Full time or part time trading?
What does it take to be a trader
If you are a successful part time trader eventually you will ask yourself the question - "Could I do this professionally?". If you have a proven track record with a solid strategy and a viable risk/reward ratio in place - theoretically you should be able to "go pro". The real question though are those the only things necessary? What else do you need to trade forex full-time?
Just Like Other Jobs
What is the usual trajectory of a more traditional 9 to 5? Education, Entry Level position, Middle Management, Senior Management and finally the not so frequently achieved, expert consultant. Let's say as a part time trader you've covered one or two of those five career stages. If the strategy you use or developed can keep your account positive or even better create sustainable returns compared to your losses, then you might have managed to graduate to "middle management". You have enough experience and knowledge to train other people but lack a long-term proven track record.
Now the fun begins - let's assume for the sake of this simile that senior level management is trading full time, you have a deep understanding of trading, the experience and a proven track record. What else could you possibly need?
Although many new traders think the way to fast and substantial returns is high leverage, they couldn't be more wrong.
Take a look at any institutional traders; there are two things they avoid like Dracula avoids garlic - high leverage and high risk - a killer cocktail which novice trader often get intoxicated on. The problem with this cocktail is it has a heck of a hang-over: a blown account.
So if you are imagining your life as a professional trader looking like a scene taken from Wolf of Wall Street (the first part before everything went sideways) forget it, trading is less crazy impulsiveness and high risk behavior and much more consistency and calculated risk.
Why are you trading? Do you trade because you enjoy calculating price movements, recognizing trends and observing emerging patterns? Do you trade for the extra income? If so, then you might be better off just sticking with part time trading.
Becoming a professional trader means more emotional impact when you are on the markets, a larger investment and more hours in front of a multi-monitor array. Moving from something you do on the side to your full-time profession and depending your livelihood on it, can be quite a challenge, a challenge that some traders don't even consider before they make the jump.
If you are determined and focused on become a full-time forex trader, then make sure your have at the very least a few years under your belt with the bare bone minimum of six months according to some experts.
Broker vs. Trader
An alternative to becoming a self-employed trader, is becoming a broker that usually works for financial institutions trading on behalf of clients. If you are excited by the "craft" of trading but would prefer to avoid all the administrative troubles that go along with being self-employed then being a broker might be a solid career direction, that will ultimately allow you to trade full time.
Depending on the location of your employer you may have to become licensed by the local regulator. If courses are required to do so they are usually paid for by the employer. Some people try to give themselves a competitive edge by taking courses and becoming licensed before they even start applying for jobs in the financial industry.
The only thing that is absolute is death and taxes they say. This is a pitfall a surprisingly large amount of self-employed people fall into, not filing or paying their taxes correctly. Something else that is sometimes is overlooked are tax deductions, if you are self-employed, your local authority may offer some types of so-called write-offs, bringing down your bottom line even further.
Some jurisdictions may need licensure or disclosure depending on the frequency and size of your trades. Check with your local tax and financial industry authorities for details.
If you still choose to strike out on your own, it is important to partner with a broker that offers exclusive risk management tools, great support (which you will need when starting out) and of course fair trading conditions.