Time Crunch Trading

Before we even delve in to the ins and outs of part-time trading, we need to start at the very top level of discussion by answering one important introductory question:

Should I trade?

In the end, how you answer the question is entirely a decision you must make for yourself. Considering that we have put the time and effort into creating this book, as you can imagine, we believe the answer to that question is in the affirmative, at least for a great many people. Of course, that is merely our feeling on the value of what trading can do for you.

That being the case, it is fair to ask a follow-up question:

Why should I trade?

That’s certainly a very fair question. The answer is quite simple – to improve your financial situation.

Trading the financial markets, no matter the timeframe, is done to expand one’s assets and allow them to continue growing.

Aside from that, the markets provide us with the opportunity to grow in ways that most people probably do not even think about. The potential for great personal development is just one such opportunity that is less commonly discussed, and is something that takes place along the way.

Trading and investing, like any worthwhile pursuits, provide more rewards than just the obvious accomplishments. To paraphrase an old saying, the destination is not always as important as the path taken to get there and the things seen along the way. This can be especially true for the part-time trader.

While it is true that the expansion of our portfolio is ultimately what indicates success or failure in the markets, how those gains are achieved can provide great opportunities to learn important lessons about ourselves. These lessons have the potential to reach across all areas of our lives.

Playing to Your Strengths

We all have our strengths and weaknesses and a kind of structure in which we operate based on the demands on our time, education, experience and an array of other factors. In the markets we need to make initial assessments regarding these things in order to help us decide what to trade, the timeframe in which to operate, and how to make our trading and investing decisions.

Why are such appraisals important?

Because it is unlikely that we will achieve our objectives if we do not honestly judge ourselves and how we can operate best. For example, I am unlikely to be a good day trader if I cannot dedicate my days to watching the markets for long stretches of time and if I cannot focus on frequently buying and selling. I must either choose another course or alter my schedule to accommodate the demands of being a day trader.

It is the same in the rest of life. We must constantly consider our personal inventory and varying life situation. These things dictate what we can do and how we can do it.

That said, these are not static things. Just as we established that we can alter our schedules to allow for day trading, so too can we change things to expand our options as well. Education, in all its forms, is part of that equation. So too is seeking out new experiences, meeting new people, and even consciously changing our attitude toward things. If a goal is important enough, there are things we can do in order to make achieving it possible. Part of that is knowing what we have to work with and how to most efficiently apply it. The other part is knowing how to open up new avenues.

Knowing Who to Listen To

Within the markets there is a vast array of information available. It comes in every form imaginable, from data released by the government, to commentary by analysts to tips from Uncle Joe. Some of this information is useful to us. Some is not.

A great deal of what came out in the aftermath of the stock market’s collapsing in 2000, was the realization that there were many differences in opinions amongst experts. These people did not have the interests at heart of those that they spoke to regarding stocks, but rather had their own interests and/or their firm’s interests in mind. Many people listened to these pundits to their detriment. Clearly, a very important element of successful trading is knowing what information is of value and which sources can be trusted, and what advice should be taken with a grain of salt.

The same holds true in all other areas of our life. All of us are constantly provided with information and advice. Some is solicited. Much is not. Before we can decide whether to make use of it all we must be able to assess the veracity of the source.

Some people are trustworthy and wise. We can depend on what they say. Others do not have our best interests in mind. We must carefully consider what they tell us, and the motivations behind it before deciding whether it is worthwhile or weather it should be ignored all together. Being able to effectively judge the input we receive from sources such as our family, friends, and peers is a priceless skill.

Being Disciplined

Success in the markets is achieved by doing what we know to be the right thing to do. The single biggest reason people fail to consistently produce the returns they seek is that they fail to maintain a disciplined approach. Sound familiar? It is the same as anything else we do. Want to lose weight? You must be disciplined about diet and exercise. Want to learn how to play guitar? You must exercise the discipline required to practice the hours required to attain the skill.

Understanding Why You Fail, Knowing How to Succeed

Perhaps the single greatest thing about trading and investing in a meaningful fashion is that it provides a fantastic opportunity to see directly what things causes you to fail, and what leads to success. The conscientious trader has a plan and thereby a way to make evaluations. Whether things go to plan and profits build, or they do not go well, you know why and you know what needs to be done going forward.

Achievement in life requires that one follow a similar course. No matter the objective or pursuit, we must understand what it takes to succeed and have ways we can judge whether we are doing those things or not. To do otherwise is to act in a random fashion, never sure if we are doing what is right and necessary.

These are just some of the valuable life lessons that trading can provide. There are plenty more equally worthwhile ones to be had, accompanying the obvious benefit of learning how the markets can be used to improve your financial well-being. And these lessons need not come at great expense - all the more reason to make the markets a source of both financial and personal growth.

All that discussion of personal growth is well and good, but it is a side discussion - albeit a worthy one. This may sound horribly greedy, but from a practical perspective, when one takes on trading as a serious endeavor, it is first and foremost about the money. It must be.

