After you are profitable - Now what? | Forex Factory

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After you are profitable - Now what?

  • #1
  • First Post: Jul 22, 2009 5:27am Jul 22, 2009 5:27am
Now what?


Now that you have been successful in trading, after sometime of learning and struggling, you have made it. You are now making consistant profit. You have taken looses before and now you are better than most.


Now what? What's the next step?


Think about it, you have a 50k account and are trading with returns of 10% which is about 5k a month (this kind of returns are much better then most pros out there; in percentage i mean). Is that enough? Can 5K buy you that boat you wanted or that car of your dreams? I used to think about that, that's why i expanded to managing funds / accounts. But is that enough?


Has anyone out there thought about this? I hope to provoke some ideas in good traders and hopefully they can share ideas that will help other traders thinking about this as well.


Andrew
  • #2
  • Jul 22, 2009 5:57am Jul 22, 2009 5:57am
I'm still a learner, but I recently read (2) books that made me think. "Rich Dad Poor Dad" and "The Millionare Next Door".

Accumulation of REAL ASSETS would be my next goal. Assets that generate revenue and at the same time minimizing liabilities and expenses. Have the assets build to a point where they generate revenue and then continue on from there.

Reducing the tax burden by filtering everything through a corporation is probably a smart think to do if you are a 'making it' as a trader.




Quoting andrewnair
Now what?...
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #3
  • Jul 22, 2009 6:33am Jul 22, 2009 6:33am
Quoting andrewnair
Now what?


Now that you have been successful in trading, after sometime of learning and struggling, you have made it. You are now making consistant profit. You have taken looses before and now you are better than most.


Now what? What's the next step?


Think about it, you have a 50k account and are trading with returns of 10% which is about 5k a month (this kind of returns are much better then most pros out there; in percentage i mean). Is that enough? Can 5K buy you that boat you wanted or that car of your dreams? I used to think about that,...
Compound.
  • #4
  • Jul 22, 2009 8:18am Jul 22, 2009 8:18am
Hi,

pipmutt, about compounding, i used to do that i mean not take out from the account a couple of years back, but as i grew older the bills grew, and I had to pay the house expenses, pay the office rentals and stuff like that. So I had no choice but take the profits as it came to cover these cost. So compounding a normal account for a full time trader is hard unless your partner understands and helps with the bills and stuff, then you can compound. Just my thoughts here.

Daytrading, we are making about 5-10% on average, but recently its tougher.....i think I am just getting older. I have been managing accounts for about 2-3 yrs or so. I have applied with some local brokers and well lets just say most said they knew better and I did not have the qualifications (degree and stuff) to back my numbers up. In my country, Singapore, I am required to take an exam with the local money authority which I have not. I think I will have too, but If I do I can't trade for myself or for others if I trade for a house.

I started this topic because before I managed funds, I was plagued with this idea and a few days ago, my buddy whom I have been guiding along, asked me this question, where does he go from here? So I told him to manage funds and do what I am doing, but he was not satisfied. So just posting this question knowing that there are other people asking this same question, I think.

In Singapore for example, there are two investment groups called GIC and Temasek Holdings. They hire people with at least 1st class honors to trade and manage funds, but they have lost billions. They look more on the normal education then track record. I am not too sure if that's the case elsewhere, but here it's like that.

Andrew
  • #5
  • Jul 22, 2009 8:34am Jul 22, 2009 8:34am
Quoting andrewnair
Hi,

pipmutt, about compounding, i used to do that i mean not take out from the account a couple of years back, but as i grew older the bills grew, and I had to pay the house expenses, pay the office rentals and stuff like that. So I had no choice but take the profits as it came to cover these cost. So compounding a normal account for a full time trader is hard unless your partner understands and helps with the bills and stuff, then you can compound. Just my thoughts here....
Sure, I know what you mean.

