Resources to begin trading from home?

Question

Apologies in advance if this type of inquiry is inappropriate for this StackExchange. But it is a personal question, and it is about finance, so...

Anyway, here is the backstory so far - I will try to provide as much context and information about myself as possible in order to avoid vagueness and obtain the most accurate responses:

I am a 23-year old who just left the 2nd year of a PhD program for (pure) mathematics a couple months ago because my advisor moved to another country and I was unwilling to follow, and there are no other schools I would like to move to that will accept me.

Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work - I think about math problems pretty much all day, from the moment I wake up to the hours I cannot fall asleep, so often at work I would just kind of mindlessly stand around or pace thinking about these things until someone comes over and snaps me out of it.

So I have moved in with my mom since I have no money saved up nor own anything (but I also have no debt). I have decided to give up on my career goals with math (I wanted to teach/research and eventually become tenured) since it seems out of reach and not too realistic as far as expectations go in the field, and my mom also needs help with sustenance at this immediate time since we come from a below-poverty line family.

I found some books by Paul Wilmott that a professor gave me a while ago while I was an undergrad that I never even opened up, but am now considering trading/investing as a career where I can be my own boss (and not get fired for doing something I love all day) as well as something that is interesting enough to keep my focus and attention on while I wean away from math. I am willing to spend at least 12-18 hours daily studying what I need to learn (which is about the same amount of time I invested studying math when I was a student) since I am clueless about finance. I would be content with making a stable minimum wage from this, as I am not looking to become wealthy or anything, and it would be enough to support myself and my mom.

Would it be viable to begin trading with barely any initial capital (well, maybe between my mom and I we can spare $50 - $100 or something along those lines, and maybe a couple dozen bucks a month) and maintain at least minimum wage profits? Or does this industry just not offer enough monetary security (or "hedging," is it called? no idea what that means but I see the term thrown around in this context) for someone that doesn't have much money to put down? If this career idea sounds plausible, what should I begin studying to make this happen? If any clarification or more details are necessary, please let me know so I can appropriately make addendums to this post. Thank you for your time

Answer 1

Your plan won't work. Working 40 hours a week at federal minimum wage (currently $7.25 / hr) for 52 weeks is an annual income of just over $15,000. Even assuming you can reliably get a return of 15% (which you definitely can't), you'd need to start with $100,000 of assets to earn this poverty income. Assuming a more reasonable 7% bumps the required assets up to over $200,000, and even then you're dead the first time you need to make withdrawals after a mistake or after a major market downturn.

As a fellow math Ph.D. student, I know your pain. I, too, struggled for a while with boredom in an earlier career, but it's possible to make it work. I think the secret is to find a job that's engaging enough that your mind can't wander too much at work, and set aside some hobby time to work on interesting projects. You likely have some marketable skills that can work for you outside of academia, if you look for them, to allow you to find an interesting job.

I think there's not much you can do besides trying not to get fired from your next McJob until you can find something more interesting. There's no magic money-for-nothing in the stock market.

Answer 2

As JoeTaxpayer has commented, the markets are littered with the carcasses of those who buy into the idea that markets submit readily to formal analysis.

Financial markets are amongst the most complex systems we know of. To borrow a concept from mathematics - that of a chaotic system - one might say that financial markets are a chaotic system comprised of a nested structure of chaotic subsystems. For example, the unpredictable behaviour of a single (big) market participant can have dramatic effects on overall market behaviour.

In my experience, becoming a successful investor requires a considerable amount of time and commitment and has a steep learning curve. Your actions in abandoning your graduate studies hint that you are perhaps lacking in commitment. Most people believe that they are special and that investing will be easy money. If you are currently entertaining such thoughts, then you would be well advised to forget them immediately and prepare to show some humility.

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TL/DR;

It is currently considered that behavioural psychology is a valuable tool in understanding investors behaviour as well as overall market trends. Also in the area of psychology, confirmation bias is another aspect of trading that it is important to keep in mind. Quantitative analysis is a mathematical tool that is currently used by hedge funds and the big investment banks, however these methods require considerable resources and given the performance of hedge funds in the last few years, it does not appear to be worth the investment.

