The Successful Part-Time Trader (Part 2) | Podcast Episode #116

0:00
Hey everybody, this is Ryan Mally with Swing Trading the Stock Market, and we are going to pick up on the second part of my series, my ongoing series, the Successful part-time Trader. We’re doing part two here. And this time it’s gonna be about when is the right time to go from being a part-time trader to a full-time trader.

0:20
And I don’t know, maybe I’m skipping a little bit ahead here because I haven’t addressed a lot of the aspects yet of the part-time trader, but this is oftentimes one of the most asked questions is when do I become a full-time trader? And I bet you there’s a lot of you guys that are listening to this podcast and are wondering the same thing. So I wanted to address it here.

0:35
And I think it’s a good question. I’ve never done an episode on this before, so I think it could be really helpful to a lot of you guys. So, when is the right time to quit your job and become a full-time trader? Well, first off, I’m gonna let you guys know I am drinking as I do this podcast episode, Lazy River, Kentucky Straight bourbon.

0:55
Never had it before. This will be a new experience for me. The bottle itself, it’s got like a tree on it, and Fish, not in the same picture. It’s like two separate pictures, but it’s kind of an interesting bottle. But anyways, it doesn’t look too bad. I’m not drinking it. I’m drinking it on the rocks. I got a 2 inch ice cube. The color is a little bit thin on it, but it’s actually not bad.

1:13
It’s, it’s actually pretty good. I, I, I could do a bottle of this. This is pretty good. I like it. It’s not a harsh taste at all. It kind of goes down a little bit with a bite, but as it’s sitting on your tongue, it’s not bad at all. I like it. So this is a little bit stronger than some of the other ones that I’ve done. This is 45% alcohol, so that makes it 90% proof.

1:30
Um, pretty good. It’s, it’s solid. I, I think it’s pretty good. It’s got a nice smooth taste, very smooth. But any case, going back to the part-time trader, uh, when, when, when is the right time to quit your job as a part-time trader to become a full-time trader? And I had this guy named Vinny, and I’ll never remember, we went to church together, Vinny and I, and, uh, he lives somewhere else now.

1:50
I think it’s like Colorado or something. He had started a construction. Company where they were building homes and everything else and uh he was doing pretty good for himself. And I remember going up to him one time after church and I said, Vinny, Vinny, and that’s actually his real name. I’m not making up the name. When did you quit your job?

2:06
How did you know it was the right time? And so what he actually told me, and I’ve never forgotten this, because this was like about 2 decades ago and he told me, Ryan, there’s never going to be a perfect time to quit your job and to go out on your own. They’re just Isn’t there’s always going to be something to tell you it’s like, oh, wait a little bit longer, and I think about that because I, I have some friends that have had some really good ideas but have never been able to just take that leap of faith and go out on their own.

2:30
There’s always, I’ve got kids to support, I’ve got a wife to support, I’ve got this. I don’t wanna lose this pension that I’m in for there’s always an excuse is what I’m trying to say, and maybe some of those excuses are valid, like, I mean. If you got like 6 or 7 kids, it’s kind of hard to just go ahead and give up a steady income when you got 6 or 7 kids depending on it and then jumping into full-time trading unless you really know that you’re going to be good at it.

2:53
But regardless of whether you have 6 or 7 kids, one kid or no kid at all, there’s never going to be a perfect time. There’s always going to be a reason why you shouldn’t make that leap. But there’s some things that You need to know right off the bat. And first off is you need to be good at trading if you’re going to be a full-time trader.

3:09
You can’t be losing as a part-time trader and think to yourself, oh man, if I could just be a full-time trader, I could definitely make it as a full-time trader. It’s the fact that I’m having to work and do part-time trading that’s holding me back. No, don’t do that. Don’t do that at all. In fact, you need to be successful at part-time trading before you ever decide to jump into full-time trading because when you jump into full-time trading, there’s gonna be a whole other set of obstacles, a whole Other set of emotions that you’re gonna have to master that you didn’t face as a part-time trader, and we’re gonna talk about that more in this particular podcast episode.

3:40
The other question about becoming a full-time trader when you’ve been a part-time trader for many years is how much money do I need to become a full-time trader? And there’s really not a set dollar amount. I’ve seen people do it with less than 6 figures, and I’ve seen some people do it with 7 figures, and the people with 7 figures, they can’t swing it, and the people that was doing it with like $50,000 or $60,000 can swing it.

4:00
But what it’s really gonna come down to. Is the frequency at which you’re winning at, and also it’s gonna come down to your position sizes. So if you’re trading regularly, and let’s say you put $10,000 on a trade, and you’re constantly making like 5% on your trades on average, and when you’re having a losing trade, you’re losing like 2%, but then you got a 2.5 to 1 risk reward ratio, and let’s say you have a 50% win ratio.

