Trading and investing can be a very time consuming job (even if you only trade/invest part time). 20% of the time I dedicate to trading goes towards reading financial news while 80% of the time goes towards doing research. And out of all the research I do, probably 90% of it is useless.
We all have lives to live, and work is only one aspect of life. That’s why it’s important to save time on trading and investing while maintaining the same quality of work. Here’s how you can be a more efficient and effective trader or investor.
It’s all about working smart, not just working hard. 🙂
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Automate your workflow
You need to have a daily/weekly to-do list on top of the one-time market research that you’re doing at the moment. This list will help you save time. Instead of waking up every morning and wondering “what should I do today”, you just follow the pre-determined list. Just tick the boxes.
Everyone’s to do list must have 2 parts.
- Daily news and reads.
- A systematic way of looking at the markets.
Ideally, you should follow financial and global news every single day. Market conditions can change very quickly, so you must stay abreast of the latest developments. Here’s my daily to-read list.
- CNBC. CNBC represents mainstream financial media. You can use CNBC as a sentiment indicator. When most of the commentators on it are bullish, sentiment is optimistic. When most of the commentators are bearish, sentiment is pessimistic.
- Bloomberg. Bloomberg has as lot of market research and studies that you can’t find anywhere else. In addition, the articles on Bloomberg.com tend to be less biased than CNBC. Bloomberg prefers to stick to facts, whereas a lot of the commentators on CNBC share opinions that aren’t based on facts.
- Zerohedge. If you want to know about financial/economic/political problems in the world, Zerohedge is the place to go. If there’s anything wrong in the world, they’ve got it. I read Zerohedge just to make sure I haven’t missed out on anything. But you need to be careful with Zerohedge. They tend to blow problems way out of proportion. The website has an insanely strong bearish bias.
- Investing.com. Investing.com has a lot of non-U.S. political, economic, and financial news.
- Briefing.com. If you need a quick rundown of this week’s economic data, Briefing.com’s calendar is an excellent tool.
- I also listen to a lot of market-related podcasts while I’m on the go. These include, but are not limited to Bloomberg Surveillance, P&L With Pimm Fox and Lisa Abramowicz, WSJ Minute Briefing, and WSJ What’s News.
I share my discretionary thoughts on the stock, forex, and commodities markets each day. I have a predetermined list of indicators/price action that I’m looking for. That way I can systematize my discretionary outlook as much as possible, which helps me cut down on time.
I look at the financial markets from a variety of different angles, and each of those angles are on my list. Without a predetermined list of things to look for, you can easily forget to do something.
Know what you’re looking for (cut the signal from the noise)
Research is extremely time consuming, and most of it is a waste. E.g. for every 20 indicators you look at, maybe only 1 or 2 are useful. That’s why it’s important to be able to discern useless from useful research as fast as possible.
You need to know what you’re looking for, and what you’re looking for should be related to your trading style.
For example, I focus on finding research that has to do with:
- Economic data
- Quantifiable patterns
- Data-driven studies.
If I come across a chart pattern for the S&P, I won’t even waste more than a few seconds on it. This is because I don’t use traditional patterns for my S&P 500 models. My time can be better spent elsewhere. I focus on finding research that’s related to my quantitative trading strategy.
Try to create systems and models
Traders and investors should quantify their trading/investing strategies as much as possible. I listed several advantages to quantitative strategies here.
- Quantitative strategies are very consistent. Discretionary trading involves a lot of guesswork, and human judgement can be faulty. With a quantitative strategy, you can backtest your models and see exactly how well they work.
- Systematic trading is also a lot easier for people who don’t trade full time. You can build a model, let the model trade, and update the model every once in a while. It’s not as time consuming. You can focus on your career and enjoy your life in the meantime. Discretionary trading is much more time consuming in the long run because you have to follow the market every single day. I can let my models trade while I’m vacation, and my portfolio will be perfectly fine.