If you are serious in wanting to make the necessary commitments, then here are a few ideas on where to start : There are certain technical details that you will need to understand in order to quantify the risks you are taking beyond simple buying and holding financial instruments. For example, how option strategies can be used limit your risk; how margin requirements may force your hand in volatile markets; how different markets impact on one another - e.g., the relationship between bond markets and equity markets; and a host of other issues. Also, to repeat, it is important to understand how your own psychology can impact on your investment decisions.

Answer 3

Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work

This is not a good sign for day trading, where you spend all day monitoring investments. If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money. Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities. Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down.

And I agree with those who say that you aren't capitalized well enough to get started. You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging). Let's say that you make money on two out of three stocks on average. What are the chances that you will lose money on three stocks in a row? One in twenty-seven. What if that happens on your first three stocks?

What if your odds at starting are really one in three to make money? Then you'll lose money more than half the time on each of your first three stocks. The odds don't favor you.

If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund. Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information. Focusing on the math problem over other things is then what you are supposed to be doing. If you are good at that, you should be able to turn that into a permanent job. If not, then go back to school somewhere. You may not like your schooling options, but they may be better than your work options at this time.

Note that most internships will be easier to get if you imply that you are only taking a break from schooling. Avoid outright lying, but saying things like needing to find the right fit should work. You may even want to start applying to schools now. Then you can truthfully say that you are involved in the application process. Be open about your interest in the mathematics of finance. Serious math minds can be difficult to find at those firms.

Given your finances, it is not practical to become a day trader. If you want proof, pick a stock that is less than $100. Found it? Write down its current price and the date and time. You just bought that stock. Now sell it for a profit. Ignore historical data. Just monitor the current price. Missed the uptick? Too bad. That's reality. Once you've sold it, pick another stock that you can afford. Don't forget to mark your price down for the trading commission. A quick search suggests that $7 a trade is a cheap price. Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock. Keep doing that until you've run out of money. Realize that that is what you are proposing to do.

If you can make enough money doing that to replace a minimum wage job, then we're all wrong. Borrow a $100 from your mom and go to town. But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares. Starting with $100, you are more likely to run out of money within ten stocks.

Answer 4

So you're 23 with no higher graduation, certificates etc which would allow you to study / training but with a high passion for logical thinking and math?

Im 31 now, i was in a similar position back then when i was 23. The very best thoughts i want to throw you over:

FORGET IT (AT LEAS THIS WAY) - You need cash equity (not borrowed) to even get a foot in the door (read on why) . The fact that you even consider to trade with a few hundred dollar shows how desperate you're, it would very likely result in loss, resignation and mental pain.

Let me get you a reality check:

1. Trading means competing with the sharpest minds and most wealthy.
2. Trading and investing is not gambling - trading is a business (with the hardest competition (brainpower and moneypower wise) you can find on this planet). If you make 15% ROI a year the performance would be outstanding.
3. You need to be able to survive (equity wise) huge and long lasting downturns - markets stay longer irrational than you solvent.

If you think you can quadruple your money within months with ease and no risk your wrong - this mindset is gambling - don't end up as gambler.

To make 24K a year or 2K a month (taxes are not included) would mean 10% a month on a 20K account which would be almost impossible on a long run (show me a hedge-fund with that performance) - What do you do on draw down months - 3 months no profit would mean you're 8K behind - you wont make a living wit ha 20K account in a western civilization and normal lifestyle.

Big question, how do you want to trade? Everything newsfeed / latency based is very hard to compete in. So called technical systems drawing lines, fancy indicators etc are bogus in my opinion (read taleb black swan). Trading/speculation based on fundamentals is a different animal - It to be able to do that you would need to understand the market you trade and what influences it, takes lot time, brainpower , tools ready (ugh, hard to write the picture on my mind).

Im 31 years into trading now, seen so many faces come and most of them go in that time , to me it sounds like you quietly hope for a lotto ticket.

To speak about hardware, ie the tools you need depends on your trading style (again a hint that a lot more study is needed. If you're really hooked, readreadread and get in touch with people - always question yourself.

Answer 5

A good place to start is to read, such as : Robert T. Kiyosaki : poor dad rich dad. It is quite simple but it gives the good mindset to start. But moreover it is stated in the book : "the best investement you can make is educate yourself".

You current situation is quite difficcult, but don't give up on your study. From your post i didn't understand : do you have a master degree?

If you love math, learn coding and find a job in banking or else. People that know how to code AND have a good level in math worth a lot.