If you're making gains of 5-10% per month then get some exposure on performance tracking websites, like Xaron's. If you're good then it shouldn't take long to build a decent size fund.

As far as regulation, there are many ways to address that problem.
  • #6
  • Jul 22, 2009 9:26am Jul 22, 2009 9:26am
hey thanks for the info, i cant find xaron website.



Quoting pipmutt
Sure, I know what you mean.

If you're making gains of 5-10% per month then get some exposure on performance tracking websites, like Xaron's. If you're good then it shouldn't take long to build a decent size fund.

As far as regulation, there are many ways to address that problem.
  • #7
  • Jul 22, 2009 10:49am Jul 22, 2009 10:49am
Hey daytrading,

i have come to a stage in my trading life where i cant grow any bigger in manage funds, as in more clients, so..... trading with a few hundred thousands worth of manage accounts is not enough in my view. How does one look for more capital or how do i go about looking to expand?

I have spoken to some traders that are making some profits and asked them if they intended to go full time? they told me that thir accounts are not big enough and they cant quit their jobs to do this full time. i think its a problem that affect most traders, i could be wrong here. forgive me if i am wrong.

err.....what happened to daytraders post?


thanks again,

Andrew

Quoting daytrading
Andrew,

I don't know about the legislation in Singapore - but one thing is for sure: there are better places on earth to make money. As I said, if you have the records to back it up, you will get the chance to manage or trade with large sums.

Proprietary firms (in places where certain certificates are required) will put you through the process at cost and in in places where there is no requirement for that, you trade your way up to larger amounts.

If you are sure that your methods are scalable (i.e. you can produce those returns based on 5m,...
  • #8
  • Jul 22, 2009 11:52am Jul 22, 2009 11:52am
Viking Club Membership.
  • #9
  • Jul 22, 2009 2:47pm Jul 22, 2009 2:47pm
Account size does matter indeed. One can't get rich trading if he needs to withdraw all his profits...

I think you're doing the right thing, looking to manage more funds or being hired by some investment firm. Good luck to you.
freedom
  • #10
  • Jul 22, 2009 4:01pm Jul 22, 2009 4:01pm
spend your profits
  • #11
  • Jul 23, 2009 12:45am Jul 23, 2009 12:45am
If you are sitting comfy on 5k a month and not exceeding that.. YOU'RE DOING IT WRONG...

Thats not a business, a business never takes everything it makes out of itself. It always stashes aside for growth and or a rainy day.

So start compounding even if its 200$ a month, eventually it will get you to the next level.

Managing funds is only a way for capital growth, its nothing special, and not a step ahead, its a step back. After you are on 100k a month, start asset building (As someone already mentioned), a few properties will prevent any collapse in your personal value and also increase your time spent working. Eventually you will walk away from trading and get into venture capital type roles and then retire.

Working for a firm is also a step back. I know this from experience and am taking that step forward now and moving from the firm i trade for. It promotes bad habits, bad trading methods, and bad lifestyle.
  • #12
  • Jul 23, 2009 12:58am Jul 23, 2009 12:58am
Quoting Takisd

Working for a firm is also a step back. I know this from experience and am taking that step forward now and moving from the firm i trade for. It promotes bad habits, bad trading methods, and bad lifestyle.
That's interesting.... I would not have guessed that. I would have thought that working for a firm would promote good trading methods and habits. (The lifestyle part is only of personal preference.) I'm a prop trader so I wouldn't know.... it just surprised me to hear it put that way.
  • #13
  • Jul 23, 2009 1:18am Jul 23, 2009 1:18am
Quoting price
That's interesting.... I would not have guessed that. I would have thought that working for a firm would promote good trading methods and habits. (The lifestyle part is only of personal preference.) I'm a prop trader so I wouldn't know.... it just surprised me to hear it put that way.

You trade prop, are you trading the tape? Are you expected to do X deals per month in order to keep the companies comission lower? You require to make good returns on small capital in the market for the job to be actually worth the stress that its worth?

