Last Updated on 17 November, 2020 by Samuelsson
With the rise of the gig economy and the labor market becoming less and less location dependent, more and more people strive to become digital nomads or trading nomads. They simply want the freedom of being anywhere in the world, while keeping a stable flow of income.
With this trend, we’re also starting to see how more and more people want to trade to support a nomadic lifestyle that allows them to do whatever they want, whenever they want.
A trading nomad is a person who travels around the world with trading as the main source of income. The best trading style for a trading nomad indeed is algorithmic trading, which means that the trading is automated, saving you a lot of valuable time to be spent doing the things you like!
In this article, we’ll look at why algorithmic trading is the absolutely best option for somebody who wants to trade for a living while traveling the world. We’ll also look at common challenges, and the equipment you need to start your new life as an algo trading nomad!
Let’s begin by looking at why you might want to become a trading nomad!
The Advantages of Being a Digital Nomad/Trading Nomad
In addition to wanting to travel the world, there are several reasons why more and more people consider becoming trading nomads or digital nomads.
One of the reasons is that many want to be in charge of their own time, not only for the sake of being independent but also since they believe that they’re more productive that way. For example those time-consuming commutes to and from work can be skipped, which frees time for other things!
However, the allure not only stems from factors like these, but also from the realization that a nomadic lifestyle, in fact, could be favorable from an economic perspective too!
Let’s explore some of the most common reasons behind the decision to become a trading nomad / digital nomad!
1. Location Arbitrage
When you live and work in one city, your economy is highly dependant on the living costs in your area. You might need to spend a lot more money than you feel is necessary just to be within commuting distance to work, if you’re living in one of the bigger cities.
For example, some of the most expensive cities in America, like San Francisco and New York, may cost you up to nearly 2 times as much as the US average. That’s a significant difference, which will have a huge impact on your living expenses.
Now, many people in these high-cost areas and cities are accustomed to the price levels, and cannot see how they are going to be able to provide for themselves with less money than their current income.
And this is where location arbitrage comes into play.
As a digital nomad, you have the freedom of living wherever you want, and since the cost of living depends hugely on the location, you could drastically reduce your costs of living by moving to a cheaper city or country.
This means that you could be living quite well, even on what would be considered a low salary in your hometown or country.
Of course, this also applies to those who decide to become trading nomads. Your trading capital and returns will buy you a lot more in countries like Mexico and Thailand, than in the United States.
For many, the realization that location arbitrage is a viable strategy is an eye-opener!
2. Less Stress
Many people decide to become digital nomads or trading nomads since they want less stress in their lives. They want to have control over their own time and do things in the order that works best for them.
Being a trading nomad or digital nomad doesn’t necessarily mean that you work less. However, you can arrange your schedule so that it fits you!
3. Becoming More Productive
Being stuck at a 9-5 job, implying that the hours worked is what counts, is not a recipe for productivity.
As a digital nomad or trading nomad, you will be much more productive because of the simple reason that you want to get your job done to explore your surroundings. When the end of your workday isn’t dictated by the hours you work, but by the work you get done, you’re definitely going to get some extra motivation to remain focused and productive.
In fact, according to a study, the average worker only works for three hours each workday, with the rest of the time being spent on unproductive things.
Of course, figures like these should be taken with a grain of salt, but regardless of the exact statistics, it showcases something interesting. Your productivity isn’t decided only by the hours you work, but as much by your focus!
And as the only thing that counts for most self-employed people is the results you deliver, you may get more time to do other things!
4. Better Life Balance
One of the most significant changes people wish to make by adopting a nomadic lifestyle, is to totally rearrange their attitude to work. They want work to become a means to an end, rather than the end. The goal is to travel and see the world, which is enabled by the money you earn. Not like many experience their daily lives, where work is needed just to maintain the most vital aspects of life.
Negatives of Being a Digital Trading Nomad
Even though there are great benefits to being a digital nomad or trading nomad, those who have tried the lifestyle often bring up a couple of challenges that could make the nomadic way of life less pleasurable. Here are the two main points that are brought up often.
1. It’s Hard to Bond With People
Some people who have lived the nomadic lifestyle for some time, point out that it becomes lonely after a while, even if you’re constantly making new acquaintances on the go.
The desire for connecting with other individuals is deeply rooted in us as humans, and could be hard to satisfy as a digital trading nomad. You’re constantly moving from one place to another, and seldom get to know people beyond the superficial level.
At first this might not be an issue, but for most people, the sense of loneliness starts to creep in after a while and becomes a major concern!
2. It Can Be Tiring
While traveling and seeing new places indeed is fun and exciting, it does take a toll on you. Changing the setting and culture at regular intervals could become stressful after some time, as you feel like you never have the time to settle down anywhere.
