Trading your account

[tbone]

Hello. I recently found this forum and an so glad I did. There seems to be a lot of smart people who hand out around here. My question is about trading my own account to provide income above a 4% withdrawl rate. I've had a lot of success over the years investing my own funds (in my spare time) and have accumulated about $1.8M in assets. When I hear about most people "daytrading" it is usually the type of person who has $50K and wants to turn it into $1M. i am wondering, has anyone had success trading larger accounts, looking for much smaller gains that you can live off of? I figure I can live comfortably off $100K/year, which I feel like I should be able to do based on my assets and my previous experience (only part time). Does anyone have any experience in situations like this?

Thanks,

Tom

[Animorph]

I don't think we have too many traders here. Don't forget you need to make that 4% plus whatever inflation runs for each year, so something like 7% per year if you can be totally risk-free about it. You'll have to aim for more if you expect to have ups and downs.

[JBmadera]

Welcome. From my experience there is a huge difference between "trading in my spare time" while being employed and trading as the primary/sole source of income. Psychologically it is a whole different ballgame.

good luck.

[MichaelB]

Hi Tom, welcome to the forum. Not many traders here.

[Onward]

Quote:

Originally Posted by Animorph Don't forget you need to make that 4% plus whatever inflation runs for each year, so something like 7% per year

Plus commissions, plus taxes, plus the bid-ask spread.

[farmerEd]

I am a trader for my own account, probably do over 1000 trades a year and have handily beat the S&P 500 for over 10 years; (though it at times seems like a job, and not 'retirement' per se), but having worked in the financial services field for many years before I ER'ed, it is something I enjoy doing, so to me it doesn't seem like work.

Every once in a while I take a few weeks or months of from trading, and enjoy the break, but always seem to go back to it...guess its in my blood.

[Texas Proud]

Well, I guess we learned something about FarmerEd....


But, from what I can tell.... most people here who trade do so for a longer term... not day trading... there are some who work the option game, but I think that is a small number...

The vast majority of people want the Ronco method of investing.... set it and forget it.... it has proven to work even if you are not fully knowledgeable about investing....

[donheff]

If I was heading in that direction I would sequester at least 1/2 of my portfolio in an index based relatively conservative AA to provide living expenses if the trading failed catastrophically. With SS and a ~4% SWR from $1M I could survive, albeit without any frills. If I blew the whole pot trading I couldn't.

[farmerEd]

Quote:

Originally Posted by Texas Proud Well, I guess we learned something about FarmerEd.... But, from what I can tell.... most people here who trade do so for a longer term... not day trading... there are some who work the option game, but I think that is a small number...

I don't talk about it around here much, its not the right place and as stated earlier, not a lot of fans around here. There is even a big part of me that knows there are better uses for my time, and a buy-and-hold strategy has worked well for lots of people, and I always recommend that approach to people that ask.

But none-the-less, I daytrade often, sometimes holding stocks for under 30 seconds upto 30 minutes, but also have some core holdings and 'swing' trades that I holder for longer period of time (and some holdings that are over 15 years old).

Gauging my own performance, I have to say that I have honestly been much better at avoiding the huge downdrafts, and making money in a falling market, rather than being smart enough to catch all the huge upswings. I tend to outperform when the market is flat to down, and underperform in strong bull runs - must be my contrarian style.

If we enter a multi-year strong bull market (and I think we maybe), I may need to re-assess my tactics.

[ERD50]

Quote:

Originally Posted by farmerEd I don't talk about it around here much, its not the right place and as stated earlier, not a lot of fans around here.

Please don't let that stop you. There are all sorts of threads that I have zero interest in. I skip 'em. Others can do the same if they aren't interested in trading.

'Trading' should not necessarily be looked at as any more 'risky' than any other investment method (including holding all fixed income). It depends how you do it. A trade can easily leave you with less downside risk than a 50-50 AA in index funds.

-ERD50

[FinanceDude]

Quote:

Originally Posted by farmerEd I don't talk about it around here much, its not the right place and as stated earlier, not a lot of fans around here. There is even a big part of me that knows there are better uses for my time, and a buy-and-hold strategy has worked well for lots of people, and I always recommend that approach to people that ask.

