For a good number of years, I silently wanted to trade stocks for a living. The idea of not having a boss, being location-independent, and possibly making an unreal amount of money and still having most of the day off work all made for something of legend to me. But I was in positions where I didn’t feel comfortable telling that to people I knew or were in relationships with, and partly for that, it felt silly to pursue something that so many are vastly unsuccessful in, so I did nothing. But that’s starting to change (my family won’t know unless I actually make something of it), and I’ve begun studying.
Here are some initial thoughts and observations:
Data, and therefore, Excel, are great friends in stocks. So is resourcefulness. Without a data subscription (Level I and Level II data), a trader is limited to data that’s delayed by 15 minutes. I can see what happened 15 minutes ago, but I cannot see what’s happening at the moment. I’m only paper trading at this point (practice trading with the software and delayed data, but not real money), so it stands to reason that I minimize expenses until I determine it viable. Since I can’t see the current price of the stocks, but I can see my current profit / loss, I take that number and calculate the current price to determine what to do. In other words, I’m working backward to find the data I’m not paying for. It involves switching tabs a lot, but that small amount of time aside, it’s real-time data for free.
I’ve been exploring the world of stockfetcher.com, which uses “plain English” to create stock filters. Using the examples I’ve found online as a starting point, and reading up on syntax and commands, I hope to narrow which stocks match my likes, reducing the work I have to do. I’m a big fan of the 80/20 rule.
The site, with which I have no affiliation, has a paid option, but again, since I’m not paying for it, I’m incentivized to create filters that only show the best 5 results (since you only get 5 in the free / public option). So, instead of sorting through 20 or so stocks that match, I’m working to get down to the best 5 or so. The less I divide my attention, the better I can focus. Remember: multi-tasking is less efficient, despite what we were all told a decade ago. Do one thing, and do it well: that’s my philosophy here.
Once per week
I’m currently running income numbers assuming I make one good trade per week. Patience. It takes some of the pressure off when I start reading about people who make dozens of good trades per day (see Twitter) and make a nominal year’s salary in the same time. Maybe one day I’ll get there, but for now, I’m going to work on lowering pressure, allowing a clearer head, realistic goals, and therefore a greater chance at success. Tim Ferriss is fond of saying that early victories are critical, so we should do everything possible to guarantee them. This is one step in that direction.
Short Term Capital Gains taxes, which are taxes paid on investment profits where the term of the investment is less than a year, are taxed at the same rate standard income (W-2 here in the US) is taxed. Since those rates are published, I’ve created a calculator to determine how much in taxes I’ll need to set aside at a given income. That’s subtracted from profit to determine take-home pay once I’ve surpassed a level at which I am comfortable trading 33% of my account balance in a given week. This all helps me to see what goals I need to set. Playing with the numbers helps visualize, and I’m working conservatively.
Speaking of visualizing, I’ve done a bit of that, too. Vague goals beget vague results I’ve learned over the years, so some more specific things have crept to the surface. While many successful day traders, especially younger white men, show off fancy cars, home(s), and exotic destinations, I dream more of actual travel with as little as practical, and financial security such that I can journey further from the mainstream and not worry when I get back or while I travel.
First off, I don’t have a car, and haven’t owned one since sometime in mid-2011, though I’ve had two company cars and a reliable bicycle. My girlfriend, Sera, has a car, and we use that. For that matter, I live in income-restricted housing, which only happened because I’ve been unemployed since the end of June 2017.
Second, the idea of owning more real estate (I already own one condo that I purchased at the end of 2015 and currently rent to an awesome couple) doesn’t entice me very much save saving the headache from dealing with a landlord (though our current one is nice). While real estate is another form of investment, and a historically stable one at that, my goal is simplicity, and given that my trading strategy is very liquid (I will aim to often will hold cash at the end of the day), my long-term risk is rather low, so that diversification isn’t high on my list.
So, what do I want? Materialistically, I want less (useless) stuff than I already have now (everything I own fits in about 70% of a 10×10 storage unit), a minimum of $1.8M to live off interest, or a maximum of ~$7M to live outright, and maybe a boat to sail the world. Unreal? Maybe, but I am certain that I’ll never get there if I dream small. There definitively are things I want that aren’t financial or material (largely pertaining to relationships and contributing to the world), but those desires and goals are / will be written about in other entries.