A question frequently asked on forums: "can we live trading?". Another frequent question: "How much capital it must possess to live trading?" . These are good questions before considering a possible change of activity ... Admit that NOBODY gives you a solid answer ..
The initial assumptions are often like this:
- With 100% annual return, then I live trading?
- A capital of 10,000 euros is enough to live trading?
The answers are generally frivolous and in any case rarely those of traders actually confronted with the difficulties of trading a vocational goal. Unfortunately, these responses leave much room for hope (that
Seller ...) and has little reflection and mathematics, essential in any 'creation of professional activity. "
Let the two hypotheses mentioned above.
**** Who can say how an average 100% annual gains over a period of 10 years?? In blink.gif capital that translates into transforming into 1,000,000 euros 1000 euros and 5,000 euros for 5,000,000 euros on easy ...
**** Who could say that 10,000 euros are enough to live trading? mataf_dur.gif Even with a hypothetical return of 100%, earnings would be 10,000 euros per year ... which you must remove the taxes and social charges of professional ... the low level of earnings being consumed each year the capital will remain identical and you're condemned to live only 10,000 euros per year less taxes and charges ..... that in France you leave apporoximativement 5000 euros or 416 euros monthly annual ....!!! (The trader will understand that other places are preferable to tax you but remember that as a professional, taxes and charges still represent less than 30% of earnings).
Always ready ?....
So how to calculate? how? I put this question several times a week.
Once again everything is a matter of MoneyManager: the use of gains.
First obvious condition gains! You have to find the trading system that suits you best and apply the appropriate MoneyManager. But then, how to live off his winnings?
It will start gains in two parts:
Part-paid as salary
-The rest is reinvested in the so-called "working capital".
**** Whether one likes to pay a significant wage from the start and then the working capital increase slightly, the salary will vary slightly.
Either you are **** reasonable wage at the beginning, thereby rapidly increasing the working capital that will generate a higher salary.
So how to manage their earnings in the best way possible? laugh.gif In other words, what proportion of earnings should we pay a salary?
The answer to this question is simple curiosity. As often, mathematics is a valuable tool to demonstrate that the best thing is to consume as half the salary gains
portfolio and reinvest the rest in working capital. There was thus the best compromise, allowing the working capital to grow the best possible, which minimizes the risk of ruining AC mean losing his working capital.
You're a good trader who has a 30% annual return (and yes you are a good trader because this is an average long-term ..).
You want to dispose of 2,000 euros net monthly or annual 24,000 euros with which represent taxes and charges to use about 36,000 euros of your annual Capital gains.
Knowing that value for the salary is 50% of annual earnings, it is necessary to remove 72,000 euros annual earnings ..... You realize, finally, the hard reality ....
Since you realize 30% annual return, therefore it requires a capital of 240,000 euros.
Some begin to scream .. Even without charges (which is impossible qqsoit the place of taxation), it is a capital of 160,000 euros.
That is the harsh reality, not dream! Of course, we can hope to do more than 30% annual return ... if you are able, do not're trading in individual trader: multiple financial companies in the world will tear your services for a great price! !
Good luck to all