Trading Returns Require Trading Effort
How much time a week can you devote to trading?
If you hired a coach to help you build a trading business, and your coach asked you how much time a week could you devote to trading, what would your answer be?
Now is the heart breaker. Take your ROI% PA figure you are aiming for and write it down (if you haven’t read the previous post on determining if you need to trade, please click here and read it first). Now next to that, write down the number of hours you can allocate to trading. Now compare your results to the table below. Do they match up?
Hours a week available / a reasonable expectation for a ROI% PA
0-5 / 0-10%
5-10 / 10-20%
10-15 / 20-30%
15-20 / 30-40%
20-25 / 40-50%
25-30 / 50-60%
30-35 / 60-70%
35-40 / 70-80%
These are just rough guidelines and in fact may even be way off for some but they are presented in this fashion to drive home an important point, and that is trading involves a lot more than just trading!
For example, as a beginner you not only have to physically trade, you need to do the following:
Learn the system; learn the jargon; learn the particular market you are trading (eg stock market/futures); learn technical analysis or fundamental analysis; learn the software, the brokers platform, the data provider; learn the laws and taxation laws that affect you; learn your own strengths and weaknesses; assess you skill level; learn any necessary computer skills and so on.
It’s exactly like any other business. You need to learn the ropes. Someone who only has 5 hours a week to devote to trading can not be expected to learn all of the above and successfully out-perform fund managers who employ teams of full time staff and traders with years of experience.
However, if you have the desire to achieve great results, it will need a commitment from you. Allocating more time to your start up now, can lead to less required time from you in the future. For example, someone looking to make 60% per year and achieve this in 12 months may look to devote more than 25-30 hours per week. However the pay off is that this extra devotion may lead to finding a system that does indeed generate 60%+ returns with only a 10-15 hour a week commitment or less.
Brian in his last post touched on some differences between being an investor and being a trader. Investors should be seeking investors returns and not trading returns. Trading is more of a business that requires time and money than investing is, so it’s important you don’t get tricked into thinking you can achieve trading (business) returns from investing.
Happy Trading
Dean Whittingham
Elite Insiders Group - Trading Systems
Financial Market Fisherman © 2006 - 2007
