Do I go for it ?

I find myself at a crossroads...and am sure many of you here may have experienced something similar in your own lives..

Some of you may know me from the Forex chatroom..

Yesterday evening I received a call from my employer of the past five years saying the company has gone bust.No money in the pot,major debts and the inland revenue are investigating the two partners for tax avoidance..bad news all round.So - job gone, no notice and even worse no salary this month (nice that he waited until the 27th to tell me this).

Here I am then...35 years old, having spent the past 13 years in IT Recruitment with no other work experience..and I have had enough of Sales.

I have been trading Forex for 4 months and am now producing consistent weekly gains.I am under no delusions in that I am still a newbie and chastise myself for sometimes making 'silly' trades.My plan was to trade for at least 12 months and get through the learning cure before considering what I am now forced to consider - to try and make a living doing it.

I have worked from home for the past 5 years so I am comfortable with the self motivation,discipline and the hours I am going to need to put in to have any real chance of making this work...

But what about my 'start up' capital - Well baring my soul now.I have about 8k sitting in the bank - which I will need to start drawing on from the 1st May and can probably eek this out over 3 months to pay the mortgage etc and day to day expenses.All other money is sitting in the family home which is worth about £600k with a £78k mortgage.

I need to net at least £2 500 pcm to get by (Wife not working + 2 young pre-school age children)..My first thought is to take 20k out of the house as start up capital for this venture but I am wrestling with myself..Am I mad..? I have only been trading mini contracts for 4 months.The pressure will be to much..it breaks the rules

However this situation has been forced on me..and like any other husband, wife, parent my first concern is to take care of my family, so I need to act.

Can anyone offer any thoughts or advice ?

It sounds like you are insufficiently capitalised and have significant commitments.

I would advise looking for another job but whilst you are doing this you can use the time to improve your trading by working on it full time.

Hopefull, you're sitting on over half-a-miilion pounds equity in your house.

Your trading system is producing a profit (although you are still making silly trades).

The I.T. Recruitment business is all you are experienced in, it is in the biggest doldrums for 10 years with no real basis for expecting recovery and your soul isn't into sales.

First: Go with your life's passions. It's the only way to be happy and successful.

Second: At 35 you've got plenty of time to make lots of mistakes and count the bruises.

Third: You are far from under-capitalised. Re-mortgage and use the released equity to provide (a) a sensible trading pot and (b) full cover for all your commitments for the next 12 months.

That way, you'll have no pressure. You simply carry in trading the way you are, with proper risk:reward and money management. Read these boards. And treat your trading as your new career.

As your trading capital (and confidence) increase, you simply stick to the rules.

The only trades that are 'silly' trades are the ones you make outside your system/strategy - win or lose - they're the only silly ones.

Losing trades are not silly trades - they are business expenses.

If at any time in that 12 month trial period you feel it isn't working out financially or psychologically, start looking for alternatives.

That's what I would do (and have done) in your position.

Others may urge greater caution and getting another day job. Also very sensible, but as you point out, your options and interest in that direction are limited.

Hi hopefull

It's a tricky situation to be sure. You will almost certainly find that the pressure increases dramatically when you have to depend upon the income from trading and earn a certain amount just to get by, and that could seriously affect your ability to make cool, calm, sensible trading decisions. £2500 pcm = £4000 before tax = 20% of your mortgage trading capital a month (5% /week) - not impossible but if things go badly you might find that you do little better than break even.

The lure of trading for a living is a big one, but the markets are always there, and (as now) you can combine trading with another job as well.

Hope this helps

waytogo

Hi Hopeful,

I'd go along with Bramble's advice.

You have a low mortgage compared to the value of your property. I'd be inclined to release some of the equity in your house to provide the capital you need to give trading a serious try. My advice, though, would be to take out more than 20K - maybe 40-50K would be more appropriate so that the pressure to earn money quickly will be taken off.

Go for it !!

Good luck whatever you decide to do.


Regards

You've already recognised the "silly" trades so you're well on your way. I would try and get some work, even part time, so that you dont put additional pressure on yourself and carry on developing your trading when you can.

Firstly - thank you for the prompt reply's and advice..Its good to get a balanced and clinical view.

Jmreeve - A fair point and quite true....but the $64 000 question is what other job? (Obviously I am not expecting an answer to that).