4:26
So that means that every time you’re trading, you’re coming back with a Average of 3% on your trades. So if you’re trading $10,000 on a on an average position, you’re coming back with $300 on every trade. Now it’s also the frequency of your trades because if you’re only making two trades a month and one of them’s a loser, you’re only making about a grand total of $300 a month.

4:46
Obviously, that’s not enough to live off of. That’s like $3600 a year. But if you’re making, let’s say, 50 trades a year and you’re making on average 30. dollars a trade, which would be 3% on a $10,000 position, then all of a sudden you’re making $15,000 a month, and that’s like $180,000 a year.

5:04
OK, a lot of people can live off of that. A ton of people can live. Almost everybody can unless you’re just up to your eyeballs and obligations of debt and everything else. If you’re running around with like a, like a $2 million mortgage and you’ve got this massive like $20,000 payment due every month, well then, yeah, $15,000 a month. gonna cut it, but if you have a mortgage that says like, OK, I’m paying $1000 a month or or even $5000 a month, and you’re making $15,000 off of your trading, then yeah, you could probably swing that.

5:33
So it’s not about a set dollar amount, right? So if you have a $100,000 account and you’re making 50 trades a month off of it, and off of those 50 trades that you make, you have an average of $300 that you’re making per trade. You have something to work with there, but it’s not just that easy because even though you make $15,000 a month on average, there may be some months where you don’t make anything where you might go negative.

5:57
And that’s, that’s a little bit tougher pill to swallow when you go negative. And then what do you start doing if you have like a couple of months where you’re not doing well and you’re starting to bleed into your savings, how do you react in your trading at that point? Do you all of a sudden start getting more aggressive?

6:13
You get a little bit more timid and say, OK, I’m just gonna get out of the trade as soon as I make 1 or 2% instead of like the 3% on average that you’re coming away with and you’re not sticking to your trading strategy. That’s a big problem too. So there’s a lot of issues when you become a full-time trader that you have to address.

6:29
That’s why I say, make sure at the very least you’re a successful part-time trader, and that’s why we’re talking about that a lot here and there’s gonna be another part to this series, at least, if not a couple more. And I wanted to do this talk about going from a part-time trader to a full-time trader because it lays the groundwork for why we are part-time traders for, for many of us.

6:49
A lot of us glorify the idea of being a full-time stock trader, and I can tell you, it’s not easy. It’s not. Easy at all because there is a whole lot more of emotions that you deal with. It doesn’t hurt for you to be a full-time trader and have some side income because trading in and of itself can be actually very boring, and you kind of need something that’ll keep you by your desk to watch the stock market.

7:08
If you’re only making like 4 or 5 trades a week, or even if you were making 10 trades a week. Let’s say you’re like this guy that I used in an example where you’re making 50 trades a week. That doesn’t mean you’re trading every second of the day, but you need to be watching the market if you’re a swing trader and you care about like the daily price action.

7:23
But you know how boring that can be just sitting there watching the TV or watching your monitors? It’s kind of boring. I love the stock market, but if I’m just staring at a chart all day, that would probably get boring. So there are things that you do on the side. There’s things that you do to enjoy.

7:39
Yourself during the day that doesn’t involve trading. It can be writing, it can be doing a lot of things. So I would try to tell you, create like a hobby, create like a little psychic. Use your entrepreneurial spirit to enjoy something that you might not have been able to enjoy when you were working full time for somebody else, because as a full-time trader, if that’s all you’re doing, you’re going to have time on your side unless you’re trading off of like the tick chart or on a one-minute chart and you’re just constantly getting in and out and in and out of stocks.

8:08
Well, then that’s That’s a little bit different. Maybe you’re able to automate your trading, and if that’s the case, then you’re really gonna have a lot of time on your hands. So I would definitely say like have something that like you’re interested in that you’ve never been able to do before, and it may be even really stupid, but just do it anyways because if you’re able to, uh, perhaps even make some money off of it or you’re able to to make it into like a product or a service, then that could be really exciting for you.

8:32
I would encourage you to do it. We so we talked about how much money do you need in your account in order to leave your part-time job to become a full-time trader. Truth is, is it’s not an easy question that it’s gonna all depend on your circumstances, your trading frequency, how much your position sizes are. So I would look at it as like, I need this much of money. You really need to say, OK, how often am I trading?

8:49
What is my win rate? What is my average loss? What does my average gain look like? You gotta put that all into the equation and say, OK, how much money am I capable of making a month? But first off, make sure you’re a successful part-time trader. Also, that the time frame that you’re trading in is gonna make a huge difference, and that should also go into the equation.

