5 Questions you need to ask yourself to become a full time trader

Two of my students are about to go full time.

Am I happy about this?

Of course I’m happy! I’m very happy and proud about them.

Every full time trader knows that in order to make the leap, you need to go through a lot of things.

And believe me, some of these things are not as pleasant as most think. But the end result is very rewarding.

So if you have been thinking about becoming a full time trader, please ask yourself these questions before making the leap.

1 – Are you experienced enough? (Hint: Market Cycles)

Experience plays a critical role on our trading.

You see, financial markets move in cycles. And the forex market is no different. In order to trade consistently, you need to experience various cycles.

Let me give you a clear example, about 13 years ago, some of the most traded currency pairs moved more than 100 pips (in just a few minutes) the first Friday of each month (after the NFP report). So it made sense to set pending orders above and below market action, one of them got triggered, you canceled the other, and in a few minutes, you got more than 100 pips.

You do this today, and you’ll get burned!

Want another example?

Remember the financial crisis in 2008?

Every single announcement related to the housing market in the US would make the market go like crazy.

What about today? Lets say I don’t even pay attention to those announcements anymore. The market barely moves.

You might have only experienced a bullish or a bearish market, which might seem easy at the beginning, but once the market changes its conditions, your system needs to get tweaked.

So if you have been trading just for a few years, make sure trade along other traders with more experience.

2 – Are you prepared to deal with the most difficult aspect of trading?

Look my friends, as I said at the beginning of the article, trading full time is a very rewarding job!

But in order to get there, you need to earn it! And that’s no easy task.

I think that the most difficult aspect of trading is dealing with loses.

This is what happens:

You patiently wait for your setup… determined not to trade unless you get a signal. You hear other trading taking other trades, increasing their trading size and so on and so forth.

But you are determined only to follow your system, so you keep waiting for the right signal.

After hours of waiting and staring at your monitor plus 3 cups of coffee, you finally get your signal.

The perfect signal, everything is aligned: indicators, long and short term charts, no fundamental releases, even the moon and jupiter are aligned.

Everything looks so clear!

You set your pending orders as per your system, and wait patiently for the market to trigger them.

Your orders get triggered… You feel that excitement and adrenaline running through your veins.

It moves a few pips in your favor (at one point it was +5) which made you feel very confident about it!

Then it suddenly stops, reverses back, and stops you out in just a few seconds.

How come?

It looked as the perfect trade! Everything was so clear! What happened?

That’s just how the market is at times and you need to learn to deal with it!

This has a very large emotional impact on us as traders! Even for experienced traders. So you need to be prepared for this.

You need to learn to think in probabilities and not to worry about individual trades. Your job as a trader is to follow your system, not to win every single trade.

3 – Are you managing your risk?

Because of the reasons above, you need to manage your risk. Because you never know what is going to happen to your next trade, so you need to be prepared in case the market surprises you with your largest drawdown.

You could have the perfect setup, the perfect signal and pattern to take your trade, it still could move against you, so it pays to manage your risk.

This is why you need to have a risk management plan:

  • How much to risk on each trade?
  • Where to set your SL levels (you always need to set SL orders)?
  • When/how to get out of your trade?
  • Are you going to increase your trading size (the closest thing to the holy grail of trading)?
  • Are you risking too much?

Think about the last one…

Some traders think they can make 100% of return on a monthly basis… but that’s impossible my friends.

Sure you can make those kind of returns two or three months in a row, but eventually you will blow up your trading account! And you’ll have to start again from zero!

4 – How much income do you need per month?

This is one of those questions that you need to think through for several days.

It is different from trader to trader.

Dont even think about withdrawing each month, you’ll have such an emotional pressure and stress that will have you make costly mistakes.

I’ve been there traders… and its not a very pleasant experience.

When you need to make money on your trading to pay the rent I guarantee that you will not make the smartest decisions. You might get away for a few months, but it will be just a matter of time until you eventually blow up and will need to get back to a regular job.

As a full time trader, you’ll have good months, bad months, excellent months, and some other emotionally and mentally exhausting months… so you cant add more stress to it!

You need to set apart at least 6 months (even better if you save 12 months) of income so you don’t feel that pressure and take some of the stress out of your trading.

You also need to think about growing your account, compound interest will be your best ally, so you cant withdraw all of your profits! Otherwise you’ll always be stuck at the same level!

Again traders, compound interest will be your best ally as a full time trader!

5 – Have you tried to trade as a second income stream?

Baby steps my friends.

To become a full time trader you first need to prove yourself that you can actually get consistent results.

And the best way to prove it to yourself, is to try to generate a consistent second income stream.

Dont fool yourself, if you haven’t been able to get consistent results as a second income stream, then there is no reason to believe that you’ll be able to make it as a full time trader.

Dont be like, “but I’m going to be disciplined once I trade full time!” That’s crap, be disciplined now! Today, even if you are a demo stage.

I know its going to be difficult, you’ll have less family time, less recreational time, etc. But you need to go through this, so that you can prove it to your self and/or your loved ones.

Besides, it will be like this just for a few months, until you can prove yourself that you can make it!

A final recommendation:

Adapt – Trading successfully is not about guessing or forecasting. Every successful trader has mastered the art of adapting to the market conditions.

So forget about those magical indicators and formulas! Just try to understand what the market is doing, and once you understand it, make your move!

That’s what I’ve found to be the best strategy ever!

What other questions would you add to the list?

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Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • Eric Aroh

    Hi Raul,
    I might add “Figure out when NOT to trade”, as a subtopic

    • Raul Lopez

      Definitely Eric!!! Will add it! I appreciate it!