It's not a question of if you should quit your day job to trade FOREX, but rather when!

I'm retired now, and though I could have 'quit my day job' years and years before I did from my real estate investments, I continued to work because I really enjoyed the stimulating challenges of software engineering.

The thing to note here is that I chose to keep working. That's a very good position to be in.

How awful is it to go into work every day and have some asshole screaming at you to hit your numbers or hit the door? Really?

Someone who made the mistake of treating me like that would be told to turn around and go take a crap in the stairwell. My feeling was that if you were so screwed up emotionally that you'd treat someone like that, and not get out of my face when told to, then that's not someone I'd care to invest 9 hours of my day listening to.

I have always been willing to get fired rather than work for someone who thought they could treat me badly. And though never directly fired for that attitude, the little people always found a way to get me out the door so they wouldn't have to deal with me.

That attitude, no fear, and the willingness — and the ability — to back it up was a huge advantage for me that most others didn't have.

So many folks are simply afraid to 'make waves'. They just can't afford to rock the boat in fear of losing an income that for most is enough to get by on but little else, or which is so good that they fear losing their toys.

It's a sad way to live....

However, vehicles like real estate, and FOREX can provide a way out.

But only for those willing to work for that privilege, and also — and probably more importantly — for those who understand what I teach and refer to as: The Rules of The Game.

I share these Rules of The Game with my advanced karate students — requiring a minimum of 5 years study; most taking 7 or so years to reach.

The Rules of The Game are the rules for economic survival, just as in their earlier training they learned the rules of physical survival.

Though those rules are structured for someone with extensive martial arts training — which at its root the way I present it is understanding and eliminating fear in our lives — I can easily abstract out the major principles of financial and economic survival for those without a martial arts background.

Working your day job, and hating it — or even just not liking it — causes stress. And, as we all know: stress kills.

But you can't run from your job into trading FOREX (or real estate, or anything) without the proper preparation.

And reading a few books, and running a $50,000 sim account up to $250,000 in 6 months is not proper preparation.

As I've discussed in many blog posts, and videos in my YouTube channel for Longwood Currency Trading, over a course of many, many — way too many — years, I not only read hundreds of books and watched hundreds of videos, but I also wrote thousands of lines of computer simulation software against FOREX currency price action.

And yet, with all of that 'education' it didn't take long for me to become a valued member of the 90/90/90 Club: the 90% of folks getting into live trading who lose 90% of their account in 90 days.

Why was that?

It was because I didn't think for myself, or have a mentor guide me. Rather, I thought that all of that 'educational' information that I had studied so hard was how to get started.

It wasn't. Rather, it's how those educators protect their account, and think that's how you start. It isn't.

And why is that?

Because most of those folks primarily don't really understand how to teach, and more often than not: they simply really don't understand the basics of those Rules of The Game, as I refer to them.

And what's all of this — as in allllll — of this have to do with quiting your day job so you can trade currencies?

Every-thing.... So, stay with me here....

Of course the objective of trading FOREX is to ultimately be able to quit your job to trade full time. Why else would you trade? For the heck of it? Of course not.

WHEN to quit your job is the real question, not IF you should quite your job to trade.

I have a companion video of the same title When To Quit Your Day Job To Trade FOREX that puts all of this together from a different view point.

If you've come from watching that video, then press on here. However, if this is your starting point, I might suggest that you read through this before watching the video. Or, if you want, you can skip to the bottom of this post to watch that video now.

The short answer to when you can quit your day job to trade FOREX is really simple: when you've prepared properly.

What the heck does that mean?

Well, the simple explanation of being prepared properly to trade currencies is: to understand the mechanics of the FOREX market, and trading itself, to have some reading to learn the workings of the economics of the market, and to have some practice trading in a sim account.

But that's just not only soooo obvious, it just repeats what I've already said. But I did say that this was not the type of proper preparation that would be consistent with what I refer to as The Rules of The Game.

We're just going in circles here, right?

Yup. And unfortunately, that's about what happens to most folks educational efforts: they end up going in circles.

Not knowing what else they can, or should, do they have little option but to do what they've learned. Unfortunately, they fail, and they blame it on the educator, or 'the system', or their father that wouldn't buy them that puppy for their 3rd birthday, or — whatever....

So, let's take a better look at this proper preparation process as it applies to getting yourself into a position where you can quit your day job to trade.

There are just a few key principles that will help you better understand when you are ready to quit your day job to trade.

Key Principles

1. Save First
2. Emotional Awareness
3. Study The Rules
4. Personal P/L Analysis
5. Is Just Replacement Enough?
6. Age Bracket Considerations
7. Why Are You Trading?

Let's take a quick look at each one, and then pull them all together into an organized action plan.

Nothing happens if you don't earn it. The other 2 things, however, can be ordered in two sequences:.

• Spend it, Save it.
• Save it, Spend it.

Which order do you think they should be in?

Right: Save it, Spend it.

Because if you spend it first, chances are there won't be any left over to save.