9:05
If you’re long-term investing and you’re only making In like 2 or 3 trades a year, you really don’t need to quit your full-time job in order to be an investor. You really don’t. In fact, probably most of the people that you work with are investors as well, and they’re working a full-time job, so you don’t need to do that.

9:21
The reason why you quit your job is because it’s become such a distraction that you’re able to make more money not working for somebody than you are working for somebody. So if you can do trading and be successful at it while still working for somebody and you enjoy your job, I don’t know why you would quit.

9:37
What I would equate going from part-time trading to full-time trading would be equal to that of going from paper trading to live trading. And the reason why is that let’s say you have like 2 or 3 kids and you have a wife or a husband at home that depends on your salary. Well, then the pressure starts to crank up if you go through like 3 or 4 losing trades or 5 or 6 losing trades, you’re gonna start feeling the pressure and at times that’s going to happen.

10:01
It happens to everybody. And it’s probably gonna even happen regularly. Everybody has bad spells if you’re a frequent trader. And so those emotions become totally different because it’s not like, OK, I lost some money today in the stock market, I still have a job, I’m still getting a paycheck. Nothing’s at risk of being lost. My ego might be bruised, but I’m still gonna be able to pay the mortgage.

10:18
I’m still gonna pay the. The bills, but when you’re a full-time trader, that is not the case. You feel the pressure to have to perform. And with that kind of pressure, it can lead to you making some awful decisions for you that sends you right back into the employment line looking for a new job.

10:34
So, when you go from part-time trading to full-time training, it’s like going from paper trading to. Trading with your own capital. Remember that everybody’s a successful paper trader. Very few people struggle with paper trading because there’s not the emotions in it, but when you’re full time trading, there’s a whole other set of emotions that you feel and that you’re pressured with versus what you would feel as a part-time trader.

10:55
When you’re a part time trader, it’s the least amount of stress that you’re ever going to feel trading your money. When you’re a full time trader, you could go broke. You really could. So that’s why the decision is so important that it’s not just. About saving up and having enough capital in your account. It’s about being able to know that you can deal with the pressure.

11:11
So I would say probably one of the best things that you could do is to not quit your job and, and make sure that if you’re, that if you’re on the verge of doing that, to take like a two week vacation and see how that works out for you, see how the, how, how you do, or maybe take a leave of absence at the very least.

11:27
But I don’t know if I would quit my job. And again, I’m not telling you what to do with your life. Everybody’s situation is unique, but I’m just talking out loud here on my podcast, telling you that it’s probably good to take a leave of absence or something. Maybe it’s for a month and just see, make sure that they can keep that position for you open so that if it doesn’t work out, that you can come back.

11:46
But you really need to know how to make sure that when you quit your job that you hit the ground running, that’s why being a successful part-time trader is an absolute must, because if you’re not, what are we doing this? You can’t expect to go from being a successful part-time trader to all of a sudden a successful full-time trader. In fact, I would say it’s almost guaranteed that you won’t be.

12:03
You know, it’s funny. I, I’ve told people this before. I said, if I knew how hard it was to, to work for yourself before I quit my, my full-time job, I probably would never have quit because it was hard. It really was. Those first few years, I mean, it was an absolute struggle.

12:20
It was hard. I felt These emotions about trading that I had never felt before. I felt pressured to provide money. I mean, you could even say too that look, I’m a divorced person and I’m not quite sure why that person maybe goodness, I’m getting kind of personal here, but I’ve never really known the reason why she left, but I wasn’t afforded that opportunity and I’m not here to try to dog her for it or anything like that, you know, people make their decisions and they have to live with the consequences, but.

12:47
It creates pressure on families. So you never know, like the kind of pressures that it’s going to put on not only just you as a trader, but on your spouse, the uncertainties and everything like it can create, it can create that. Maybe that’s what happened to my own previous marriage, who knows?

13:03
But it was definitely very, very hard going from being a part-time trader to a full-time trader. That’s why I say it’s, it’s good to have maybe like a little side hustle there. If you’re good at something, make it better. Like, I mean, one of the things that you can do, for instance, I mean, there’s so many things that you can do out there like there’s, there’s online courses that you can create and there’s there’s platforms like the Teachable.

13:25
I use Teachable for my website, you know, when I’m selling my courses. And before I forget, I want to give myself a little bit of a plug here. I started this really cool Patreon account, right? To, uh, go along with this podcast. It provides you with market Updates multiple times throughout the week.

13:40
It provides you with some of the most interesting stocks that I’m watching, the charts that go with them. It gives you updates on the Fang stocks that include Facebook, Apple, Amazon, Netflix, Google, as well as Microsoft and Tesla. I provide all those charts throughout the week. And I’m gonna give you my personal watch lists updated multiple times per week.