Nothing wrong with being a day trader..........

Do you use options to mitigate risk?

[farmerEd]

Quote:

Originally Posted by FinanceDude Nothing wrong with being a day trader.......... Do you use options to mitigate risk?

No, I have found that I can't trade options successfully, and I rarely short. I tend to put (almost all) all my eggs in one basket, and watch that basket very, very closely .

I worked in the tech industry (programmer by trade), within the financial services, so I tend to trade the tech stocks that I am familiar with .

[ziggy29]

Quote:

Originally Posted by ERD50 Please don't let that stop you. There are all sorts of threads that I have zero interest in. I skip 'em. Others can do the same if they aren't interested in trading.

Agreed. I'd just suggest that the "stock picking" forum might be the best place for discussion of active trading.

[jclarksnakes]

Most of us are not traders but a bunch of us are very interested in the subject. If you were to write a post here on the specifics of day trading I think it would be widely read.

[ducky911]

Quote:

Originally Posted by jclarksnakes Most of us are not traders but a bunch of us are very interested in the subject. If you were to write a post here on the specifics of day trading I think it would be widely read.

Yes i would like to read about it. A couple examples would be a good read. Please don't make it sound to good as i do not believe that i would be good at it.

[KiraC]

I'm an active trader and rarely hold anything for very long (so far). One way I see regular successful profits is to Sell PUT options in various ETF's. You have to be willing to own the stock if it falls below your strike price but if you select the right ETF's, they can recover fairly quickly. Good luck!

[LOL!]

There is the well-regarded LOL! market-timing newsletter where trades are posted. It is found in this thread: http://www.early-retirement.org/foru...ter-57042.html

[Nords]

Another source for the life of a day trader is Gary Smith's "How I Trade For A Living". He ER'd a few years back and dropped out of sight.

Amazon.com: How I Trade for a Living (Wiley Online Trading for a Living) (9780471355144): Gary Smith: Books

His first chapter recounted the life of a day trader, and was pretty much guaranteed to make you choose to do any other lifestyle.

[GusLevy]

Quote:

Originally Posted by farmerEd I am a trader for my own account, probably do over 1000 trades a year and have handily beat the S&P 500 for over 10 years; (though it at times seems like a job, and not 'retirement' per se), but having worked in the financial services field for many years before I ER'ed, it is something I enjoy doing, so to me it doesn't seem like work. Every once in a while I take a few weeks or months of from trading, and enjoy the break, but always seem to go back to it...guess its in my blood.

Greetings. I have been retired for about 2.5yrs and primarily trade my portfolio to pay the bills as I go along in addition to holding/rotating various corp and muni ETFS for the yield or the trade depending on the sitch. IMO we have been in a "trader's market" since the housing bubble collapsed as evidenced by the extreme volatility in the highly correlated markets so, for me, active trading makes me feel more comfortable than sticking to a rigid long term AA for the time being: Capital preservation while this crazy market exists is the key for me and presumably for folks like you and the OP.

My question to you is, given the large amount of trades that you do, do you use one of the online retail shops or do you use a full-service shop and pay % of assets but get free trades? 1000 trades at $10 per begins to be real money, obviously. I use the former for now but have been seriously considering the latter as of late. If you use a full-service shop what are your opinions about their trading platform and are their limits to the amount of trades in any way?

[farmerEd]

Quote:

Originally Posted by GusLevy My question to you is, given the large amount of trades that you do, do you use one of the online retail shops or do you use a full-service shop and pay % of assets but get free trades? 1000 trades at $10 per begins to be real money, obviously. I use the former for now but have been seriously considering the latter as of late. If you use a full-service shop what are your opinions about their trading platform and are their limits to the amount of trades in any way?

I have always used Fidelity and Schwab to execute my trades(retirement versus non-retirement buckets)

However, I much prefer the real-time trading tools that schwab provides "StreetSmart Pro", so that's what I used to watch stocks that I am either currently trading, or likely to be trading soon - even if I then execute the Fidelity trades thru their website.

I think I pay around $8/trade, no matter the size, for equity trades which I consider pretty reasonable.