Should You Quit Your Job to Start Trading?

I know several people who want to quit their jobs and start trading for a living full time. Is this a good move?

I think stock trading is the best business one can get into: the market does not care who you are; you can trade from anywhere in the world and nobody can take trading away from you; opportunities will always be there and you don't have to ask anyone for permission to trade. But should you trade the security of a regular paycheck for the uncertainty of stock market gains? I don't think there is a "one size fits all" answer.

Do You Have a Passion for Trading?

You noticed that I did not say "skills" or "knowledge." Good traders are not born but made. All great traders are self-made. Ever since I came to the US from Russia over 20 years ago, I've had an overriding interest in stocks - one area that I knew nothing about by virtue of birth or education. But I persevered because I liked it. I could as well have had a passion for computers or surgery - but I liked stocks. If you have the passion, you can learn to trade; if you don't - you may be a great computer programmer or surgeon but you are not going to make a fortune in stocks.

Do You Have the Right Qualities to Succeed?

Trading is a lonely endeavor; it's you against the world. Most traders are loners and corporate misfits - you must be, so that you can make decisions fast and take responsibility for your actions. The market is unforgiving: you pay for mistakes with your capital and there is no point in assigning blame or playing office politics - it won't bring back the lost money. You don't make money by building a consensus - you have to beat the crowd by being ahead, not in the middle, of the pack. You have to live with uncertainty because you have no control over the market but the market has total control over you. You should leave your ego at the door as you enter the market because the market has a remarkable way of cutting the arrogant down to size.

Do You Have the Capital?

Clearly, you need capital to trade but you noticed that I did not put that question first. The amount of capital varies - I cover the calculations here. Having an adequate cash reserve to take pressure off your trading is more important than the absolute amount you can trade.

Do You Have the Right Circumstances?

It does not matter whether you are single or married, own or rent. What matters is that the people close to you support you 100% - otherwise nagging or skepticism will kill your confidence and drive. Your financial obligations should be adequately covered by the reserve, but most importantly you should be prepared to have an uneven cash flow: you may go without income (and even be in the red) for 10 months in a row only to make your annual income in the 11^th month - but, again, even then there is no guarantee.

More from this contributor:

Stock Trading as a Business

How Much Money Can You Make Trading Stocks?

Trading Zoomers - What to Expect