A lot of people ask me how much time trading consumes. It’s not easy to answer that question because the time you invest in trading is dependent on your strategy. However, we can give you an indication of the minimum amount of time that it will take to become a successful trader.
The amount of time depends on your strategy
The time you need to invest depends on the strategy you choose. Let’s look at the three most common profiles, so you can see which form of trading suits you best.
As an intraday trader, you are very active. You keep a close eye on the price and you’re busy opening and closing positions all day long.
As a day trader, you look at what the price has done all day. You determine your strategy over the weekend and follow this strategy daily.
As a traditional trader, you hardly follow the price. You buy or sell stock, but your focus is mainly on the future and not on getting the highest daily profits.
As an intraday trader, you are always trading
You are a very enthusiastic trader who spends several hours watching the price every day. You buy and sell stocks, commodities and currency pairs on the four-hour, one-hour or minute chart. Over the course of a day, you open up multiple positions. As an intraday trader, you’re trading intensively and when your strategy works, you maximize your profits.
As an intraday trader, you spend two to eight hours a day trading. Your investing or trading is your primary source of income; you watch prices like a hawk and try to profit from the slightest movements in the market.
As a day trader, you profit from a minimal time investment
You watch the price movements as much as you can, but you don’t do this in real-time. Day trading is a profitable trading strategy that can be combined with a day job perfectly. As a day trader, you pick your investments over the weekend based on technical analysis, and you create a watch list.
As soon as you have formed the watch list, you only need to check your picks on that list every evening. Because you have already made a list of what to watch, you only need to check whether your predictions were accurate or not. Day trading doesn’t take up a lot of time: about two hours on the weekend and half an hour every evening. You can still make a lot of money as a day trader.
The traditional trader isn’t focussed on immediate profit
As opposed to the intraday trader and day trader, the traditional trader is a bit more conservative. Based on the advice of asset managers or gathered by reading annual reports, the traditional trader decides which financial instruments to buy. The time span of the traditional trader is long; the strategy is based on making money over a long period of time.
As a traditional trader, you aren’t investing a lot of time. You manage your portfolio by checking in from time to time on how your investments are doing. Traditional trading is very convenient for building up to a certain amount over a long period of time and is not aimed at generating short-term income.
By combining the several trading styles, you get the best of both worlds. You don’t have to invest a lot of time and you can still profit quite a lot. By building up an income as a day trader combined with a more traditional approach, you profit twice without having to invest a lot of time.