Many individuals contemplate leaving their jobs to engage in trading, influenced by the optimistic portrayal of markets and trading on social media. Someone diligently working for a consistent salary may feel insecure about their current situation, perceiving a lack of control and extensive working hours. The allure of social media posts showcasing individuals making significant profits in a short time, such as earning Rs. 50,000 in 15 minutes during a vacation, prompts the question: Why toil for an entire month when the same amount can be made in a fraction of the time through trading?
The critical question arises: should one quit their job to pursue trading full-time? The answer hinges on two key factors:
1) Capital:
a) Before contemplating leaving a job for full-time trading, it is essential to possess sufficient capital capable of outperforming the income derived from employment.
b) Assuming a capital of Rs. 25,00,000 and a projected 20% return from trading, the annual earnings would be 5L. If one's current job pays an equivalent amount, it may not be sensible to abandon a stable income for the uncertainties of trading.
c) Shifting from a secure income to an uncertain one necessitates a substantial difference in potential rewards. Refer to the attached table for a clearer understanding.
2) Statistics and Reality:
a) Trading operates as a zero-sum game, where the gains of one participant come at the expense of another. Success is not guaranteed for every trader.
b) Disturbingly, 90% of trades result in losses in the stock market (see attached image).
c) For 99% of individuals, beating the returns of a bank FD is unattainable through trading, making it financially imprudent to leave a job for such uncertain prospects.
d) Being in the top 1% of traders, making a 20% annual return, requires confidence and skill. Consider whether you are certain of achieving this status upon quitting your job.
3) It's Not Only About Money:
a) Monetary considerations should not be the sole determinant for leaving a job. If dissatisfaction exists, consider changing careers or exploring entrepreneurship.
b) If the motivation to quit stems solely from seeing others on social media succeed in trading, reconsider your decision. Common trading myths include the belief that trading full-time guarantees higher returns and that more capital ensures profitability.
The reality of trading differs significantly from these myths. Investing, unlike full-time trading, can be pursued alongside employment. Before deciding to quit your job for trading, carefully reassess the situation.
16 сен 2024
