Becoming a full-time trader is a big decision. So the team asked G7FX founder Neerav Vadera how aspiring traders should prepare before making the leap.
"It's an enticing prospect: choose your own hours, be your own boss, and make money on your own merits. Trading full time gives you the freedom and flexibility not offered by a typical 9-to-5 job, with the bonus chance of making huge profits in comparatively little time."
However, trading is infamously high risk. There's little certainty, and if people don't know what they're doing, they could end up losing far more than they gain. Time and time again, eager new traders have invested all their capital into one asset, it deflates in value, and then they desperately scramble to break even - usually without much luck. So-called 'revenge trading' follows as they enter into another big trade in the hopes of recouping their losses, which almost inevitably leads to them losing even more.
It's unsurprising, then, that there are many variables to consider before becoming a full-time trader. First, people need to evaluate how ready they are to make the change and see if they can do more to prepare.
To help everyone get started, the team spoke to Neerav Vadera, a former trader at Barclays Investment Bank. Neerav - better known on social media as NV - is the founder of G7FX, a trading education program designed to teach new traders the strategies they need to find success. After working at Barclays for over five years, he left to become a successful private trader.
He gave the team some advice on how everyone can prepare for a career as a private trader.
⦁ Know Thyself
Before everybody starts making moves to switch to full-time trading, it's essential to evaluate whether their lifestyle and personality are suited to the career.
"Private trading works very differently from a regular career," Neerav told us. "You've got more freedom but less security. Everything depends on your choices throughout the day, and you need to be able to stay motivated."
For one thing, he says, "you should have a genuine passion for trading. You should enjoy the thrill of making a smart investment and knowing how to navigate the market for profit. If you currently trade solely for the chance to make money, you might struggle to stay motivated when trading full time."
NV continued, "another thing to consider is your overall lifestyle. 'Is it suited towards the structure of trading?' 'If you encounter losses, do you have enough funds to recover?' 'Do you have a family to provide for, and will trading provide enough security for them?' Finally, you need to ensure you have the time and resources to dedicate much of your day to trading.
Your temperament is also important. You need to be dedicated, logical-minded, and able to remain calm in potentially stressful situations. Someone who can stay relaxed and rational is likely to fare much better than someone who panics or angers easily. It's also vital you have a lot of patience - it can take a long time to see the results of your actions, so you need to be good at waiting."
0. Get Educated The Right Way
Neerav emphasized the importance of knowing before acting. "Like any skill, you need to learn and practice before you can do it well. It's so important you know what you're doing before you start investing money. Otherwise, you're putting a lot of your capital at risk."
He argues that the biggest mistake people can make is to treat trading as a way to 'get rich quick.' It's not - it's a career like any other, with all the work and effort that comes with it.
And to do a job well, they need to have the right training.
"There are hundreds of online training programs available," Neerav said, "many costing upwards of thousands of pounds. But, unfortunately, a large number of them don't teach the things you need to know to make a profit. Instead, they teach outdated or ineffective strategies that sound good on paper but fail to work in reality."
He says he created his training program to help remedy this. "I wanted to teach people the same techniques I learned both in business school and at Barclays. Having an institutional background helped me create a program that mirrored the training given to employees of real-world trading firms."
0. Start Small and Practise, Practise, Practise
Before switching to a full-time career as a trader, people should first have a good amount of practical experience.
"I'm a big believer in the importance of practicing with simulations before moving onto actual markets," Neerav told us. "Many people believe in jumping in at the deep end and learning as you go, but that's an easy way to lose a lot of money fast. Simulations let you practice your skills in a realistic environment without risking your real-world capital."
There are dozens of stock market simulators available online, many of them free. Some good examples are Warrior Trading and Investopedia's Stock Simulator.
Once people decide to move onto real markets, Neerav stressed the importance of starting with small investments first. "Now you've practiced with big trades in the simulator, and it can be tempting to try making big trades in real markets. Don't do this! You should always start small and make sure you can make a real-world profit first. Then, you can start making bigger investments once you're comfortable with the way actual markets work."
Always practice caution - even a small profit is better than a big loss.
It is important to note that "You should have extensive experience trading with real money before you consider leaving your current job. If you make a considerable loss after switching over to full-time trading, you might not have money from your current job to fall back on. Only once you've generated enough profit to live off comfortably - and proven to yourself, you can keep making a profit in the future - then that's the time you should make the switch."
"Being a private trader is incredibly satisfying. I've got more control over my career than ever before, and I get to do something I love every day," Nareev told us. "If you think private trading would suit you, I can't recommend it enough."
After all that, now everybody knows what to consider before embarking on a career as a full-time private trader; they can start preparing to make the switch.
"Are you ready to get started?"