Six things I wish I knew when I started trading: Part Three – Trade when the market is closed

By John Bannan | October 29, 2012 |
By trading when the market is closed, I simply mean that you are setting up all your trades after the market bell.  By not trading during market hours you can be much more level headed and objective in your decision making.  Trading is a marathon not a sprint, therefore using daily charts should be enough to earn a good living with a relatively modest capital balance.

My system was set up so that you would be able to trade yet still be working 9-5 in whatever you chosen profession is.  My profession is trading, so I do use intraday exits to garner more profits, but that is a choice I can make, it’s just how I keep trading somewhat exciting, otherwise following a mechanical strategy would be too boring for me.  I can also choose to set up an exit at the open and forget about it.

So, why not just day trade, surely there is more money to be made?

I heard an unbelievable statistic recently that only 2% of traders are successful.  If this is indeed true, then most of the 98% that fail are undoubtedly day traders, trading on the intraday swings of the market.  It is the hardest way to trade and it’s too easy to let your emotions get the better of you by letting your losses run and cutting your winners short.  I know I have tried to do it more than once.  Usually, when I leave it long enough to forget why I stopped doing it before!

A tongue and cheek definition I once heard about the life and times of a day trader:

“A day trader lives by the seat of his pants, they get stressed out, get an ulcer, get married seven times and become alcoholics!”

Joking aside, stress is a killer.  Trading longer time frames lessens the stress involved in trading.  Also, don’t we trade to live not live to trade?  If your idea of financial freedom is staring at a screen for 8 hours a day then fair play to you, but mine is somewhat different.

Don’t get me wrong, I believe there are many successful day traders and day trading coaches and teachers out there, some may even be making more money than me.  So I would not be as bold to say that day trading is futile, That would be an incredibly arrogant thing to say, it’s just not for me and does not fit with my lifestyle choice.

Trading takes me 10 minutes a day and I make all the money I need and then some.  Some years will garner more than others and I accept that this is somewhat out of my control and in the hands of the market and the trending nature of my stock choices.  However, my way of trading allows my days to be my own, as they should be….now that’s freedom!

May today be a profitable day…for all of us.

John