How much time do you spend preparing for the trading day? Do you spend hours scouring the markets for a winning trading opportunity? Do you watch hours of commentary or read all the major financial newspapers? You don’t need to spend hours and hours reading about the markets if it doesn’t directly lead to a profit. For example, most media coverage of the markets is for entertainment value, so spending hours reading or viewing it is a waste of valuable time. You need to work efficiently and make sure that the time you spend learning about trading and the markets does indeed pay off.
Consider how Mark, a seasoned hedge fund manager, prepares. He shared his morning routine with our Innerworth staff: “I look at about 300 charts every day. That gives me a good feel for what the markets are doing overall. I try to see whether a lot of different markets are signalling the same thing and breaking out at approximately at the same time. I wait for that to happen before I take a position. When it happens, it’s fairly clear, and I really don’t have any problem with courage at that point.” The seasoned trader doesn’t spend hours the night before preparing. Instead, the seasoned, winning trader can prepare right before the trading day begins. Rather than wasting time on tasks that don’t pay off, the winning trader works efficiently.
Seasoned traders may work efficiently, but novice traders may need to spend a little extra time preparing. It’s difficult to become a skilled and consistently profitable trader. Only an individual with rare talents can rise to the top 2% who make it as a top-notch trader. It does indeed take dedication and hard work. However, some make the mistake of thinking that trading is like a regular 40-hour a week job. The idea that an hour of work directly produces an hour of pay is not pertinent to trading.
Trading is more about accomplishing a specific target and making a profitable trade, rather than putting in a specific number of hours. For instance, if it takes only 15 minutes for a skilled trader to make enough profit to have a year’s worth of living expenses, then so be it. Seasoned traders don’t have to spend 40 hours a week to make a living if they have the requisite skills (and novice traders may need to put in more time building up these requisite skills).
The point is that if you’re a novice trader, you can’t work under the belief that everything you do will have a payoff. You must also consider that there are a fixed number of hours in the day that you can work, so you must spend that time efficiently. Trading is a challenging profession, and you need to focus your psychological energy on what matters most. For example, don’t be distracted by learning additional trading strategies that you will never use, or new indicators that are redundant with basic indicators of trend. And don’t believe you must keep up with all the media hype. Focus, work efficiently, and in time you will build the skills you need to become a consistently profitable trader.