In the marvelous George Clason classic 1926 book, The Richest Man in Babylon, one of the parables presented is:

"Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family."

I retired a millionaire because that's not only how I started my investment career, but it's something that I did throughout my life. In fact, I have a separate 'No Touch Account' that is used for one thing, and one thing only: only invest/spend it on something that increases in value. This means that it was not used to buy a car when mine died, or a new tv, or even to pay medical bills or my mortgage when I was dead broke.

A 'No Touch Account' is used for one thing, and one thing only: only invest/spend it on something that increases in value.

When I was making so little money that I was turned down for a gas company credit card, I still added money to my 'No Touch Account'. And when the time came, though I had very little else in savings, I used that 'No Touch Account' as the down payment and closing costs to purchase my first investment property. And I still didn't have a credit card....

If you don't have the desire and the discipline to 'save first', then don't even think about quitting your job to do anything but crawl off to the side of the road and and watch those who do have the desire and the discipline to 'save first' pass by....

So much of trading is based on this self introspection that most don't do the analysis necessary. There are many reasons for this, primary of which is that all most folks want to do is to start hitting the order button on their trading platform.

Now, by 'emotional awareness' I'm not talking about how your feelings get hurt easily when someone mentions that you walk pigeon-toed, or that you're just stupid.

The sort of emotional awareness I'm talking about here is whether you are better suited for long term trading, swing trading, short term trading, or speculating.

If you haven't thought of this before, or are new to trading, then let's just keep this really simple and have you ask yourself just this: Are you patient and comfortable with making plans for something you'll do over a long period of time, or are you better wired up to jump into something and make it happen right away?

You shouldn't even think about that one — the answer should just projectile vomit out of your brain. Look, if you're 12 years old, you have a pretty good idea of this.

Don't make a big deal of it because there's no 'right' answer, and there's no 'wrong' answer to that question.

You are who you are, be proud of it, and then, as Albert Einstein said:

"You have to learn the rules of the game. And then, you have to play better than anyone else."

An excellent reference that shows the different approaches to trading is the 1923 classic Reminiscences of a Stock Operator about (and most likely by) legendary speculator Jesse Livermore. Livermore starts out as a pure scalper, and then as he amasses huge sums of money makes the transition into longer term trading.

It's fascinating stuff. And look: if you don't like this book, then I'd personally feel you're not suited to trading at all. My opinion, but I think many would hold the same attitude. For me, I won't even talk about taking on a student who hasn't read, and who can quote from this book even under the duress of massive amounts of alcohol....

Now, when getting into trading, here's something different to consider about what sort/type of trader you are:

Though a scalper can make the transition to long term trading, a long term trader most likely will not be able to do short term trading, let alone scalp.

Think of it this way: A drag racer could take their skills and move into stock car racing, but I'm not real sure a stock car racer could be a successful drag racer.

Another example is my own son who grew up on the water with boats, and dismantling and putting back together marine engines on the dock at 12 years of age. As he got older, he considered a career as a marine mechanic because he just loved working with his hands and solving mechanical problems.

A friend of ours who owned several car dealerships but was very much conversant in the marine world owning a beautiful antique Duffy counseled my son to consider working in a warm garage on cars as opposed to working on boats out in the yard with snow and ice all round him.

Roger also pointed out something neither my son or I had considered that we found to be very much the case, supported by our own experiences later as well as hearing this from numerous others: it's far easier for an automotive technician to transition into marine engine repair than it is for a marine engine mechanic to change to working on cars and trucks.

My son has been working on cars going on 15 years now, and totally gets that. In order to be good at both, you'd have to either work in both arenas simultaneously for a long period, or you'd need to start off in the automotive world, and then transition to marine work.

The point to be made here is that if you feel you're far better wired up emotionally as a person to do long term trading, it would be wise for you not to consider trying your hand at short term trading.

Here's a simple example I'll work off of:

Why am I showing this? Because this is how Bob can determine when he might give up his job to trade.

From the P/L statement, it shows that Bob has a couple of hundred dollars left at the end of the month. That's actually great, though I think you'd agree that most folks with a $3,000 a month income would fare far worse.

Further, let's say that Bob has $1,000 in savings, so if he went all-in, he could trade a $1,000 account for 1 mini lot at $1.00 per pip. Considering that in 2020 it has been estimated that the 'average' American could not come up with $400 in an emergency, I'd say that to have $1,000 in savings is a pretty good position for Bob to be in.

No, let's say that because Bob really doesn't know what he's doing, and listens to the fools out there with high leverage that he could trade 2 mini lots at $2 per pip on that $1,000.

Bear with me here using this example of our buddy Bob. You might be saying, look, Bob probably is married and thus the expenses will go up a little, but then instead of a $3,000 a month income, there's really say $5,000 of income per month, higher end of month balance, and probably more in the bank.

No, that's just not the case. I base that on 2018 figures that the median household income was $63,179. If we divide that in half for Bob's share, then we're pretty much on track here....

