As a dividend investor looking to achieve financial independence and retire early, my number one goal is to invest as much money as I can into high-quality dividend-paying stocks, such that I could one day cover the entirety of my monthly expenses with the passive income generated by my portfolio. As such, I am always on the lookout for new ways of earning some extra capital every month, in order to accelerate the rate of accretion of my dividend snowball, so to speak.
Now, first, there is of course my paycheck. By increasing it, it would have an immediate and direct impact on my portfolio’s growth since I would have more disposable income every month to throw into the market. However, increasing one’s paycheck is easier said than done, and there is only so much you can increase your salary by before you hit a ceiling.
Second, there is freelance work. I occasionally moonlight as a web developer/designer for individuals and small businesses who are in need of simple, functional websites and/or blogs. This pays quite well, but it is sporadic and demands a lot of extra hours on top of my regular work days, which can quickly burn me out. Also, I’m sure that any fellow web designers out there can attest to the frustration that can sometimes arise from dealing with non-tech-savvy clients who don’t realize that “that little change” or “that little extra feature” they forgot to tell you about at the beginning of the project will actually require re-coding their site from the ground up in order to implement it. So while freelance work can provide a decent chunk of extra change, it’s not necessarily the most sustainable and enjoyable way of going about it.
Third, there is Zero to Zeros. The blog has been picking up in traffic quite a bit as of late, and it has grown far beyond anything I expected since I launched it in March of this year. While the revenue I currently generate thru the blog is pretty trivial, it is consistent, and slowly but steadily increasing. So, as ZTZ continues to grow, there is no doubt that it will provide more and more passive income for me; however, for the time being, it is definitely not something I can rely on to boost my savings.
So, where does that leave me? Well, over the last couple of months, I have been spending a considerable amount of time educating myself on the topic of day trading. It is no secret that the art of speculating on the market in an attempt to make a profit can prove to be quite the lucrative endeavor; the problem is that, if approached incorrectly, it can just as easily spell the end of your bank account’s life.
I think it is often said that 95% of people who take a shot at trading end up losing money. However, since random internet statistics pulled out of someone’s rectal cavity without any evidence backing them up don’t intimidate me, that’s kind of a moot point as far as I am concerned. At the end of the day, my philosophy in life has always been that, if someone else can do it, why can’t I? If everyone said “I could never be an actor”, or “I could never be a professional athlete”, or “I could never be a neurosurgeon”, or “I could never get ripped and look sexy as fuck”, or, well, you get the point…then we would have no actors, no athletes, no neurosurgeons, and no fitness models. Yet we do have these types of people. So what makes them so different than you?
Anyway, the point is that I am going to try my hand at day trading. My market of choice will be the forex market, for a few reasons:
1) Unlike the stock market, the forex market is open 24 hours a day, 5 days a week, giving me a lot more flexibility as to when I can trade.
2) Unlike in the stock market where you are required to have at least $25000 in capital in order to day trade, you only need a few hundred bucks in order to start trading forex.
3) Unlike in the stock market where the maximum leverage you are offered is 2:1, in the forex market you are offered 50:1 leverage, allowing you to make huge profits (and yes, huge losses of course) with little capital.
4) Unlike the stock market where there are thousands of stocks you could trade, the forex market only has about a dozen currency pairs that are worth trading, thus making it a lot easier to manage.
Like I said, I’ve been educating myself on the topic of forex trading for the past few months, and I’ve spent a lot of time outlining a trading plan, fleshing out a trading strategy, and developing an effective risk management system to hopefully get started on the right foot.
My plan is to paper trade with virtual money until the end of 2015. If, by the end of the year, I have managed to be consistently profitable, then I will slowly move up to live trading with small amounts of capital that I will set aside each month specifically for trading (a ‘day trading fund’, if you wish). The end goal is to eventually generate a decent little stream of side income from day trading that will be used entirely for the purpose of furthering my dividend investing strategy.
I started paper trading last Wednesday, and so far I have made a little over $1100. Beginner’s luck much? Perhaps. Only time will tell!