- 2001: Volume 10, No. 5 Mind Over Money: Full Time Trading

"I work eight hours, I sleep eight hours, and I have eight hours of fun."
Trading full time can translate to anything from grueling 16-hour workdays to one hour per day or any combination of time in between. It is important to discover what time frame is right for you in order to get the most benefit out of your trading results while maintaining a good and happy life. Too many traders get trapped into thinking that they should put a certain amount of time into their trading day and the amount of time that they choose can be either too much or too little for getting the best results.

"He Works Hard for the Money"
Being a consistently profitable trader takes just as much time and energy as any profession where rewards can be exceptional. The problem for many traders is that the pattern of long hours becomes an addictive behavior that is difficult to overcome. Traders begin to think that if they do not keep up with long hours, their trading results will suffer. It is highly advisable for traders to put a considerable amount of time into study while they are in the process of becoming a trader. But, if a trader continuously pressures himself for too long, the imbalance in his life will have an adverse effect on his trading results. For a trader to maintain a consistent top performance level, he must be physically, emotionally, spiritually and socially in balance. In short, this means that he must also have a life beyond trading.

"It Ain't Necessarily So"
The old work ethic would have you believe that in order to earn a living from your work, you must work at least eight hours per day. By observing the patterns of clients, I have found that many of them would earn considerably more money if they did not put as many hours into their trading. Sometimes it takes a coach...

...To Point it Out to Them
When I restate to a client what he has verbalized to me about the activities of his trading day, he becomes aware of the obvious solution, which is to use his time more effectively. For example, Ron traded on the floor of an exchange for years. He has been diligent to be there at the opening and closing of almost every day for the last 10 years. He has consistently made money, but working in the pits has taken its toll on his body to the point that trading has stopped being fun.

He said to me, "Yeah, sometimes I think it's just a waste of my time to come in the afternoons. I lose a lot of the money that I make in the mornings because I've never been good with handling volatility when I'm tired." I asked him, "What do you imagine your results would be if you hadn't traded in the afternoons for the last five years?" He said, "Hell, I'd be ahead by twice the amount, or more."

Now, Ron is trading only in the mornings, enjoying the rest of the day at the gym and feeding the ducks by the lake. He is also earning considerably more money than he was and is enjoying trading once again.

...To Recognize the Patterns Themselves
The best way to improve your system or methodology is to be consistent in following your trading rules over a period of time. Patterns will emerge showing when and where you earn the most profits. Sometimes, a trader is too close to notice it himself. In Tom's case, he simply did not want to notice the obvious.

Tom was trading two time frames. Trading the long-term time frame was supporting the short-term trading and his life style. After I held a mirror up to Tom so that he would admit to his day trading gambling addiction, he decided to choose computer war games as a substitute for his compulsions. Now, he is earning a full-time salary working one hour per day on his long-term position trading.

...To Get Permission from Someone to Work Less
Traders get models of what is an appropriate amount of working time from their parents, their teachers, their peers, and other traders. Most of them don't get to experience the many good traders who work a shorter day and earn good profits doing so. They are more likely to believe someone like me, a trader's coach, because of the vast experience I have had working with many traders than people in their family who tell them the same thing. For example:

When Marty first started trading, he made mistakes that cost him a great deal of money. Since his mistakes, he felt that he had to rethink his trading decisions over and over before he made a final decision. I asked him how many times did he have to look at a chart before he recognized an opportunity. "Only once," was his response. Marty finally understood that he did not have to recheck himself and it was okay to spend less time analyzing the markets. In fact, he is making more money now, feels less stressed, and has more time for his family and friends.

...To Plan to do Something That is Compelling with the Extra Time
Watching a trading screen for some traders is more exciting than other activities in their lives. For people who love this intensity, trading is hard to walk away from unless there is something equally compelling to anticipate. For example:

Tim once had a wife, children, community activities, and hobbies to keep him balanced and happy. His wife who was his "activities director" passed away and his children went out on their own. Tim did not know how to do things on his own. He started spending more and more time behind the computer screen until it consumed all of his time. He missed his old life, but did not know how to get himself interested in other things beyond trading. When I worked with him, I gave him weekly assignments of activities that he had to accomplish. At first, he was reluctant and told me that all of my suggestions were not as interesting as sitting and watching the screen. One week some old friends asked him to a party. Normally, he would have refused, but I insisted that he attend the party as his weekly assignment. At the party, he met a woman who was like his wife and had a very active social life. She took over as his "social director" and he is back to a balanced happy life working on trading six hours per day instead of 16 and is earning just as much if not more money.

