There is an unfortunate belief among many people that doing well in the stock market (and other markets, for that matter) requires a great deal of work and loads of time. This is partly a function of those in the markets wanting to make what they do seem complicated, and therefore exclusive. The reality of the situation is that you do not need to dedicate your life to the markets to produce good results.
I will use myself as an example. In most years there are significant time periods during which my schedule of travel and other commitments prevents me being overly active in the markets. One particular year I added a six week trip between the end of May and the early part of July in to the mix as well. During the course of that year I did a total of about a dozen trades in the stock market. Want to know my return for that year? It was more than 200%.
Now you might be thinking that this is an anomaly. It’s not.
Over about an 18 month period between 2002 and 2003 I was able to double the value of my retirement account trading stocks (I had to double it to make up for the beating the mutual funds I had been in prior to that had taken) necessarily using a much more conservative approach than in the example above. Again, that was done on a relatively small number of trades.v
Actually, I don’t normally make that many trades in any given year. If I get very far above twenty it’s rather unusual.
Clearly, I’m not a day trader. I do not get in and out of positions rapidly. My strategy is one I have formed over the years which allows me to find stocks with good upside potential that I don’t have to constantly watch. The positions I put on are intended to be held for weeks, if not months. That’s the timeframe when the largest moves happen, so that’s the timeframe I want to trade.
The strategy I use incorporates all three primary forms of market analysis – fundamental, technical, and quantitative. That said, however, I can go through the stock selection process in a couple of hours, at most. If there isn’t anything worth really looking at, the whole thing can be done very quickly.
What’s more, if I have active positions on I will generally not be looking to enter any new ones. In that case, aside from a little bit of checking up to see how the stocks are trading and if there’s any important news, there’s very little to be done. I can literally trade my system in only a couple hours a month.
Now you might be saying that I’ve got a great system. Maybe I do. It certainly works for me given the constraints I operate under with my schedule. I don’t consider it any major secret, though. In fact, I outlined it in detail in my book, The Essentials of Trading, so you are free to take a look at it for yourself.
The important point here is that I was able to develop a trading style and methodology that works for me. Anyone can do that. It is a question of making an honest self –assessment and defining an approach that fits within the parameters you have for trading or investing in the markets. Maybe you can day trade, or maybe you’re like me with limited time to dedicate to finding good stocks to buy.
Whatever the case, you have to do what works for you and realize that you can trade effectively regardless of how much time you have to put in to it.
About the Author:
John Forman is author of The Essentials of Trading (http://www.TheEssentialsofTrading.com) and a near 20-year veteran of the markets. For a free e-book on getting started in trading go to http://www.theessentialsoftrading.com/FreeGuide-GSIT.html