How Much Time Are We Talking About?
Have you thought that to be successful in the stock market, it would be comparable to having a full time job? Constantly watching the screens, staying on top of the market news, never having a life outside of trading, just hoping to be lucky enough to make it big? Or maybe you think that some people have a knack for it and just casually place a few trades and make crazy amounts of money with such little effort. Well, let me tell you my perspective on how much time it takes to be a successful trader.
Do You Want to Be Good Or Rely on Luck?
If you have the idea that stock trading is just gambling, then you probably think that any trading is all based on pure luck. And if you don’t put in the time to understand the market and how to trade, it will totally be that for you. So why put in any time that is just based on luck, right?
My life motto is that if anything is worth doing, it’s worth doing well. And I’ve taken that to heart in my trading. This coronavirus shutdown has given me a once in a lifetime gift of time that I’ve used to study and learn about the stock market. I’ve read several books, listened to tons of podcasts, watched and participated in as many webinars as possible, and practiced my trading every day.
Take Time to Learn By Multitasking
Set aside time every day to increase your stock trading knowledge. Here are some easy ways to slip it into your day.
- Listen while doing cardio. Every day when I’m exercising, I listen to a podcast. This is “dead” time that I would normally just be watching a recorded show while I’m on the elliptical machine. During this crazy time, I try to take walks instead just to get out of the house for a while so I grab my earbuds and phone.
- Listen while driving. When I have to go back to teaching, I’ll listen to a podcast on my way to and from work instead of listening to my country music.
- Listen while you are getting ready for the day. I easily spend at least 30 – 45 minutes every morning taking a shower, getting dressed and doing my hair and make up. If you share the bathroom with someone else who may not be as exuberant as you are about learning the stock market, you can make your case as you take your newly earned money to the bank!
Use Technology to Learn
- Get the audio version of stock books. I have this attitude that I’m not being productive if I’m just sitting reading a book. Crazy, right? It’s still learning! But that’s just the way I feel so I work with it by listening to these stock books while I’m walking or getting ready for the day. I do own the hard copies of all these books too which I read sometimes at night in bed.
- Subscribe to your favorite podcasts. I subscribe to IBD which interviews a different investor every week. (I really need to be getting a kick back from IBD for all the promoting I do for them!)
- Use a spreadsheet to keep track of your trades. (I’m currently working on one for my subscribers.) Then use it to review and analyze your past trades.
Actual Time Needed
Investor Who Has a Professionally Managed Portfolio
- 5 minutes at the end of the day to quickly check the market
- 10 – 30 minutes over the weekend to do a little more analysis of your portfolio and market action
- Learning time – as much as you can fit in
Long Term Investor with Only Position/Long Term Leader Trades
- Daily – 10 minutes a day to quickly check the market and portfolio after the market closes
- Weekend – 10 – 30 minutes over the weekend to do a little more analysis of your portfolio and market action
- Learning time – as much as you can fit in
Active Investor with Swing/Position/Long Term Leader Trades
- Daily – Minimum: several minutes as you check the market and your portfolio at least a couple times in the day
- Maximum – all day long as you stare at the screens and watch and react.
- Weekend – 1+ hours. At a minimum, you need to go over your portfolio and create a defensive plan for the following week. See my post Defense Is Everything in the Stock Market!
- This is also a great time to research new stocks as well as rate the ones you own. In addition to creating a defensive plan, you want to do more of what works, and less of what doesn’t.
- I spent at least 4 hours this past Sunday learning more through a webinar, a podcast, and reading articles. Then I spent another hour going over each stock I own and creating an action plan.
Is the Time Spent Worth It?
Every person is going to have different results. Let’s say you have a great portfolio manager and he or she is doing a great job. I’m the type of person who wants to be sure my money is making the most amount of profit possible in the current market conditions. When you spend the time to learn about investing, you will give yourself peace of mind when you check your quarterly statements if the account is handled well. If you suspect that your money isn’t working as hard as you’d like, you have the knowledge to ask the right questions or find another portfolio manager.
If you manage your own account and you have invested in long term leaders, your account should definitely increase at least with the market trends. That’s assuming you have learned how to pick the right stocks at the right price. In fact, your account should increase better than the market trend. And since you put in the time to learn about investing, you’ll be able to pull your money out of stocks at the start of the next crash and reap a huge amount of profit when you start putting it back in when it turns around.
Since I have long term leaders and short term trades, I spend 2 – 3 hours a day (some days less) on my portfolio. Today I made 3 trades and I’ve already made $1000 (on paper) this morning. Do I do that every day? Of course not. Some days I lose money. A lot.
Research Time Paid Off
But today’s increase was because I looked over my stocks last night and figured out which ones I wanted to add to. I also followed the suggestion of IBD Live experts (my commitment: a monthly subscription and 1 1/2 hours of every morning). The biggest increase was from my Zoom (ZM) purchase. It was recommended this morning, but because I had done my research over the past few weeks, I knew I wanted to buy some. So when the recommendation came in, I already had the knowledge to know it was a good stock to buy. If I had waited to research it after the recommendation, the price would’ve been too extended for me to buy and I would’ve missed the opportunity.
How Does One Fit Trading In Normal Life?
I am writing this 2 days before I have to report back to teaching in the new school year. My gift of time is coming to a close. Here is how I’m going to have to accommodate my trading.
- My IBD Live show will have to be watched after the market closes.
- I won’t be in front of my screen like I am now, but I can check my app during my lunch and just before the market closes (as I quickly walk to car pool duty.)
- I can set up trades during the evening to be executed automatically for me during the next day.
- My day will be extended some before I can relax for the evening.
- I will not be swing trading as it is too risky when I can’t watch it (UNLESS I put in stop loss orders.)
- Most of my analyzing and reviews will fall to the weekend.
Before I completely took over my portfolio, I was already used to checking it every evening. Most times I didn’t do anything, just monitored it.
Why am I keeping my IBD Live subscription when I can’t watch it live? Because they give a great analysis of the market every day and I want to know as soon as possible if another market crash is imminent. No one can predict it, but these experts have a pretty good pulse on it and will be much more aware of the current sentiment than I will be.
How much time does it take to be a successful trader? As much as it takes to get the results. My portfolio has increased 24% as of last Friday with today making another huge gain. That is very worthwhile to me of course and I don’t regret all the time I’ve put into it. I did not sit on the couch and binge watch TV shows or movies this whole time and I’ve “paid” myself for it.
Nobody can guarantee any results for your trading, but if you learn, create rules, and stick to them, you can be successful too. If you are not, review your trades and try paper trading (demo accounts that don’t use real money) and try again. I can’t say this enough: always keep to your sell rule of 7-8% loss (or less) to keep your capital. See my post Selling Stocks, You Have to Have Rules! Stick to that and you’ll always have money to trade another day.
Until next time,