13:59
And there’s different choices that you can make as to which tier that you want. Maybe you only want the Fang stocks and the S&P 500 stocks. There’s a tier for that, or maybe you just want The, uh, the market updates, there’s a tier for that or if you want all of the above plus my personal watch list, you can get that as well.

14:14
So make sure you check that out. It’s really, really a good feature. But what I’d like to tell you guys though here is, is that going from part-time trader, if you haven’t figured it out already in this podcast, is that it’s a very, very difficult journey. And it’s something I’m very passionate for. I didn’t even realize already I finished off the whole bourbon.

14:29
I didn’t even know that I finished it off, but I get kind of going on this because it’s a very near and dear personal subject matter to me. It’s something that was life defining, life defining, and I am so glad that I did it. Yet if I knew upfront how hard it would have been, oh my gosh, I don’t think I would have ever done it.

14:46
That is also the the grand mystery of life, right? That we experience. We don’t know what tomorrow holds. And so we make these decisions in our life, for better or for worse, we don’t necessarily know how they’re all gonna turn out. We try to make the best judgment, just like when we’re trading, we don’t know how the stock trade is going to turn out.

15:04
It could turn out really bad, or it could turn out really good, or somewhere in between. And it’s just like when you go from a part-time trader to a full-time trader, there’s gonna be risks involved. There’s gonna be new emotions, and there’s certainly going to be a lot of things that you did not anticipate. So the whole purpose of this podcast episode is to lay these things out, not to tell you the exact things that you’re going to struggle with, or to tell you exactly how it’s going to play out, but it’s to tell you about the different emotions, the uncertainties that you will face.

15:34
So that’s why, at the very least, make sure you’re a successful part-time trader. Before you try to become a successful full-time trader, know too that there’s not a magic dollar amount that goes with your capital that you need for trading. I’ve seen some people do it with $30,000 or $40,000 and I’ve seen some people do it with $100,000 and I’ve seen some people do it with a million dollars.

15:54
There’s just no set standard. Again, it comes down to The amount of capital that you’re putting on your trade, how frequent you’re trading, what is your win rate, plus what is your average loss, and what is your average gain. And remember, going from part-time trading to full-time trading, it’s kind of like going from paper trading to real capital trading.

16:13
And there’s gonna be a lot of people out there that I’ll tell you that I can teach you how to become a full-time trader, and they’re lying because they don’t know who you are, they don’t know your circumstances. What I’m trying to do with this episode is really give you the heart and soul of what it’s like to do that and to not glorify it.

16:32
It is one of the hardest professions that you can get involved in because if everybody could do it, everybody would do it, but it takes a lot of training, it takes a lot of dedication. Long nights still, you thought it was hard as a part-time trader, you still had a paycheck. When you start thinking that you don’t have a paycheck unless you perform, yeah, it’s gonna be some long nights.

16:51
You’re gonna want to get better, but it’s gonna be one of the most amazing journeys too, because you’re going to learn so much about yourself. I know so much about my emotions. I’m one of the most in touch people with my emotions, not because that I’m an extremely emotional person. Yeah, I, I, I have emotions and I do have.

17:08
Uh, strong ones at times, but trading has taught me a lot about them. I know what I’m feeling so much because I feel the emotions in trading, and I’ve learned how to control them in a way that doesn’t send me back into the employment line. But you have to confront those emotions and learn about them.

17:25
And when you’re trading, whether it’s part time or full time, you’re going to have a, a unique set of emotions that you’re faced with on a day to day basis. And so if you’re one of those people that are thinking about becoming a full-time trader, I would urge you to listen to this podcast episode multiple times because you’re talking to somebody who has done it and has been very real with you.

17:47
I’m not like these blowhards out there that are trying to tell you that, oh, I had this system that made $10 million for me out of $15. No, I’m not gonna do that to you because that doesn’t That these people are full of it, and all they’re trying to do is shove product down your throat. I have products and I have services.

18:02
I have coaching services. I have training courses. I have a trading room, but I want to give you the real experience. I’m not going to give you a bunch of fluff and lead you down the wrong path, because in the end, I want to lay down my head at night and know that I told you the right things and I was being honest.

18:21
In any case, that’s gonna do it for this episode here. If you liked it, I encourage you to, uh, leave me a review on iTunes or whatever platform you’re listening or follow me or something, whatever, whatever the platform lets you do, do it, because it really does help me as a full-time trader to continue to expand what I have been doing for two decades now with SharePlanner and with this podcast over the Last 4 years and my growing YouTube channels and there’s just a lot of cool things that are going on, and I encourage you to get involved in as much of it as you can.

18:49
Thank you guys. If you have any questions, feel free to email me, ryan@shareplanner.com. Make sure you send those emails because, uh, my next episode will be an email episode, so make sure to keep sending those emails in me, asking those questions. I love them. So make sure you get them sent over my way. Thank you guys and God bless.