Finding the right balance between work/studying and trading
Initial luck, or lack of it, can strongly influence the way new traders perceive trading. They either see it as as the quickest money they’ve ever made, or a waste of time. The former group starts devoting more time in the hope that the excellent run will continue, while the latter drop everything without even scratching the surface, deciding that it’s either too hard or rigged.
Is doing these things right or wrong? Is it too optimistic to expect constant (high) returns, or that it will only lead to losses and you shouldn’t bother anymore. For some it might be so, but for the vast majority of people that choose to include trading into their lifestyle, the truth is somewhere in the middle.
The optimal path depends on your lifestyle, the amount of time that you can set aside for trading and your preferred trading style.
If you have a small amount of time, or want to start off nice and easy you can do it for anywhere between half and one hour a day. This includes the research part, “reading” the chart of your selected instrument, looking at indicators and the duration of the trades themselves. It’s preferable that this is done for a smaller number of instruments, ranging from one to five.
With this trading style, the chart timeframe most traders go for is the five minute one, with some opting for 15 or 30 minutes, although they can still the use longer ones for confirmations (one of our topics next week will cover in detail the tricks of the trade when it comes to timeframes). You can try and trade on tick charts or on the one minute interval to cram more trades in, but we don’t recommend this for newbies.
The main advantage of this style is that it lets you enjoy trading more because it can be done calmly, with the necessary level of focus and clarity in the decision making process. It doesn’t overlap with other tasks and is usually done in the evening, although it can take place in mornings as well.
The cons here come from the less suitable opportunities that present themselves. Limiting the amount of time and where it’s situated during the day effectively cuts the number of moments with suitable conditions. It’s obvious that they don’t always come around when you’re looking for them.
The good news here is that with more practice the time you’ll need to perform the “pre-trade” tasks will get smaller. Just like any skill it needs time to master and to identify what works and what doesn’t. In this case this would be finding the right instrument(s) that are a mix between being easy to understand, ones with more opportunities for profits and that are available in the time of day you prefer.
In our next article tomorrow we’ll explore combining trading with working and study activities, as well as what it means to trade full-time as a retail trader.