There are relatively few vehicles for truly self-directed wealth-building that most individuals can put to their own use. Trading is one of them. It lets the average person do spectacular things. One need look no further than some of the amazing success stories in which someone ran a small initial stake into a portfolio worth millions. The Market Wizards books are full of such tales, and well worth the read. They are both sources of insight and motivation.

But….

If, at this point, you have that word in your head, you should be asking yourself whether it is a legitimate concern or whether it is an excuse. It is perfectly acceptable to question, wonder, need a bit of convincing, and all that. Skepticism is healthy. You should be a questioner. It keeps you out of a lot of trouble.

Skepticism, though, requires an open mind willing to listen and allow for new ideas. You may not always agree with them, but at least you are willing to explore them to some degree.

The excuse-maker is not a skeptic. They are someone looking to challenge something as a way to avoid doing it. Their minds are already made up and they are simply looking for a way to justify their position.

If you are an excuse-maker, you might as well put this book down and walk away. We can’t help you.

On the other hand, if you are a skeptic, though, we can work with you. We will answer some of the more commonly asked questions about trading and the markets so you can make an informed decision as to whether they are the right thing for you.

“I don’t have the time”

Chances are you do, even if it doesn’t seem like it. You just think that trading is very time consuming, and when set against your demanding schedule it doesn’t look like something that’s going to fit in very well, if at all. Many people, when they hear “trading”, think it requires sitting in front of the computer all day. While that certainly is one form of trading, most of us do not have a schedule to allows us to dedicate hours each day to monitoring the markets. The good news is that we don’t have to in order to trade well.

Here is a good example – that of a college coach, who also happens to be one of the authors of this book. That position requires large amounts of time in the gym, in meetings, and on the road. Pair that with coaching a club sports program and running a couple of businesses on the side and you get a very busy schedule.

Despite long periods of no trading at all, and only a dozen total positions all year, a return of 200%+ was achieved in one year alone. If someone with that type of schedule can trade and get those kinds of results, anyone can.

The fact of the matter is that when done properly trading doesn’t actually have to take that much time. As you may have gathered, the idea of Time Crunch Trading is that you can trade effectively given a short amount of time. That is what the book is hoping to help you accomplish.

“I don’t have the money”

In years gone by, this was a very legitimate reason for people to refrain from trading. The markets were a hard place for the small trader to have any chance of success. There were substantial transaction costs in the form of broker commissions and the like, and certain markets were just not set up to facilitate the trading of a small account.

That all has change dramatically over the last 10 years. Technology and competition has radically altered the trading landscape, and in the process creating vast new opportunities for those traders with only a little cash with which to play.

Transaction costs are but a fraction of what they used to be, and there are low or no minimum trading accounts available all over the place. Exchanges have introduced instruments that give individual traders the chance to take part in markets like stock indices and forex that previously were out of their reach. All of this makes profitable trading for the smaller account much more possible than ever before.

“It’s too risky”

Trading is only as risky as you make it. If you make risky trades, then trading is quite naturally going to be risky. If you don’t, then it isn’t. There will always be the risk of losing money on any given trade. That is completely unavoidable. But that could be said about all of life, one way or another.

Driving is one of the most potentially risky things in the modern world, but we still do it. We reduce the risk by obeying traffic rules, planning our route, wearing seatbelts, paying attention, etc. Does that completely eliminate the risk of ending up in an accident? No, it does not. Nor does it necessarily keep us from getting lost, or getting caught in a traffic jam. We understand the risks, though, and weigh them against our need to get places in a timely fashion.

Trading is the same. We do it because it helps get us where we want to go, in this case financially. There are going to be hiccups along the way, but if we are focused and conscientious, we can minimize the risks, and potentially the damage an unfortunate turn might inflict, and remain on course.

“It’s too complicated”

Technology and competition have combined to make trading so much easier than it has ever been before. All it takes is a couple of clicks and you can execute a trade, check your positions, get news, and do anything else you need or want to do. The fact that you are reading this book says you probably have all or at least some of the basic skills needed.

Can trading be complex?

Sure it can. There are those people in the markets who use complicated software, mathematical algorithms, even artificial intelligence. However, none of that is necessary. Some of the best traders use little more than price quotes or a simple bar chart. How intricate you get is strictly a matter of personal preference, not one born of necessity.

Is there a learning curve?

You bet. Trading is like anything else. There are things you need to know. The good thing, though, is that there are loads of resources out there to help you learn.

Now before we get too much further along, one point needs to be made. This book was not written for brand new traders – folks just getting in to the markets. That is not to say such people should not read it, or cannot derive value from it. They certainly can.

If you have little or no actual trading experience, you are strongly recommended to read The Essentials of Trading. It was written especially for you. By taking a very hands-on and practical approach to getting new and novice traders up to speed on what they need to know, it will help you develop the experience and confidence required to effectively tackle the markets. Learn more about it at
www.TheEssentialsOfTrading.com

With that out of the way, we can move on to the task at hand – making you the absolute best part-time trader you can be. That starts with framing things the right way.

If, in the course of reading the chapters which follow, you come upon terms with which you are not familiar, a great resource for looking them up is the Trade2Win Traderpedia located at 
www.trade2win.com/traderpedia