I feel in my heart that my days of making endless number of calls and attending sales meetings etc. are behind me and although a young (if I may say so myself) looking 35 I am way past the grad/trainee hiring stage for a new profession.

I know that it isn't unusual to reach this stage after being in sales for many years, 'burn out' is not uncommon.I have also found that as I am getting older I am less willing to take all the c**p that get's thrown at you in this sector...so time to bow out gracefully with no regrets.

Bramble - Again you have hit the nail on the head especially with your third sentence...

..and yes my gut instinct is saying to push forward.In my experience if your heart isn't in selling - get out...and for some strange reason I am passionate about trading.

Wow, the replies are coming through thick and fast - thank you all for taking time out to share your thoughts.

wtg - good idea ..However I have been fortunate in having been able to work from home with my current (now previous) employer.Going to another firm is likely to mean the typical 8-6 hours + 45mins either side commute which will literally kill the trading.

iv - Again,good point and I need to put a business plan together with some cost analysis..20k may be just be cutting things to fine

Oatman - Yes, I was thinking along these lines..I am thinking of possible some evening or weekend work here..

I am more than prepared to take a lower paying PT job to support me initially - I know nothing in life worth having comes easy !

hopefull-

I was in a techy job and the company was not doing so well so decided to go it on my own.

However, when I did this I had no commitments, owned my house and had a decent amount of trading capital in the bank.

I also do not depend only on trading but also started a small company and write software.

hopefull,

You have my sympathies, though I wish I was sitting on £500k of equity, though I don't have your commitments. I'm facing a similar decision myself, but very different circumstances.

Have you considered selling the house, and moving to a cheaper one, possibly in a cheaper part of the country, though you don't say where you are located.

You could get a cracking house in some parts for £200k, use a conservative amount to develop your trading, invest the rest as safely as possible, reduce living expenses as much as possible?

Could be a lot worse off - good luck anyway.

excellent advice all thru the thread (specially Brambles!!)....we've all been there hopefull. Your psychological approach, coupled with your trading plan & strict MM will put you leaps ahead on your desired path to a long term career in your chosen occupation....you're starting a new 'business' that's all, and like all new businesses, as long as you approach it with due diligance & in depth research, you have as much chance of success as any other!.....doesn't seem too much wrong with your 'approach' by your recent trades (in the fx room)....and good trading y'day by the way

just keep on doing what you're doing mate!!.....if you really 'want it' & you go in with your eyes wide open, that's all you can ask of yourself!....stick to YOUR rules!

ps: you're also NOT on your own, this board offers a good sounding platform for bouncing idea's/obtaining advice & opinions....use it as a "business advice centre"

...blimey, I read this hopefull and it describes my situation almost exactly, same age, same size/age family, large equity in the house etc - I'm still plodding on though in a relatively secure/profitable IT Rec business, but the passion is with trading -some great advice above and I really hope you make it. Keep us posted with how you get on - I for one will be very interested in following your progress.

Good luck!

Dear Hopeful, do NOT go for it. I will explain the reasons why.
Currencies are very dangerous because of their unexpected volatility. Hear me out. You have been involved in currencies for 4 months you say. 4 months is not enough for you to have given yourself the opportunity to experience every variety of market condition possible. You need to give yourself time to mature.
By this I mean to mature in your approach to unexpected opposite scenarios that have a nasty habit of developing rapidly.
This is the most important and difficult part of trading and it comes from having a string of meaninful experiences, you have to give yourself time to have these experiences ~ you cannot have them all at once. It is only after you have had experiences repeatedly that you will force yourself to learn, that is one reason why you need time. There is another reason. You place emphasis on hope. Hope is an emotion. Emotions do not help you to reason.
In fact, they are instrumental in impairing or even destroying the ability to reason, just at the time when the faculty of reasoning, or if you like, the application of reasoned judgement is most needed. This leads us to the third factor, which is the imposition of pressure, whether real or perceived. you cannot afford to be under pressure of any sort in this game. The emotions attached to and caused by pressure will disable you. You ought NOT to take any money out of the house for this venture, to the contrary, you should be looking to clear out your mortgage instead, and then to proceed with safeguards along the route you wish to follow, not hindered by worries, which are emotions of the worst sort. I can understand your posture, but I do not advise you to proceed in the direction you suggest because also of your cash flow requirements, the resulting ratios would be disadvantageous, strangling actually, having the net result of instead of helping you to go forwards, to actually achieve the opposite result. This is dreadful if it is imposed upon you if you have no choice but unpardonable if it is self imposed.

you cannot afford to be under pressure of any sort in this game

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I often hear this said , but I don't understand it.