I trade prop for an FX company, not futures, just spot (which is unlike most prop desks), and its good money, I won't deny it, but you have expectations to keep your comissions down and your seat value up.

It promotes over trading, excess pressure and taking risks that shouldnt be taken. This is bad trading.

I'd rather not trade than trade 40 round turns in order to keep my bosses happy.

I hate to be negative, but I would only trade for a firm if i didn't have enough capital to trade my own.. Right now, I do have enough capital (thanks to trading prop), and I'm outa here end of next month.

A prop firm here who wanted me to get into futures told me that if you have enough capital to trade at home, there is no point trading prop. You can't go anywhere after trading for an arcade. Market making is another story, our company market makes, but only to a small extent as our volume isnt too high. But theres a bunch of us doing 120-400 round turns a month just so the boss gets his comission (not a trader just a manager).


Sry to rant Have fun.
  • #14
  • Jul 23, 2009 2:08am Jul 23, 2009 2:08am
if you want to do it yourself, there is no other way than to trade bigger and take on more risk. enough risk to make others want to barf..... seriously think about it...
  • #15
  • Jul 23, 2009 3:29am Jul 23, 2009 3:29am
Quoting andrewnair
hey thanks for the info, i cant find xaron website.
He posts on these forums.
  • #16
  • Jul 23, 2009 3:34am Jul 23, 2009 3:34am
Quoting Takisd

Managing funds is only a way for capital growth, its nothing special, and not a step ahead, its a step back.
How is managing funds a step back, it's all upside without any of the associated risk.

With returns like the OP is producing, and assuming he's consistent and his risk is comparable, it's likely he could build up a reasonable sized fund within 12 months and in effect probably double his monthly income. He can then use the excess to compound, and another year or two down the road he will have accumulated a healthy balance.....and so it goes on.

The key to managing funds is to have the right type of clients, and knowing how to manage them.
  • #17
  • Jul 23, 2009 3:42am Jul 23, 2009 3:42am
hey guys, thanks for the reply, about taking more risk, that's not the way to trade in my personal view, it goes against my trading rules to take more position size and increase my sop losses.

i think managing funds is a way to increase your account by not taking the profits out of the trading account and use the com from the profit to cover life's expenses. Allow me to give you an example:

Account size : 50,000
Manage ac size : 500,000
profit for the mth: 5%
My com on the profit (high water mark) is 20%

The person account will make 2,500 and the com on the manage acc is 5,000 so one can use the com on the manage account and keep the personal account growing.

I am just wondering how the great traders who started with a few thousand manage to amass billions. Just my thoughts.....

Andrew
  • #18
  • Jul 23, 2009 3:48am Jul 23, 2009 3:48am
Quoting andrewnair
I am just wondering how the great traders who started with a few thousand manage to amass billions. Just my thoughts.....
Have you read any of the Market Wizards books? Not necessarily 'how to' do it, but folks that did do it. You can also look up the names from the book and look for interviews with these people on the web or check out their sites.

Someplace to start...
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #19
  • Jul 23, 2009 4:49am Jul 23, 2009 4:49am
andrewnair,
"Now What?"
u can do any or all of these:
relax & spend more time with family;
do your hobbies, sports, etc.;
learn more (trading-related or not);
try to improve your trading methods/strategies to maximize future profits;
learn how to go about in managing your finances better
pursue any plans u had prior to trading/before u were profitable

Once profitable, u have opened a lot more doors in front of u!
  • #20
  • Jul 23, 2009 5:42am Jul 23, 2009 5:42am
Quoting andrewnair
Now that you have been successful in trading, after sometime of learning and struggling, you have made it. You are now making consistant profit. You have taken looses before and now you are better than most.

Now what? What's the next step?
For me the next step would be to automate the strategy you are using (if that's possible) - that way you will still have the profits you need but much more free time.
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