My goal with my bots from the start was to generate a monthly income that would more than replace the income of my wife and I put together. While that is my goal, that is not everyone’s goal.

A friend recently contacted me about pulling money out of his 401k and putting it in a brokerage account. Once the money was in the brokerage account, he would set the algo-trading bot up to trade the account. Below are a few of the possible scenarios he could encounter.

CONS

• If the algorithmic trading bot does less than 2% he may lose money. I have never had a bot make worse than 3% per month. This is the risk he needs to be willing to take.
• It is unfortunate this is a path he is considering, but if it helps him cover some immediate needs, I applaud his resourcefulness in seeking out this option.
• Depending on his tax bracket, he will be paying the tax on the gain. Because international brokers are necessary for appropriate leverage to operate these algo-trading bots, you won’t get any IRS-related tax documents. You will need to pull reports from MT4 or the broker.
• If you are not very technical, this process might add stress that is not worth it.

PROS

• It helps him get past some immediate financial challenges.
• He has already paid for the bot. (It was the early release price, so he got the bot at a very reasonable price.) As long as he has enough principal to cover the monthly cost, he might as well put it to use.
• If the bot does 5%, he would make 5% that month.
• I don’t think there would be any wiring fees from the bank. (My bank allows me 3 per month.) I believe all cost are included in the table. If there are any other fees, this would further decrease his monthly profit.

Questions? Always welcome.