Surely the only way you can trade for a living and not be under any pressure is if you have enough money to live indefinitely without needing to earn any money from trading. In that case, why bother trading anyway ?

If you have decided to trade full-time, then I don't see how there cannot be some pressure on you.

Just my thoughts ........

Whatever you do

I'm not going to give you any advice either way. in terms of "do it" and "don't do it". Ultimately only you can make that decision.

The one thing I would do is write down a proper business plan. Discuss the ramifications with your wife of taking £100k or so out of the house as a trading pot. Why £100k? Because £20k is simply not enough trading capital. Add to that £25k to live for a few months and you are at £45k anyway.

Its easy to say "you'd still have a small mortgage" but to me £178k would not be small - especially with no way (other than trading) of paying it back.

Scared money never wins. I'm not saying you will be scared, just that emotionally its a different feeling when you kick it off full time.

The other main thing (and I speak as someone who has a mega understanding wife) is to make sure your wife is totally aware of the risks etc. in what you are doing.

It may be for example that she dreams of a little cafe somewhere by the coast etc. I know of one couple that did just that. She wanted a cafe, he wanted to trade. They sold their $1m house and moved to cheap property on the coast. She has a cafe, he trades. Both happy, and I think he trades better because he knows that they will get an income from the cafe. I only say this because in my experience you will need an understanding and supportive partner.

Either way, give yourself a couple of weeks off. Being made redundant is traumatic (whatever you may feel etc.). Do not leap into anything. Go and sign on the dole. Consider ALL your options. Make no decisions now. You almost certainly have many more options than you think you have. I once trained for 3 months as a plumber after a particularly horrid City job. It taught me I have options, and after 3 months at the local college I knew that I was not going to be a plumber, and my wife understood how much I loved trading. Still a valuable insight though, both into myself and to the lives of other people.

Apologies if this is a bit of a ramble, I have a lot of thoughts on this. I have seen so many people try and fail.

If you decide to trade full time, then my best wishes go with you. If not, then they still go with you!!

When I wrote my message this morning it was with a degree of hesitancy.

I am normally someone who deals with decisions such as this alone, but felt some unbiased advice was called for from people who could relate to my situation and maybe have been there themselves(a cry for help perhaps..)

Look at the responses I have received..Outstanding.I am humbled.


Thank you all for your well wishes and advice along with the many meaningful points which must be considered before a final decision is reached.

Trying to cover some of these points..


Yes - downsizing the house has sprung to mind.I currently live in the North West and could move down to a decent 4 bed detached for c£2 -250k..ironically Mrs H. has complained that our house is to big anyway and she is sick of cleaning it.

I am personally loathed to make a move based purely on launching myself into the trading arena full time.

Mrs H. is behind me all the way- I am extremely lucky in this aspect.However whilst I may be prepared to wear rags and live on beans on toast for next year I cannot expect my wife and children to do the same so I intend to do a very candid analysis of how much equity I need to take out of the house to ensure no serious drop in lifestyle..this in my opinion is key to the whole project and once working out how much I will need - and am I comfortable with it !

I am not intending on coming to any conclusion today - don't wish to trade in haste,repent at leisure ! But all of you who are sharing your own thoughts and experiences with me are helping me in considering all the options..and it is for this reason I posted in the first place.

The one thing I would do is write down a proper business plan. Discuss the ramifications with your wife of taking £100k or so out of the house as a trading pot. Why £100k? Because £20k is simply not enough trading capital. Add to that £25k to live for a few months and you are at £45k anyway.

Click to expand...

Disagree.

When I started on the floor I was given a £20k account.

If you start at a prop firm the will give you around the same.

When I jacked in the ratrace for a life (again!), I started on just under that.

Im doing fine now.

If you cant trade a $10k account with profit, you wont have a chance with $100k either. FACT.

The biggest problem this guy is going to have is the emotional pressure to provide for third parties (family and bank manager).

