One question that constantly comes up, and understandably so is, When Can I Become a Full Time Trader? Being a trader is like running a business. You are the manager / owner / operator of "You, Inc. " How much capital does it take to run your business? What's your monthly P&L? How much money do you need to have in "float" in case of emergencies (like, oh, I don't know, a global pandemic that sends the price of everyday items skyrocketing?)
If your goal is to become a full time trader, where trading is your primary source of income and provides you with all of your material needs for now AND the foreseeable future, do you have a PLAN on how to get there? Do you know how much capital you need and / or what rate of return you need from your trading system and / or how many trades on average you need to generate your income target?
Let's figure out how much Monthly income you need. First, take your monthly expenses. Include things like rent or a mortgage, a car payment, utilities, gas expenses for your car, etc. and total them up. Second, take all expenses that might be annual or irregular and put an amortized amount each month into a separate checking account for when they come up.
For instance, HOA fees may be billed semi-annually. You may plan on a vacation every year. You may have to replace a major appliance every 3 years. Factor all those expenses and what it may cost as a monthly savings plan and put them into that account. These expenses would come out of that account without touching your monthly income. For example, it's easier to pay $69/month in expectation you will have to replace your fridge, stove, or set of tires every 3 years than to have to come up with an unexpected $2,500 when the fridge dies on you.
With these initial stats, you know how much you need to make a living trading... just to break even. So, what does the responsible business owner (trader) need to do? DOUBLE that number so you are putting an equal amount in savings (for a rainy day / a down month / or the "nest egg") and factor in taxes, say an additional $35% in the United States - the top tax bracket. This final number is what you should comfortably want to make to consider yourself financially free – not dependent on ANY source of income except for your efforts in trading.
Now, given how much money you want / need to live on, what type of trading performance against what amount of capital do you need to achieve this monthly desired income? How much capital do you have in your trading account? What is the Win Rate of your current trading system? How much money do you earn on each winning trade and how much do you give back to the market on every losing trade? Finally, how many trades on average does your trading system find for you each day given the hours you work your trading business?
Let's assume you have a $20K trading account, and you trade using the 1% Rule of Risk Management and the 3R rule of expectation – your Reward-to-Risk Ratio. Let's also say that your trading system is able to locate two trades per day during the timeframe that you are "working" the markets and your Win Rate is 50%. So, if you you win one trade and lose one trade each day, winning $600 and losing $200, you are netting $400 for the day. Multiply this by 20 (the average number of trading days in a month) and you will have an estimate of what monthly income you can generate from your trading account.
An important question is then, "How many trades might you take per day?"