Is it possible that individuals from all walks of life can become good traders or do they need to possess great intelligence, stamina, be of a certain mental and physiological temperament, have great luck and bollas of steel?
The Acid Test
Many, many years ago a very successful trader who made many millions in the markets conducted an experiment. He recruited a group of individuals from all walks of life; most of them had very little understanding of the futures markets and no practical trading experience. He provided them training, coaching and some seed capital to get started. The ‘TURTLES’ as they were called, went on to become some of the most successful traders in the industry. Dennis proved that individuals can ‘evolve’ into successful traders when given the right tools, training and coaching.
A BUSINESS OPPORTUNITY … COMPARING BUSINESS VENTURES
Go ahead and shop around for serious business opportunities. I do not mean MLM's or HYIP's; but a credible franchise business or a structured business opportunity. The start up fees may run between $150,000.00 up to $450,000.00 or more. The projected returns on these types of businesses are about 30% to 50% per year on invested capital.
In you will also need to cover the following costs covered to run the business:
Commercial facility rental like a store or building or office
Design and Advertising costs
Employees
Sales taxes, employee payroll and workers compensation.
Product inventory and seasonal product turn over
Sales team and business formula education.
In the end what you have bought is "self employment" and you will bust your chops 24/7 in order to earn $75,000.00 per year or maybe $6,000.00 per month. AND THERE IS NO GUARANTEE OF SUCCESS!
In contrast, the ‘TRADING BUSINESS’ is unique. It is efficient, has no employee requirements, has no payroll, no insurance and very few tax hassles to deal with. It can be run from a room or office in your house. It does not require inventory or production equipment other than a computer and some software. However, the ‘TRADING BUSINESS’ is like all other businesses in that your success is measured by the return on the capital invested into the business.
INCOME OBJECTIVES FOR YOUR TRADING BUSINESS
Many small traders actually believe the indicator salesmen, who masquerade as traders, when they say that you can turn $2,500.00 into $50,000.00 or more in under 30 days using their trading software and trading futures contracts. I can 99% GUARANTEE you that you will fail miserably as a trader if you believe that to be true.
The realistic potential offered by trading the ES market is about $50 per day per contract traded. What this means is that after a successful training period and with guidance from a seasoned successful trader, a new trader starting out with live cash trading can expect to make 1 net point per day. With more experience there is the potential to produce amazing returns on capital in this market, but there is also the potential to accumulate tremendous losses …enough to wipe out your trading capital in the first month or less. Huge profit potential; potentially devastating losses. Between these two extremes you will find the successful professional trader.
Professional traders who trade for a living seek consistent realistic returns based upon their knowledge and experience of the markets they trade.
The operating capital and equipment you will need to get started in this business:
1) A robust computer and monitor dedicated to trading. If it is dedicated you do not need lots of software or computer protection guards against internet borne or email borne virus or hackers. The computer can be less than $2,000.00 - Where?
2) A high speed internet connection. Maybe $500.00 per year.
3) Integrated data-feed charting application: NinjaTrader or eSignal. About $600.00 per year.
4) Technical indicators and charting tools.
5) Trader's education and continued trade coach service to earn as you learn to trade until you are ready to go it alone.
Without the proper tools and services mentioned in items 1-5 you will fail in the business.
FUNDING YOUR TRADING ACCOUNT
Please read elsewhere on this site about the two greatest mistakes new traders seeking to trade as a business make. Under Capitalization is the number one mistake. You will fail in this business if you are under capitalized. Don’t listen to anyone who tells you you can open up a trading account for as little as $2,500.00 and succeed in the trading business. If you do that … YOU WILL FAIL IN THIS BUSINESS. If you are undercapitalized you have no margin for error and will always be trading with ‘scared money’. Trading with ‘scared money’ is a virtual guarantee that you’ll fail in this business, as your emotions will overcome you on every trade you take. Did I mention under capitalization is mistake numero uno?
To start a trading business you need a minimum trading account of $10,000.00 per contract traded in operating capital. This is risk capital and you must be able to accept the possibility that you’ll lose every dime.
DO NOT START A TRADING BUSINESS WITH YOUR RENT, MORTGAGE OR FOOD MONEY. DO NOT START A BUSINESS WITH MONEY YOU CANNOT AFFORD TO PUT IN A BROWN PAPER BAG AND LIGHT ON FIRE. IF THIS IS NOT CLEAR TO YOU, THEN READ NO FURTHER AND HAVE A HAPPY LIFE.
If you do not have $10,000.00 in trading capital and another $7,500.00 for operating overhead, then you are not ready to trade live cash. You can get started and spend time learning to trade using trade simulators, and under guided trading education until you have accumulated enough capital to start trading in the live market. You will need the initial $7,500 for your education and equipment, the rest for funding you live trading account.
Compare this cost with the costs of a franchise business and the expected return on that business (working 24/7).
In order to earn $6,250.00 per month we need to make a profit of 125 ES index points every month. There are about 20 trading days every month so by dividing 125 index points by 20 trading days we need to make a profit of 6.25 index points every day.
However, we really only need 2 things to get to that daily goal. We need to trade more contracts and we need key ingredient number two... the lack of which happens to also be mistake number two - PATIENCE.
In order to consistently hit our daily objective we need to trade multiple contracts. With $10,000.00 we can comfortably trade 1 contract at a time. For each $1,000 earned we can add 1 contract. However long it takes you to gain $1,000 pr contract is however long it will take you to reach your monthly goal.
Our mission is to net 1.25 ES index points per day. TRADING 5 CONTRACTS WE NEED TO EARN 1.25 INDEX POINTS PER DAY in order to earn $75,000.00 per year on our $17,500.00 investment in our TRADING BUSINESS.
1.25 INDEX POINTS PER DAY using 5 contracts per trade.
These numbers are very achievable. Is it guaranteed? NO - only two things in life are guaranteed. Is it possible to make $312.50 per day trading the ES? Yes, professional traders do it every day. Take a look at the point per contract record at ProTrader Ed's.
Please select one of the following:
Shell out $250,000.00 for a business, have a 50/50 chance of success or failure, work 24/7 and deal with employee and tax hassles in order to make $75,000.00 per year?
Or
Set realistic income goals from your Trading Business starting with a capital base of $7,500.00 in your education and funding your TRADING BUSINESS ACCOUNT with $10,000 when you are ready to go live?
You will fail at either or any business if you’re not totally committed to success.
The most important benefit from your trading business is a life style that is unique. If you can hit your daily point goals every day (1.25 points) before noon time, you take the rest of the off to enjoy more of your life. This is true FREEDOM.
Successful professional traders develop over time. You will always suffer some trading losses and experience frustration as long as you are a trader. But, with the proper desire and patience to succeed and armed with the proper tools, good training, and patient coaching, you can develop into a successful trader.
Through experience, patience, education, confidence and guidance you can develop as a trader, build your account through positive re-enforcement of your trading success and achieve your goals of the lifestyle of your dreams and the income to go with it.