Maybe it's time to get the wife working to help relieve the pressure (pay for the mortgage) and use your trading income for other less expensive essentials.

The business plan idea though is a good point.

hopefull:

Something not covered by anyone else so far. First of all, go to the local Citizens Advice Bureau. There are certain things that they may be able to advise you on regarding redundancy payments, and employees have a higher priority on funds (after Inland Revenue and Customs & Excise) than other creditors. There may be government schemes available designed specifically for your predicament - so go along, find out, and even if it's just 200 squid, it's better than nothing at all.

You say you need £2,500 per month for you/your wife and two children to live on. I say this can be drastically reduced. Your mortgage payment, council tax and gas/electricity will take up no more than £1,000 max. Your wife is not working, and you will now be at home all day, so you have plenty of time on your hands and there are lots of ways you can reduce this remaining £1,500 to more like £500.

It's tough, but a real economy drive is absolutely essential. Only one car is needed - get this serviced by a mobile mechanic, and don't bother with the main dealer servicing. Make things like your own bread (and rolls, and pizza bases), cakes, biscuits, jam, meals, etc - batch bake, cut it in slices and shove it in the freezer. It's fun, and it's cheap, it contains no additives or preservaties, and it tastes infinitely better. Go shopping in the evening, where you can take advantage of all the reduced items in Waitrose, Sainsbury, etc. Buy good quality basics, not ready-prepared foods. Don't buy cheap foods, but buy good quality foods, cheaply.

Every time you go to buy something ask yourself if you really need it, or whether you just want it. You'd be surprised if you are disciplined just how much is bought because it is habit, not essential.

Get rid of the gym membership - go on eBay and buy 2nd hand equipment, use the local leisure centre, and take up running. Make do with the clothes you already have - you'll save yourself a fortune anyway because you don't need the best clothes to go to work in.

My neighbour has allotments, and in return for me doing a little weeding now and again I have access to as much free fruit and vegetables as we and the freezer can cope with, every week of the year. Raspberries, blackcurrants, strawberries, potatoes, onions, tomatoes, lettuce, and about 30 other different types of fruit, vegetables and herbs, and it's there in quantities to feed an army! Last night I feasted on a plateful of 1" thick asparagus which I'd picked a few minutes earlier - and all free.

Most allotment holders have too much stuff, and are only happy to give it away, particularly in return for an odd half an hour weeding. Anyone with a couple of apple trees in their garden will happily let you have their excess.

Don't eat out in restaurants - host dinner parties. It's cheaper, fun, and it's an opportunity for you to network. And everyone usually brings a bottle of wine, so you end up with just providing food and ambience.

My friend was in the same situation as you, and she reckoned that £1,900 was the absolute minimum she could live on per month. Two months later I had 'coached' her into being able to live happily and generously on £850. She's happier than she's been for ages, fitter and eats healthier foods (she's now horrified to think that she used to spend £6 a day on a sandwich and latte for lunch).

There's an art in being frugal, and the advantage is that you'll probably end up healthier and happier. The hardest part will probably be getting your wife to adapt. Just make sure that you always look on it as a game - a game of how much fun and frolicks you can have on the smallest outlay.

Then whatever you end up doing, the pressure on you will be minimal because you'll realise just how little you actually need to live on. And at that stage, you will be more relaxed and in a better frame of mind to decide whether trading or working (or a mix of both) is the way to go.

Skim - Do you live in Surbiton and is your sandwich and latte lunching friend called Margo by any chance? Are you married to Richard Briars? Do you keep chickens in your back garden too? lol - only kidding.

BBB -

Agree...

It comes to down how much I am comfortable in trading with initially.

I am going to have to increase my stake size substantially anyway if I intend to go full time and am aware that do so without gradually phasing it up may affect my performance..from what I have read from other peoples experiences.

This said, make no mistake - IT Recruitment is no walk in the park either.Failure rate is high (just ask ChowClown) and I have been a top fee earner in this industry for many years..the last 5 of which have been pretty much working from home and since 2001 our market has been hit the hardest, yet I have managed to make a living..and have done so on more or less a commission only deal for the past 24 months.

I am no stranger to risk...

Mrs H. has not worked for 4 years now (raising children)..the problem here is simply what she can expect to earn versus the cost of child care..