Budgeting: Knowing Your Financial Limitations
In day trading, there’s the ever-present potential to make a fantastic income. But you could also lose everything, fast. Avoiding big losses takes frugality and patience. I know my tone might crash and burn your dreams of professional grandeur, but there’s really no way around it. I feel that my job is to tactically slow you, to help you stay financially safe.
For the beginner in day trading, the management of finances is two-phased. The first phase is all about floating your boat during your full-time training. The second is all about later on, when you’re actively trading for income and you need a reliable cash flow.
I’ll assume that before you started reading this book, you already had some knowledge of day trading. Most likely you looked at the subject online, and you purchased several good reads. So far, maybe that’s all you’ve spent on it. Most likely you’ve still got your day job. You haven’t yet taken the plunge.
I’ll also assume that at this point, you’re ready for some serious training. Well, before you do that, you need a budget. I’m talking about a budget that keeps you afloat during live trading, while training. Because even when you get to where you can safely trade with real money, you’re basically still a cadet. Even if you’ve done more than buy a few books—even if you’ve dished out thousands of bucks for a week-long day trading program—you’re still a rookie, deep in training, and you need a trainee’s budget. ...