Regardless of all the possible hand-wringing and debate about this, Bob needs to replace a $3,000 per month income from his trading to be able to quit his job.

Right off the bat the answer is no.

As soon as Bob quits his job his cost of health insurance goes way up, like 2 to 3 times as much if not more, and his deductible goes from something like $1,000 to maybe $3,000 and in some cases I've seen (and have personal experience with) $6,000. Sobering stats by themselves.

Next, if Bob has been taking money out and salting it away in a 401k and thus reducing his tax liability: that's gone. He can still put $6,000 or so (2020 under age 50) into an IRA. It's easy to have his work take that out for him; not so easy to do on your own... Besides, he'll need that money for trading to make up for some of that extra health insurance.

Again, you could argue that Bob could just slip onto his wife's insurance, and he can reduce his car expense (gas) because he won't be driving 30 miles each way to work, and he'll be saving $10 a day not having to buy lunch at work, etc.

But let's not get hung up on all of these side tracks. The long and the short of it all is that Bob is going to most likely have more expenses after he quits his job. Let's be light on him and say he needs $200 a month more, a total then of $3,200 per month to be even in circumstance to where he currently is at being employed.

Another thing of concern here is that if all Bob is doing with his trading is replacing his income, then what happens when he gets sick and can't trade for a week. Or worse: car accident that puts him out for a couple of months. At work — at a good company — he still gets paid time off, and in the case of a long time out, short, and possibly long term disability insurance. He won't have that ability trading at home from the den in his pjs.....

Or how about just the fact that if his car breaks down on Tuesday and he's not able to trade while he's getting that car fixed down at the garage, no one is paying him while he sits in the waiting room for 4 hours....

Because of these, and other, reasons, Bob should absolutely plan on making at least $300 a month more to put away in savings for just such events.

I could go on — but I won't. Let's just say that Bob is going to need to generate $3,500 a month in income from his trading in order to just meet his current obligations, let alone set anything aside for retirement.

$3,500.....

For example, if you're in your 50s then you can ill afford to lose a lot of money learning. Money lost late in life if you haven't sufficient resources may not only just take you out of the trading game all together, but it may seriously impact the money you'll have in retirement.

However, if you're 21 to 34, you've got not only a lot of time to make some mistakes, and recover from them, but you also have time to compound your account such that it grows your net worth. And the younger you are, the assumption is that you have few limiting responsibilities — such as mortgage, kids, boat, whatever — to take the risks that trading has.

If you're older, you probably have more money to invest so that smaller pip moves equate to larger dollar gains, whereas younger folks with limited resources have to trade more aggressively in order to grow their smaller stake into one that can provide job replacing income.

It's difficult balancing the differences in what's going on at different stages in your life. You have to consult a lot of legal, and financial resources to help guide you in your decision process. How you trade is very much determined by your age: don't let anyone tell you differently.

And those differences may require you to make even more money from your trading than just covering living expenses.

You need to understand yourself and your circumstances such that your goal is to trade for income, to trade to increase your net worth, or potentially both. This was all alluded to in Principle 6: Age Bracket Considerations, but it's not solely about your age. Rather it has more to do with your makeup as a person, and how you view your life unfolding before you — regardless of your age.

Regardless of all of that, when setting out trading at the onset, you really do need to focus on trading either for income, or for net worth building. How you will trade will be based on that decision. This is something that's sorely missed in most educational resources. But it's an important distinction that you need to be aware of.

It's also one of those things that's tough for you as an individual to ferret out on your own. You'll most likely need to bounce these issues off of someone else. The problem here is finding someone who understands why this would be an important thing to consider.

You can't just ask you cousin who's a banker, or Fred down the street who trades for a living. You have to find someone who really understands the connection between what you are like emotionally, and what the true vision is you hold for the course of your life — again, regardless of your age.

Not sure how you're going to be able to determine this, and I'm sorry I can't be more helpful here in this post. But even if you emailed me, or called me on the phone: this just isn't something I could really guide you in.

I'm really only able to help a student who is in it for the long term with me to be able work through this type of analysis together. It's that closer relationship which enables both student and teacher to build a sense of trust between them so that a discussion can be had about such complicated issues rather than some talking head broadcasting advice at you.

Key Principles

1. Save First
2. Emotional Awareness
3. Study The Rules
4. Personal P/L Analysis
5. Is Just Replacement Enough?
6. Age Bracket Considerations
7. Why Are You Trading?

How about this:

The short answer to when you can quit your day job to trade FOREX is really simple: when you've prepared properly.

You'll know you've prepared properly when:

First, you have proven to yourself that you have the discipline to save, to preserve capital.

Second, you have proven to yourself that you have the emotional awareness to understand and to do the work necessary to study and learn the rules of both major forms of trading for either income, or net worth enhancement such that you can clearly choose one to begin trading that form.

And finally Third, you have a full grasp of your current P/L situation and age to determine realistic expectations for your trading goals.

It's only through such an analysis that you will be able to develop a viable trading methodology to meet those goals.

Video: When To Quit Your Day Job To Trade FOREX