How much Time do I need to Dedicate to Trading?

Q. How much do you need to research everyday to day trade?


A: The traders I know who day trade put in several hours a day, some of this time is spent studying the markets, some consists of individual research. You should approach day trading as a business really - it is a demanding profession and if you do not have the time to day trade you should not trade at all - there is simply no shortcut (don't trust anyone trying to convince you otherwise...). Learning to read and translate price action takes time and you need to get exposed to many different price patterns before even thinking about jumping into the bandwagon. And lest I forget if you decide to day trade you can forget about the fundamentals, you will save some time here - your best chance is to find someone who has been in the trenches and who makes a living from this activity. A trader who would be willing to teach you how to proceed as otherwise it is just very hard...

Q. But how many hours a week do you dedicate to trading?

A: Answer by MTG. Depends how you measure them. I don't sit at a screen continually. Most of my positions nowadays (at present 15 stocks) are quarterly spreadbets, plus a few conventional shareholdings. On weekday mornings I log on sometime before 7:45am to see what news items came out at 7am, in case they affect my stocks. If they did, I might be online or on the phone after 8am to adjust position sizes. Or not. I leave my portfolio on screen until about 8:40am (by when some reversals of initial movements will have kicked in) but I am doing other things around house and garden, not watching the whole time, and I will look again at/after 9:30am when official government economic figures are mostly released - in case they have any bearing on anything of mine. Ditto 2:30pm when the US market kicks in.

Around 4pm I will check all positions and possibly adjust or close some. Between 9:30am and 3:55pm I am mostly doing other things, and only glancing at the screen when passing by. Though if I do stop by, I will likely catch up with emails and bulletin board discussions at the same time. Some days I go out or switch off between 9:45am - 3:55pm. Occasionally I'll be out all day and not checking. Every few months I might find myself clearing the decks completely, and start again days/weeks later.

Catching up with charts and news etc is something I do late evening or into the night, or not.

So, total hours of actual trading activity are very few. Time spent intermittently watching or checking will vary a lot. Hours spent on research are equally difficult to quantify precisely. That might sound like I'm copping out of answering your question - but it's more to do with me not logging my hours. Overall, it certainly involves fewer hours than any normal job I ever had. It feels like a part-time flexi-hours job. I could eliminate the monitoring time by employing pre-arranged stop losses, which is sensible for some but doesn't always suit me.

My portfolio is balanced in such a way that - if called away urgently for a day or two - I am unlikely to suffer intolerable damage.

Q. The market I'm looking to trade is open during the night!

A: The alternative is to perhaps identify which markets trade during the hours you are awake - and trade them from where you are (with this internet thingy one doesn't have to actually go there). Assuming you need an hour or so to rub your eyes, open the mail, etc., a market that opens at 1pm (our time) would seem ideal. (You could of course wait till 2:30pm UK time, when the New York market opens - but you might have to find something else to do while waiting).

Q. My goal is not to be someone who is staring at charts all day...

A: This business does require a lot of attention. If that's not really where you want to be right now, then I would suggest you against day trading - swing trading might be a better fit as it would be difficult to daytrade without constantly looking at the charts especially if your target is to make serious money...

Q. I'm doing loads of money spread betting but the thought of sitting in front of a computer and trading for the rest of my life depresses me...!

A: Answer by MTG. Don't do that then! If you are doing so well that you have more cash than you want (congratulations on that by the way), you could progressively channel that surplus capital into steadier investments that don't require you to sit at a trading screen. It sounds a bit daft to be going about the job in a way that doesn't please you, and achieving an end result that doesn't suit you. So change it.

After my first 7 years of trading/investing fulltime, I deduced that I was getting good enough at it to be able to condense the amount of time spent doing it, and free up some time for the other things in life. I calculated that (at a push) I ought by now to be able to achieve a (modest) fulltime income from working at it one third of the time. I looked at whether this might best be done by working one third of each weekday (which works for some efficient traders), one third of each week, a third of each month, a third of each quarter, a third of each year, or one year in three.

Because of the type of trading I like to do (mostly spanning several weeks or a couple of months, plus a few brief trades and a few longer ones) I found my best plan was to shut myself indoors during the wintry third of each year (Nov-Dec-Jan-Feb) and aim to generate enough during that screenbound spell to tide me over the other 8 months Mar-Oct, when life takes priority and unattended investments replace intensely monitored ones.

So why am I still here into September? Not because the plan didn't work - it did. But I ballsed it up by dithering when the moment came to switch from winter-phase to summer-phase. By ten weeks into this year I had made more than enough to last me this year and beyond. But in the ten days that followed I managed to stupidly lose the biggest chunk of it. So I've had to make up lost ground. Though a determination to not work too intensely at it through the summer means the gains are slower. Had I stopped before the mid-March spread bet expiry date and not rolled so many positions over (telling myself at the time that, because spring was late coming this year, I may as well grab another few weeks of the next quarter) I would be outta here as planned. Hey ho.

So just have some serious thought and see if you too can benefit from splitting your time more decisively between the time spent enjoying life and the time spent paying for it!

 ...Continues here - Bad Shopping Habits - to Spend or to Invest?

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