Re: GEN - Lifestyles of the Rich & Famous Real Traders

[TRaffertu@xxxxxxx]

Subj:	Re: GEN - Lifestyles of the Rich & Famous Real Traders
Date:	97-11-05 19:04:05 EST
From:	TRaffertu
To:	cliffsch@xxxxxxx, realtraders@xxxxxxxxxxxxxx

        Hi Cliff & RT's,

         Thanks for the great responce.

          You wrote:  "One very important item is, try your best not to "need
the money" from trading as you make the transition...  Use the transition
period to build base equity so that when you really turn it on fulltime,
 there is plenty of cushion."

           I agree.  Most financial planners will tell you to have about 6
mo. income in reserve for emergencies.  This may be fine for someone with a
steady job, but I think it would not nearly be adequate for an independent
trader.  As a starting point I would like to have 2 years living expences in
reserve (excluding trading capital).  Any thoughts about this would be
appreciated.

          "If your trading is very sucessful, take money out, into TB or CD
at bank separate from brokerage. Let compounding work for you without any
attention needed."

            I was thinking of laddering CD's ( 6mo, 1 yr, 18 mo, 2 yr) so
that the funds would become available if necessars and if not roll them into
the longest expiration.  Are there any other methods that would produce the
same results?  RT's, any ideas?

            "Get in the mindset that you are operating a business."

            Are there any advantages/disadvantages to actually incorporating
vs. sole proprietorship?

             "You have fixed costs, variable costs, and your business must
generate a rate of return to sustain itself and grow. Set up proforma budgets
during the transition period, with the goal that they will become your
operating guidelines later."
           
              I am dusting off my old copy of "Quicken".  Now to convice me
wife about budgets...

              "Allocate time and money for R&D because whatever way you trade
now won't work as well in the future, I guarantee it."

              This is somthing I had not thought of, but I deffinatly see
your point.  Are there any other "hidden" costs to trading for a living?

              "...make sure your recent success is not simply because of the
bull market. This kind of objectivity and self-critique is good for you
always."

               This is good advice for any trader.  I feel comfortable going
short (I whent short Fri 10/24 and held to near close monday), in fact this
is one of the reasons I am considering making the change to trading for a
living.

               "let me know when you buy the first porsche."

               Thanks but during the next 2 yrs. I plan to reduce my living
costs, including paying off my 2 yr. old Dodge Caravan.  I'll wait for thr
Porsch untill I start selling tapes and giving seminars, thanks.

                                     Good luck and good trading,
                                               Ray Raffurty

P.S.  Any other RT's have thoughts on the above or related issues are welcome
to respond.