Do You Need To Find A Trading System?
Let’s first determine if you need to be trading at all.
So you’ve decided you want to get into the markets somehow and you are looking to become an active investor or trader. It is at this time that it is safe to assume you believe you can out-perform most of the fund managers out there. Before you go dismissing fund managers, do the following simple calculation.
Write down your starting capital, the amount you have included in your trading plan.
Next, write down monthly goal, i.e. the amount per month you want to be making from your trading. It could be an amount to replace your current income, or an amount you’d like to see your capital grow at (make sure it’s a money amount and not a %). It’s important that you at least have a figure in mind.
Get out a calculator, or use a pen and paper and divide the monthly goal amount by your starting capital, and then multiply your answer by 12 and then by 100. Your answer will be the yearly ROI (return on investment) you are seeking. So for example:
I am starting with $20000, and want to be making $1000 a month as a monthly goal. 1000/20000*12*100=60%.
Take the yearly figure (in this example 60%) and then compare it against the best fund managers. When comparing fund managers, it’s best to look over a 5 year period as a minimum to gauge their ability to make consistent returns. You can easily find a list of fund managers by doing a search in Google.
The point to this first exercise is to determine whether you need to embark on a trading career or not. If you find a solid fund manager who over a long period consistently achieves the returns you are looking for, why spend time and money learning to do it yourself.
Of course if you’re looking for a new career in wealth creation and you want to become an active trader, then setting a benchmark against fund managers is a good place to start.
Happy Trading
Dean Whittingham
Elite Insiders Group - Trading Systems
Financial Market Fisherman © 2006 - 2007
