal )
4). Don't start trading with a $ goal in your head, like a "new car" ( "Trade what you see, only" )
5). Withdraw profits initially, only to deposit it in a bank. ( increase "backup money" ). You can keep it into your trading account, if is not tempting you to increase no of lots, without MM Rules.
Also, you must understand that in this profession, you either have initial money to start trading big ( when you are prepared ) or you have time to start it with a small amount and have patience ( years ) to end up "trading for living". If you start with less than $ 1,000, you need years to become full time trader. ( or you can live a cheap life until then - like being student and living with your parents ).
Just to have it in mind: a healthy profit / month = 10-15%. You can make more...or less. But don't expect 100% / month. If you like gambling ( or need it to become rich faster ), better go to a casino and use all your money on a single roulette number. You have more chances, mathematically, to win, than trading Forex with a bad MM. You can have "luck" to trade profitably like this, few months, but you can't have luck each month...to make $ 100,000 faster.
So how can you start trading ?
I can show you how I did it, after many loses that almost made me quit trading in my beginning years:
1). Build a strategy for trading. ( specific signals/confirmation for entry + exit rules )
2). Build the MM Rules according your strategy statistic ( SL, TP, lots, account's exposure %, account's % loss for stop trading )
3). Trade it on DEMO few months ( at least 3, ideal 6 months or better 1 year )
4). Remember profits on demo does not guarantee profits on a real account. ( different emotions )
5). Establish the amount of money you can afford to lose. ( economies )
6). Deposit 50% to bank ( backup money ) and 50% to a Forex account.
7). If you lose the established % from account balance, stop trading, go demo and don't come back to real trading until you found out, what went wrong ! Refill the account using the backup money and start over.
8). If you are profitable, don't double the no of lots until the account balance is doubled, as well ( or withdraw profits and deposit to bank account to increase backup money ).
9). If still in profit after 1 year, you can add 50% from backup money to you trading account to double or triple no of lots, using the same MM Rules and keep withdraw profits to bank deposit for building backup.
10). If still in profit after 2 years, you can fill your account with all backup money and you can upgrade your MM to the next level ( from 1% to 2% risk/trade and exposure from 15% to 30% ). Start again to build your backup money deposit, using monthly profits.
You think this is "too much" ? Yet, you go ( or went ) to school more than a decade plus 4-5 years in a college, to start a "normal" profession, followed by 2-4 years of practice ( doctors, engineers, IT programmers, architects, teachers, etc ). Why did you thought that becoming a trader is easy ? If this would be easy...then we'll all be rich and happy. Right ? :)
Still think you can start a trading account with less than $1,000 and in less than 1 year become full time trader ( "trading for living" )?
Good luck, then ! And send me an e-mail in 1 year, to tell me how you did it. Or better, build a website and let us all know about it ! Maybe there are few that done this, with less than $ 1,000 in less than 1 year...But what if you will be on the other 99% that risked all to achieve this in less than 1 year...
Best Regards,
^^_Lord_Ice_^^
1 comments:
Just received a cheque for $500.
Many times people don't believe me when I tell them about how much you can earn by taking paid surveys online...
So I show them a video of myself actually getting paid $500 for taking paid surveys to set the record straight once and for all.
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