Adrian Reid breaks down the difference between day trading and actual trading. He walks through rule-based systems that work on different schedules, from daily to once every six weeks, and argues you should pick one that matches your returns, your tolerance for losses, and how much time you have.
There's an important distinction between trading, being a trader and day trading. This is probably something that I should have talked about. But when I say to Mo to most people I'm a trader, they go, oh, you're a day trader? It's like, no, no, I didn't say I'm a day trader. I'm a trader. Now. A day trader is someone who sits in front of the computer and buys and sells stocks during the day as the markets go up and down and they place multiple trades throughout the day and they have to look at the screen and they have to be focused on that. You know, most people don't want to do that. I don't want to do that. It's horrible, it's stressful, it's difficult, and I just don't like it. I want it to be free. That's why I started trading. So I don't day trade. What I do do is I use objective rules to tell me what stocks to get into and what stocks to get out of tomorrow. Those objective rules are trading rules or a trading system, and I follow them. So.
Being a trader doesn't mean you have to be very, very active. You know, you could say, well, I only want to spend 10 minutes a month.
That's all I want to spend doing my trading or investing. And you can do that. I've got strategies that are literally 10 minutes a month. Actually, I've got one that is 10 minutes every six weeks. Right. And it's a great strategy, works brilliantly.
But you only have to take action every six weeks. Everything else in between you ignore. I've also got strategies you have to do every day. So the point here is, don't define yourself with a word. Oh, I'm investor. Because this one works for me. I'm an investor. Think about your objectives. This is the important thing. What sort of returns do you want to make, what sort of drawdown are you willing to tolerate, and what level of activity can you fit into your life? Remembering that all of this can be automated.
If you don't want to trade very often, you can have a longer term system that doesn't trade every day. I've got daily systems, weekly systems, monthly systems, and like I said, a six, once every six weeks system. I've got a system that only trades in November. So if you want to do it once a year, I mean, you don't make huge returns by just trading any one of those, but you can certainly make good returns. So define how much activity you want and then find the right system. For that level of activity, build confidence in it through backtesting, and implement. That way no matter whether you're a long term person or a short term person, whether you're ultra busy or whether you're you've got heaps of spare time, you can still do this. I don't really like the terms day trader, trader, investor. It's like we're all making money in the market or trying to, right? We just need a strategy that fits us, that fits our lifestyle and what we need.
Sam.