The two issues outlined above are very similar to each other. They both stem from the fact that you’re moving too quickly to bond with the culture or people that you meet. At its core, it’s about feeling part of something more than the suitcase you carry between the places you visit.
After some time, many digital nomads and trading nomads report that a solution to this issue is to establish some form of base. Typically it means that they start to spend more time in a particular city, and return to it at regular intervals. Doing so, they manage to build lasting friendships and relationships with people and satisfy their need for deeper relations.
Digital Nomad Vs Trading Nomad
Now, you might have noticed that we’ve used the words “trading nomad” and ” digital nomad” quite interchangeably. Well, from now on, this article is going to be about living as a trading nomad, and nothing else.
However, the issues we just discussed could be said to be even more relevant to a trading nomad than a regular digital nomad. As you travel and meet with new people, very few are going to understand how you earn your living through trading, and that could create a distance between you and the people you meet.
It’s easier to tell somebody that you’re working with marketing, as a content writer, or any other common Internet-based profession than as a trader. And then you may even have a topic to discuss for the rest of the evening.
Having said this, let’s start to see what type of trading that’s best for an aspiring trading nomad!
The Best Trading Form for a Trading Nomad
Living a nomadic lifestyle is quite different from having a normal job. One of the biggest differences is that you don’t have the same strict schedule as a regular worker and may arrange your schedule to your liking.
As such, you want your work to be flexible so that you have the option of working whenever you find the time. Arriving at new destinations and exploring new places isn’t very compatible with having a strict schedule that has to be followed at any price. One of the big pleasures of living as a digital nomad is to be free to set the schedule yourself.
Keeping this in mind, many trading styles don’t fit that well with the life of a digital trading nomad, since they require that you constantly monitor the markets.
And how much pleasure is there in being trapped at various hotel rooms all day long, because you had to pay all your attention to the markets?
Not that fun, right?
Algorithmic Trading Is the Solution!
Well, luckily for all of us, there is one trading form that’s especially suited for anybody who wants to pursue a nomadic lifestyle, namely algorithmic trading.
Here at The Robust Trader, algorithmic trading is our main priority, and what we do the most. It’s a trading form that allows for superior risk handling through diversification across many markets, in turn leading to more profits.
And at the same time, it doesn’t require you to be present all the time when the markets are open. All you need to do is to check in on your trading strategies, that the computer trades for you, once in a while.
In that sense, algorithmic trading is the perfect option for a trading nomad who wants to decide when to work and when to be free. Most of the work is to build the trading strategies that the computer will auto trade for you. This can be done anytime, and isn’t dependant on the opening hours of the market.
Hopefully, you’re now as convinced as we are when it comes to the superiority algorithmic trading over other trading styles. There indeed are other trading styles, like swing trading, that could work as well. But none carries the same possibilities for the digital nomad as algorithmic trading.
We sincerely believe that the number of people who resort to algorithmic trading in the coming years only will increase. More and more people are starting to realize the immense benefits of automated and quantified trading, and are leaving old and outdated discretionary methods behind!
How to Become an Algo Trading Nomad
Let’s now look at the steps you need to take to start traveling the world as an algorithmic trader!
Step 1: Learn Algorithmic Trading
Of course, the first thing you will need to do is to learn algorithmic trading.
Now, for a beginner, this could be quite hard to do. Learning the steps to building a strategy, making sure it works in live trading, and managing live positions will take a lot of time. As such it might be wise to take an algorithmic trading course to significantly speed up the learning process.
Here at The Robust Trader we offer what we believe is the most comprehensive algorithmic trading course on the market.
However, if you wish to study on your own we indeed have a lot of free resources available that will help you a great deal!
We especially recommend that you start with our massive guide to algorithmic trading. There we have included a lot of information that is of great value to anybody wishing to get started quickly!
Then it’s all a matter of putting in the hard work that’s needed! Building trading strategies is laborious and time-consuming but at the same time a very rewarding occupation! We indeed enjoy spending time learning to know the markets and their special quirks, and think you will too!
Step 2: Set Up Your Infrastructure
Once you have strategies in place and know how to trade, it’s also important to ensure that you have the tools you need to as safely as possible run your trading business while traveling.
This means that you need to have a couple of things in place.
Let’s cover them one-by-one.
1. A Trading Computer
In order to build trading strategies, you’ll need something that’s powerful enough to handle various backtesting software and charting programs. In addition, you want it to be lightweight and portable.
We recommend that you get a 17-inch sized windows based computer. While some backtesting software will run on a MacBook, you will limit yourself from using some of the best alternatives on the market, such as TradeStation, Multicharts, or Amibroker.
