So you’ve made something of yourself and are now consistent with your trading. You can come in with the peace of mind that you have the ability to take a certain amount of money from the market.
The big question is, now what??
Its very easy to imagine spending your millions on Ferrari’s and Mansions, but there is a big possibility that you might now make it that far if you don’t manage your spending properly when you start making your consistent gains.
So how should a trader spend his trading profits when he/she starts making pretty good money??
1.) Wire Out Certain Amount of Money Every So Often
This is 1 of the top mistakes I see a lot of intermediate and even professional traders making.
The reason why its so important to wire out money so often is to keep your trading in control. I have seen traders slowly build there account diligently and patiently,just for one trade to come along and blow there account.
The scenario that usually happens is the stock doesn’t go in there favor, but they decide to throw all their rules out of the window.
They hold on for dear life as there position evaporates,but instead of blowing up their $30,000 account, they blew up their $100,000 account.
The person that contentiously takes money out and puts it in savings or other investment opportunities will always have the option to blow up an account and still get multiple chances add more money to participate.
The trader that has all his equity in his trading account will suffer immensely if he ever blows up his trading account.
2.) Real Estate
Its not a coincidence that many real estate professionals eventually put there money into stocks or options, and stock traders and investors put there money into real estate.
I always recommend taking a portion of your trading profits and putting it to real estate because real estate is one investment that will not disappear.
In my opinion real estate investing can also be safer in most respects. Its nice to have some passive income coming in every month so that you don’t have to rely so heavily on trading profits.
And because you don’t rely so much on trading, it can give you the ability to perform better in the long run.
3.) Find A Place To Live/ Pay Off House
This is sort of related to #2, but this is talking more about getting real estate to live in.
One thing my mother told me when I was a child was that no matter what happens, “whether its losing a job, being sick, no transportation or no food, she will always have a place to lay her head at the end of the day.”
Meaning, because she paid off her house, she will always have a place to live.
A famous real estate stated that “no matter what happens, there will not be any more earth that is made”. So if you get the opportunity to acquire a piece of land or property, than you should jump at the chance.
Its my belief that if you secure a place to live, this will also take away tremendous stress while trading.
There is nothing worse then losing a ton of money from your account and it affecting your living situation.
This doesn’t mean that you rush to go find a house or an apartment, but you know when the time is right.
And when that time arrives, please take up some money from your account and take care of that area of your life.
4.) Pay Off Debts and Loans If Possible
Also sort of related to #3, this has to do with paying off school debt, credit card debts, car loans etc.
Imagine being in a scenario where you’ve made well enough money to take care of your outstanding expenses, but refuse to do so. And instead keep all that cash in your account.
Remember anything can happen during trading.
What happens if you get stuck in a halt that lasts for weeks like “LFIN” Stock??
And it opens 75% lower than you entered.
You are going to wish you had put some money aside.
Don’t be greedy. I always say trading is an opportunity to make money to funnel into other things. Whether it be safer investment vehicles or even if you only want to pay off debts, or just save for a rainy year.
Don’t work this hard to make money and have nothing to show for it because you kept all of your eggs in one basket.