Can I Quit My Job and Trade Stocks?

Can I Quit My Job and Trade Stocks?

Reading Time: 9 Minutes

Many dream of quitting their full-time job and trading full time in the stock market; this is particularly true for those who want to trade short term: day traders and scalpers.

Of course, whether you can quit your day job and trade stocks depends on one’s personal situation. Furthermore, to become a successful trader, one must acquire a unique skill set, including a proven trading strategy, a well-defined risk and money-management system, and a strong understanding of the psychological elements of trading with real money.

If you are a beginner, quitting your job to trade is often unfeasible. This is akin to asking someone if they can quit their job and become a teacher after studying for two months. As with other professional occupations, trading profitably and becoming successful takes time, patience, education, and dedication. Importantly, learning to trade successfully can take years, though a seasoned mentor can certainly speed things up and help you avoid the pitfalls many newer traders succumb to. On the other hand, a trader who has studied the financial markets for three years and has been trading a small live account with strategies that have proven to have an edge could eventually look to venture into trading stocks, increasing their account equity and trading either as a part-time or full-time venture.

As you embark on your trading journey, you must also understand that we are all unique and have different goals and commitments; trading is not a one-size-fits-all situation. This is why it is regularly recommended to begin trading through a demo trading account, a platform designed to offer real-time conditions using simulated funds.

Trade From Home

Trading from home is often considered a major benefit for stock traders—they no longer have to sit in traffic or ride the train to get to the office, for example. Nevertheless, while some prefer to trade from home, it does have its pitfalls. Trading from home can be a lonely endeavour, so you often see many professional traders conducting live trading sessions and providing trading courses.

Stock Markets

The stock market can be a confusing beast for many new traders, abundant in puzzling terminology and various trading strategies.

First and foremost, stocks and shares are terms often used interchangeably, but there is a difference. A share represents a unit of ownership within a single company, and a stock is simply the issuing company: Apple, for example. Sometimes, however, you will find that some also refer to stocks as holding multiple shares across different companies.

In a nutshell, stock markets (or equity markets) are a forum designed for the issuance and trading—buying and selling—of company shares through a stock exchange or an over-the-counter (OTC) market. Common shares and preferred shares represent two of the most common share types. The former receives voting rights and may receive dividends depending on the issuing company. The latter, on the other hand, are like common shares, though they are also akin to a bond.

One also usually refers to stock indices or indexes when discussing stock markets. Put simply, a stock market index tracks the performance of a basket of stocks. Take the S&P 500, for example, which tracks 500 (a little more than 500 actually) of the largest companies listed in the US; it is thus used by many to gauge the overall health of a stock market. 

Contract for Difference (CFD) Market

A Contract for Difference (CFD) is a contract (or agreement) that allows two parties to trade financial assets based on the price difference between the entry and exit prices. If the closing price exceeds the opening price, the seller will pay the difference to the buyer, representing the buyer's profit. The contrary is also true; if the current asset price at liquidation is lower than its value at the beginning of the contract, the seller, not the buyer, will gain from the difference.

Although CFDs might initially appear quite complex, they are one of the most accessible and convenient methods for trading stocks. It is also crucial to understand that CFDs are always cash settled. There is no physical delivery of the underlying asset that you might see in the futures and options markets (though this is also rare).

The Bottom Line

Can you quit your job and trade stocks as a full-time trader? Hopefully, at this point, you will understand that the answer to this question is subjective, depending on not only one’s trading experience but also their personal and financial situation.

Trading professionals are passionate about the financial markets. They enjoy learning. They embrace the process. If you do this just for the money, trading stocks for a living is unlikely to come to fruition.

Key takeaways:

• Understand why you want to trade; what are your goals, and are they realistic?
• Use a demo account. They help new traders familiarise themselves with the platform’s features and back-test (and forward-test) a trading strategy. You can also back-test non-discretionary trading systems using MetaTrader’s Strategy Tester function. FP Markets offer demo accounts on some of the most popular trading platforms, including MetaTrader 4 (MT4) and MetaTrader 5 (MT5).
• Embrace the learning process. Understand that it is not just a trading strategy that’s required to trade successfully; it is also an understanding of the mind and risk management (and learning methods to mitigate risk to the best of your ability)