Now the kids are back at school, I no longer have to listen to a chorus of “I’m bored” every time I walk into a room at home.
But anyone who’s New Year resolution involves trading less … investing for the long term (hopefully including the HAV Trading strategy) … or generally obsessing and checking on the markets less … is probably going to find themselves twiddling their thumbs a tad.
It’s hard not to feel that we should be ‘doing more’ … ‘trying harder’ … if we want more success from the markets, but I want to show you how this slower pace, with lengthy stretches of ‘doing nothing’ is actually the silver bullet that your investing needs …
Let the money work … rather than you.
One of the key reasons many of us start trading is that we feel there must be an easier, better way to earn a living.
Trading can allow us to not be wholly dependent on a 9-5 existence, having to answer to a boss. (Of course, that doesn’t mean you’re completely freed from some mundane tasks, like keeping a trading journal, and monitoring your results.)
But we can definitely make our lives as easy as possible by following clear, simple rules, looking at longer timeframes, which free us from checking charts every hour, or even every day. Plus, by using limit orders, stop orders and take profit orders to open and close trades for us – we can automate our trading down to just a few clicks of the mouse each week.
Feel the stress ebb away
One of the most powerful things about longer term strategies is that they cut down on the stress and emotions involved in trading. If the markets jump a couple of percentage points in a day, we don’t need to panic – these kinds of ups and downs are built into our trading strategy.
It’s a great way to enjoy a better night’s sleep.
Establish your routine
Whilst I’m not an addict to social media, and the thought of checking Facebook gives me a cold shiver … I’m not unaware of the impulse to constantly be checking my phone … looking at charts and open profit levels while I’m cooking dinner, sitting in the cinema, awake in the middle of the night …
It’s just not healthy behavior.
Having a clear trading routine is the best way to claim time back from the markets, so you’ve demarcated times when you’ll be checking charts and adjusting trades. You can also have times for testing tweaks to your system, or exploring new trading opportunities – but you have clear tasks that you’re doing there, rather than just lurking on your broker’s platform and torturing yourself watching price levels!
Don’t sweat the errors
We all make mistakes from time to time … putting the decimal point in the wrong place, fat-fingered typing, forgetting to adjust a stop level …
If you’re day trading, these kinds of errors can quickly end up in a stop being hit. But with longer term strategies, there’s usually time to spot an error and put it right before any harm’s done.
Stop paying for your broker’s skiing holidays
There’s no getting away from it … day trading is an expensive business, even if you’re winning, as the costs of spreads hits you every time you open and close a trade.
But long-term traders barely notice the commission they’re paying their brokers as it’s a tiny fraction of the potential profits they’re making on each trade.
Unleash the power of compounding
Compound investing is the most powerful tool we can unleash on our trading funds, and the one thing that compounding needs is … patience. And that’s what the long-term investor has.
Shift your goals
Switching your trading style to a longer term approach involves an adjustment to our goals.
I often chat to traders about their goals, and I hear different stories. However, there’s often a strand which runs something like this … “prudent long-term planning, risk management, blah, blah … but I just want to double this initial investment first, then I’ll start following all my sensible rules.”
Most of us want a quick boost to motivate ourselves at the start. Like those first few pounds that come off easily at the beginning of a diet … compared with the stubborn ones that you can’t shift a few weeks later.
Unfortunately, trading methods can’t guarantee that the first few trades will be winners, so long-term traders need to make a conscious effort to keep their focus on long-term results, rather than obsessing on how the last few trades have fared.
You may find this post on Myopic Loss Aversion helpful here.
So, if your new trading routine frees up lots of time … how will you use that to good effect?
Sure, you can spend time keeping your trading journal immaculately tidy … and you can spend time testing new trading strategies or looking for ways to improve your results …
But opportunities don’t have to revolve around trading.
As I mentioned earlier, many of us turned to trading in search of a better lifestyle, where we can set our own working hours, not answer to a boss, and not commute into an office.
Now is a great time to think about what that improved lifestyle really looks like, in terms of time spent with loved ones, travelling, enjoying hobbies, volunteering or learning a new skill.
Revel in the smug value
Long-term, trend-following trading methods have historically always been on the winning side of the markets. While you’ll have ups and downs ahead, like any trader, you can be confident that, as long as you go the distance, you can be profitable.
It’s a very good feeling!