In our guide to trading computers, we take a closer look at the important things to keep in mind when selecting a trading computer.
2. VPS Virtual Private Server
In algorithmic trading, it’s the computer that runs the trading for us.
However, since we’re going to travel a lot, we need to ensure that our trading isn’t interrupted by unexpected events like hardware failures or internet disruptions.
The best way to do this is by renting a virtual private server. You can find some good VPS providers that don’t charge more than perhaps $10 dollars a month, and that will host your live trading platform.
Then, the only thing you need to do is to check in on your VPS server regularly to ensure that everything runs smoothly!
3. Redundant Connections to Broker
This is something you need to think about twice. Having all your trading on your VPS means that you’re extremely reliant on the internet connection. You need to ensure that you can reach your broker, no matter what happens.
Making sure that you have redundant internet connections is one way of doing this. For example, you should make sure that you always can reach your servers through your smartphone and computer.
Another good thing to keep in mind is to always have the phone number to your broker at hand, in case you happen to lose the connection to your VPS. The last thing you want to happen is to find yourself in the midst of a market crash, unable to get out of your positions.
4. A VPN
Nowadays you can find free wifi almost everywhere. While this is great, you should be careful with your data on public wifi networks, since you run the risk of having your unencrypted data stolen by other users on the same network.
Fortunately, there is a quick fix for this. You just need to get a VPN, which will encrypt the data.
Things That Must Be In order before You Leave
When you have come so far that you feel like your trading can support a nomadic lifestyle, it’s finally time to take the leap and travel the world. Still, there are a couple of things that you should make sure to have covered.
1. Health Care
Having valid health insurance is vital. In the US, personal health insurances use to cover life-threatening emergencies, while other incidents aren’t included.
Just make sure to know the coverage of your current health insurance before you leave, so that you’re always covered if something happens to you!
Another thing to consider is taxes. In most countries, you don’t pay any taxes if you stay there for less than 6 months. However, while this might not cause any issues for you, there might be certain deductions for you to take as a trading nomad.
Be sure to check with a professional before leaving, to get the information that’s relevant to your situation!
3. Consider Getting a Physical Address
Being an algo trading nomad means that you’re always on the move from one place to the other. As such, receiving mail such as bills or other vital documents on time will be quite difficult.
If you own your own place, then you could use that as your mailing address. Then you just could ask somebody you know to get by once in a while and forward the mail by taking images.
However, if you decide to not keep your own place to save yourself some money, you definitely want to consider renting a physical mailing address or use an address belonging to a friend or family.
If you decide to go for a solution where you rent an address, make sure that they send email snapshots of incoming mail. That way you will always be kept updated, regardless of where you currently reside.
Final Tips for Algo Trading Nomads
As an algo trading nomad, trading is your principle income that supports your lifestyle. This puts you in a different situation than somebody who works for a company or as a freelancer.
While these groups also have some uncertainty about their incomes, they arguably have more control over their situation than the typical trading nomad. A digital nomad can look for new work in his or her field if the main employer decides not to continue with their services. However, as an algo trading nomad, you’re constantly at the whim of the markets.
Now, don’t get us wrong. Trading done correctly will provide a quite regular income stream if you look at longer time periods. However, you could in fact be left in a drawdown for quite long periods before the account heads higher again.
As such, it’s important to be prepared not to live in constant worry over how you’re going to be able to cover your living expenses. Here are some of the things we recommend you that you do!
1. Have Realistic Expectations of Returns
If your counting on a 50% yearly return only to cover your expenses, your career as an algo trading nomad won’t be longlived.
While these returns certainly are possible, you want to have some margin of safety to ensure a smooth ride. Returns can vary greatly from year to year. For example, an average annual return of 50% percent over a five year period is definitely going to include some over and underperforming years.
What we recommend that you to do, is to only count on getting perhaps half the returns that you expect to get. That is, only expect 25% in annual returns if you believe you’re going to get 50%.
That way you’re also letting the capital grow if you hit your expected return, which means that each year that passes decreases your withdrawal rate as a percentage of the total account equity!
2. Have Your Yearly Expenses Covered
What you really should do before embarking on your new life as an algo trading nomad, is to save up enough money to make it through your first year. In trading, you never know if you’re going to make money this month or the coming month.
Having the constant stress to make money that monthly withdrawals bring certainly is something you want to avoid. Both for the sake of your personal well-being, and trading performance!
Being an algo trading nomad is a wonderful experience. You get to travel around the world, and have your expenses covered by your trading strategies.
Just be sure to prepare carefully before you go, and consider the things that we’ve covered in this article.
In case you want to read more about algorithmic trading, we recommend that you have a look at our massive article on algorithmic trading!