If you are planning to day trade for living, this post might interest you. Here I share my personal experience focusing on how the average person, with extensive or very little trading experience, can enter into the arena of day trading and creating wealth with some preparation.
Some time back when I decided to day trade for living as a business, I felt I needed to do some preparation in order to ensure my smooth transition from a fixed monthly salary job to a volatile kind of earning through the day trading. Due to the volatile nature of monthly earning in the trading profession, first challenge in front of me was to generate some sort of income through other sources so that I do not need to depend solely upon the trading for living. I thought this other income was very much required because it would not only take care of my day-to-day needs but also it would give me mental peace and I would be more relaxed and not under undue pressure to treat the trading as the only source of income. If you are thinking about taking up day trading for living, I would suggest you to do some preparation like this, so that you can plan it out the better way.
My first priority was to become debt free by paying out my loans which I did. After getting rid of loans and other liabilities, this is how I explored different options to generate some passive monthly income of around Rs. 25,000 which I thought would take care of routine expenses like grocery, utility bills, school fees for my kids. etc.
I had some funds that I saved over the years, mainly through PF, FDs and shares. I decided not to utilize all the funds for the trading and instead put it into fixed deposit and good liquid funds to generate around 8 to 9% of yearly risk free interest income. The amount of Rs. 10 lakhs was enough to generate monthly interest income of around Rs. 7000.
Sovereign Gold Bonds. I went ahead and converted the physical gold of roughly Rs. 5 lakhs into the sovereign gold bonds to generate 2.5% of yearly interest income. This guaranteed me monthly income of around Rs. 1000.
I also had an option of renting out a small old property after doing some repairing work which I decided to do. It helped me generate a monthly rental income of Rs. 5000.
Income through parttime work:
Since it was possible for me to work online at my free time from home, I decided to continue to do it for around 3 hours a day. After all this is what I did and worked for 15 years. I only required to spare 3 hours post market close. In addition to that I also involved myself in coaching and mentoring to help come up aspiring traders in a professional way utilizing my free time on weekends. Working parttime like this helped me generate an average income of around Rs. 12000 per month.
So everything was there, available for me. What I had to do was just plan it out properly to generate a continuous source of monthly income to keep me going in this highly uncertain day trading profession. Every profession requires time and experience to get settled and day trading profession is no different. There will be initial hiccups and initial struggling phase when starting out trading as a profession and hence it becomes pretty much mandatory to be ready with some other options. I kept on telling myself everyday that even if I could not earn a penny from the trading, I would be able to sustain and hang on to it with the help of passive income. This passive income was also very much necessary as I was the only earner in my small family.
If you are planning on entering into the day trading profession as a source of living, I would suggest you to do some well thought-out preparation like this. I am sure you will have some options like this or something different which will work out for you for sure. If you are living in a metro city like Bangalore, Mumbai or Delhi where standard of living is high, you may think about shifting to a much smaller town. It will help you cut your expenses to a great extent. You may have some piece of land in a village, which you can think about selling out to generate some funds for the interest income. You may be good at, for example, music or dance or writing or some kind of sports and you can involve yourself in coaching as a part time profession to generate some passive income. You can even utilize your marketing or consulting skills for that purpose. There are lots and lots of options. You just need to sit and assess your strength and weakness. Once you do that, you will automatically find a way to better utilize your capabilities and resources, and you will be ready to take your first step into day trading as a business.