A YouTube video by Adrian Reid (founder of Enlightened Stock Trading) arguing that the common belief you must day-trade to generate living income from markets is false. Reid explains that margin accounts let traders withdraw cash without closing long-term positions, and advocates swing/trend trading with conservative leverage and steady withdrawals that are smaller than account growth. He promotes a free two-day Market Mastery Bootcamp as the next step for systematic trading instruction.
If you've ever thought about trading for a living and generating an income from the market, then you've probably fallen victim to the income trading fallacy. What most people believe and what the industry tries to make you believe is that in order to trade for income you need to be a day trader. But what they don't tell you is that the reason they want you to be a day trader is because the people teaching you are getting referral freeze from the broker they've introduced you to. And the more frequently they can make you trade, the more money they're going to make in the form of commissions and kickback. So what they do is make you believe that order to generate an income from the market, you have to trade very short term, trade very frequently and use a lot of leverage. This makes them a ton of commissions, making them rich, but causing you stress, frustration and mountains and mountains of trading losses. So what is the trading income fallacy really? Well, basically the idea that you have to close a trade out bank profit so you can withdraw money from your account in the form of income is just completely wrong. Because in reality most traders have a margin account. And what that means is that you can withdraw cash from your account at any time whether you've closed a trade or not. So for example, I trade many long term stock trading systems which might hold their positions for weeks, months or even over a year in the case of a mega trend in stocks. But if I'm holding for that long, how can you withdraw income from the market in order to live and pay your bills? Well, the trick is you actually don't need to bank your profits in order to take money out of your account if you have a margin account. See the way it works is as your account grows, you've got more and more margin capacity. And so you can take a little bit of money out of your account to pay your bills and leave your existing positions open. You don't need to close the positions or bank your profits just to withdraw money from your account. Just not true. So trading for a living isn't necessarily day trading. In fact, day trading is probably the hardest way to make a living because it's super high stress, it has a very high burnout rate, most people don't succeed and the margin for error is really, really small. You're far better off swing trading or trend trading in longer time frames so that you have bigger average profit per trade and a higher margin for error. With these longer term strategies, the way you draw income out of the market is by growing your account in the form of profits, capital gains from your systems. And then as you need monthly income to live on, all you do is withdraw a little bit of money and that puts your account into a little bit more margin. So really, what you're doing when you're trading for a living is converting your capital to income by withdrawing it at a steady rate that's slower than the rate at which you generate profits from your trading strategies. So the secret of trading for a living and generating income out of your trading account is to grow your account faster than you withdraw money in the long run. As long as you withdraw less money than the growth you generate, then you can survive and generate an income from your trading. You just don't need to be a date trader. In fact, it's a horrible way to make a living because you're staring at the charts all day for hours on end. It's high stress. You've got to make tons of decisions, There's a very high incidence of burnout, and most day traders just don't make money. If you want to succeed long term as a trader, you've got to calm things down, lengthen your time horizon, and take on trading systems that give you a much bigger margin for error that are psychologically easier to trade. Now, the trick to making this work is not using too much leverage. If you max out your leverage with your trading positions, of course you can't take out any more cash without generating a margin call. But as long as you use very conservative leverage or no leverage when you take out a little bit of money to pay your bills, then you're able to keep growing your account without closing your positions. Now, all of this, of course, assumes that you have a consistent, profitable trading strategy that you have absolute confidence in. And that is the missing link for most traders. So if you want to learn how to systematically extract profit from the market, what I want you to do next is click the link in the description below and enroll for Market Mastery Bootcamp. It's a free two day live training event that I'm running coming up really soon, where you're going to learn all about the fastest path from launching your trading career to mastering systematic trading. We're going to cover every step of the way, exactly what you have to do in order to become a successful, confident stock trader. My name is Adrian Reed. I'm the founder of Enlightened Stock Trading. Click the link below, register for Market Mastery Bootcamp and I'll see you there. Bye for now.