...To Convince the Significant People Around You that Working a Shorter Day Does Not Mean that You Have Become a Handy Man
When one member of a family is working 10 to12 hours per day and making perhaps half as much money as the trader in the family, it sometimes becomes an issue that their spouse is not at least "putting in his time" for the hard stuff in the relationship. Many traders waste time at the screen because they do not want to become the errand boy or the Mr. Mom that would be expected of them if they did not sit behind the screen all day. Here is an example:

Linda was always complaining that her trader husband, Harry, failed to get chores done around the house. I suggested that Harry ask Linda for a list of the chores to be completed and agree that if the chores got done, he could do what he wanted with his time. Harry found people to handle most of the handyman stuff. As a result, he spent less time at the screen and easily handled the added expense with the increase in income working fewer stressed hours.

...To Prepare in Such a Way that They Do Not Feel that They Are Missing Out on Something
Every trader has a war story of the big trade that they missed when their attention was diverted from the screen. For this reason, traders glue themselves to the screen through countless hours waiting for the "big one" to hit. Most of the best traders that I know do not look for killings, but consistently pull profits out of every day trading. These traders at the top pace themselves to have a life while enjoying the time that they do spend trading. This strategy prevents the build up of tension that most traders develop by not allowing themselves time away from the screens. For example:

Yes, there was that time that Joe missed that big trade when his wife dragged him away on vacation. And yes, there was that time when he was sick that afternoon and missed another big trade. He still talks about the big trades that got away. He was spending so much time watching the screen that he over-traded and missed opportunities that were smaller fortunes. I asked Joe to give up 50 percent of his trades and work a four-hour day for one month and check the results. While he reluctantly committed to my suggestions, he accomplished giving up 20 percent of his normal trades and worked a six-hour day. He made more money in that month than ever before. He was still uncomfortable, but the profits were strong evidence that he was missing larger profits by gluing himself to the screen in his effort to catch the next "big one."

...To Protect Themselves from Possible Losses that Could Occur
Albert was in the habit of watching his stops very closely. Often, he would lower his stop, thinking that it would get hit and the market would immediately bounce back. It was not okay for him to be wrong and lose money on a position. He forced himself to watch the screen for most of his waking day and sometimes through the night. Albert was exhausted and a nervous wreck. I pointed out the obvious when he told me his problem. In order for him to trust himself, he was going to have to commit to his stops and feel that he could walk away from the screen. I suggested that he go back to his trading plan. He needed to work on contingencies for his rules and backtest all of the positions that he had taken to see what the results would have been if he had kept to his original stops. What he found was that he would have made more money if he had consistently stayed with his original stops. We worked on his issues of the fear of being wrong. We also worked on mentally rehearsing feeling comfortable trading his rules and staying with his initial stop loss. Now, he is able to leave the screen with confidence that his rules for stop placement are the best for his method. Albert works a four-hour day and is well rested for making better choices.

..."It's Time to Call it a Day"
Here are some questions for you to coach yourself. They will help you recognize if you are using the right amount of time to produce the best results.

• Why do you work the hours that you work?
• What would happen if you worked fewer hours?
• When do you make most of your money?
• How much of your day do you waste?
• What part of the day do you make most of your money?
• What part of the day do you make the least amount of money?
• Who expects you to put in a certain amount of hours to be considered full-time?
• Would you make more money if you worked less or more hours?

Conclusion
Successful trading initially demands many hours of studying and planning. One of the difficulties and/or benefits of being a professional trader is that the traditional eight hour work day is not necessarily the rule for getting the most in monetary reward. While some traders need those extra hours to produce great profits in the markets, I have found that many traders who lessen the hours that they spend in the markets produce better results.