Hi,
I'm not sure you've really thought this through properly....I mean, I've been there and done it so to speak being 20 years your senior...however my marriage ended in divorce so perhaps my dedication to trading made her an 'internet widow'
Anyway - What is the real practical difference between
a) having a mortgage and putting all your spare earnings into it to pay it down faster or
b) paying what your bank expects you to pay in the 20 year repayments every month, and saving your 100 K cash aside in a separate account.
They only difference is that in example a) you just re-withdraw the 100K and start paying some interest whilst you use it trading....compared to b) you have NOT placed this 100K against your mortgage account so you have not payed down the monthly interest expense in favor of cash account interest (Why it's lower?) so you end up paying more interest anyway, and you are actually doing exactly the same thing ( think carefully about it)....
If you've ever traded options, you know that in the options formula, the interest money you are saving when you buy a call option rather than the outright stock ( A lot more $$$$) is charged to you via the options premium anyway.....no such thing as a free lunch buddy.....so you're not really saving your mortgage by not paying towards it in favor of an off-set account......
SO???? a) and b ) are equiv. in practical money terms why do you FEEL better doing b)??? YOu're just choosing to delay paying down a) anyway which is not actually sensible because you pay the bank more interest over time.
So just trade your line of credit......it's better actually because if trading becomes your business the interest becomes a tax deductible expense and you save about 30c in the $1 compared to version b) where you pay tax on interest earned......
Regards,
One whose done exactly what you did, but just payed down my mortgage and got a line of credit rather than keep it in cash ( same difference as you now owe the bank more via the mortgage anyway da da da )....
The following user says Thank You to Zentrader2010 for this post:
I wonder how many people on this site that need to face the fact that they need to stop trading. My last trade was in January of this year. I was attempting to make a living in the futures market and nearly lost everything in the process. There was nothing wrong with my method. Nearly every mistake was a mental error--pure psychology. I traded a minimum of 5 contracts and as much as 40. I can't count the number of times I had to re-fund my account.
I do plan to return to trading one day. I still paper trade (very successfully), but now I am working full time to rebuild my savings. My top 7 learnings are:
1. Master support and resistance
2. Limit indicators to the bare minimum
3. Stay away from short time intervals and use the dominate one for the market your are trading
4. Control your emotions
5. Be very patient and let the market come to you
6. Maintain a detailed journal
7. Learn when to stop trading short term and permanently ( I should have stopped much sooner).
I firmly believe there are, relatively, a small group of traders that can make a good living trading interday futures. I was not one of them. Are you?
The following 23 users say Thank You to WISDOM for this post:
I get a lot of emails and PM's from people seeking advice. Usually they've been losing money and don't really know what to do next. But I received a particular letter recently that made me want to write this post.
Stopping trading is not an easy thing to do. I believe it takes courage to admit to ones self when something is simply not working out. The best thing you can do is realize that before you are at complete rock bottom. Trading is an extremely difficult thing to do. My best analogy of trading would be like trying to solve an algorithm equation while in a boxing ring trying to keep from getting punched in the face.
The emotional ups and downs associated with risk take an enormous toll on a persons psychological well being. I believe it takes a certain mindset and personality to succeed at this game, but that said, I also believe that anyone can change themselves into that mindset and personality to succeed. Those who are unwilling to change are the ones who trade until they are out of money and then leave. The successful ones force themselves into the mentality it takes willing to learn what they need to survive.
I applaud you for doing what you believe is the responsible decision for your life. There are those that go until they have gone completely broke, or worse yet in debt that will take a lifetime to recover from. This is the gambling mentality and the sad parallel between risk taking in a controlled way and rolling the dice with an addictive context.
Best of luck in your future endeavors!
-D
“Success is a journey, not a destination. The doing is often more important than the outcome.”
-Arthur Ashe
The following 6 users say Thank You to DropD for this post:
Ok, I know the title is pretentious but it sounds good. They aren't set in stone. I've considered adding one or two. Those changes tend to fit somewhere within one of these.
I've learned these through hard-knocks, learning what successful traders do, and learning about trading psychology. I think they are important enough to warrant being on a list. You may disagree with one or more of these. That's fine. There are many ways to make money in the markets. Some people can trade off news announcements. I haven't been very successful doing it so I avoid it. Also, I like automated trading. It fits my disposition and I don't like sitting in front of the screen twitching on every entry and exit signal and going through the emotional ups and downs as the trade evolves. My confidence in the strategy allows me to put the mouse down and walk away to enjoy time with family.
** Trading 10 Commandments
1 Trading is your business not your hobby.
2 Have rules to enter and exit a trade before you enter.
3 Don’t risk more than you are willing to lose.
4 Develop confidence in your system with backtesting.
5 Don’t trade in anger, to get even, or in fear.
6 Don’t trade off news.
7 Don’t micromanage your trades.
8 Know your trading tools.
9 Keep physically and mentally fit.
10 Read these commandments each trading day.
The following 12 users say Thank You to StanfiCW for this post:
After years of trading, I wish I have never tried day trading futures. I have tried every method I know, trend following, band trading, volatility breakout, mean reversion in stock index, bond and currency futures. I would be lucky if I could get a break even month. Too many adverse factors in day trading.
Random direction - The intraday direction is difficult to predict even taking into account the higher time frame of daily and hourly chart. The intraday momentum direction can change suddenly without any warning sign.
Random magnitude of move - The magnitude of each move is difficult to predict. Occasionally the market may give a nice trend, but most intraday moves are short and choppy. Easily lost what I have gained in a few choppy moves. Hardly justify the risk involved. In some trades, I need to risk a dollar for reward of one dollar. Very bad risk to reward ratio.
Intraday stop hunting - Because of the limited profit potential in day trading, I cannot set a wide stop. Too many times the market stopped me out before it makes a big move.
Swing trading the daily charts of stocks are much easier, but it requires more capital to trade the stock daily charts. Do not put all eggs in one basket. Money management is important in each trade to limit your lost if you are wrong. My advise to beginner is that do not begin trading with trading the intraday time frames which are the most difficult and competitive field in trading business. Trust me. It looks easy but it is actually very difficult to be profitable in long run. Save enough money to do the daily charts of stocks which is profitable and less stressful.
The following 4 users say Thank You to tonyyhl for this post:
