Tuesday, March 16, 2010

Day Trading or Trade on multi month cycles or Investing Part II

Earlier, I had a blog post on which style of playing the market I should adopt.

As I proceed on, I become more and more convinced that a longer term approach is more feasible for me. Although I do see people earning nearly $6k extra monthly by day trading even with a full time job, I'm not sure if they can focus or are focussing on their day jobs. I know I can't.

While it's true that you don't need your job if you can consistently profit near to $6k monthly just by trading alone, that isn't really the desired path I want to take for reasons below:

(i) Day trading is pretty solitary.
I'm a social creature. Can't really stand a job of solitary nature.

(ii) Day trading requires you to be glued to your screen.
Then how I go to the gym, work at my job, go to the toilet, eat snacks, etc etc?!?!?!?!

(iii) Lots of homework required.
I might as well find alternative sources of income with the time? I have my own active life to lead as well!

Fact is, the amount of time a day trader spends on preparing, charting, reading up, and trading, easily beats any of my rudimentary fundamental analysis on stocks. If they do not earn much more, then their time would be in vain!

Yet, mathematically, the combined gain of traders would be equal to the passive gain of the market as a whole. If you cannot beat the market in a massive way, why bother to trade so aggressively for that little amount of profit?

Ultimately, it's how we want to choose the paths for our lives. For me, I want to be able to do many different things. I like to see my income coming from diverse sources. I thrive on human interaction. I want to make an attempt at starting businesses. I like to see returns on my investments via dividends. There are so many things I want to do in life that at times, I really wish I have more time. Life can be so fulfilling...

Of course, traders who find it a joy to do their homework and trade are enjoying their time too! For me, the joy I derived from doing the homework before trading is much less than giving tuition, or receiving dividends from my dividends basket!

This is what I foresee myself. My dividends will continue growing, and I will leverage on the dividends and embark on something that would give me a higher rate of returns than 8% from the market. Examples would include starting a business, trading real things, setting up online shops, whatever. And I would be starting on the basis that if I falter, I still have my dividends to rely on for some support.


  1. Hi JW,

    You have it all thought out! Stick to the plan. :)

  2. Full and part time trading is a world of difference. Even if one is successful in part time trading doesn't mean he can make it in full time trading. Stress of putting food on the table is totally difference from getting coffee money

  3. Hi AK71,


    Hi Cw8888,

    That's very true... Didn't think of that... Thanks!

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