I was asked today by a friend whether it was a good time to invest or if it would be best to wait for a lower price. I told her “you can’t time the market, just get in when you have the money to invest, set it and forget it” and don’t worry about potential short-term losses. This is the best advice for 99% of people out there, but it is not my full opinion.
Warning: Before continuing this post, please understand there is a difference between investing and trading in the stock market. Stock trading capitalizes on short-term stock trends with no regard for the company. It is not the same as investing.
I do not believe you can time the stock market as a whole but you can time significant movements in stocks when they are trending. To predict what stocks are going to pop or drop you cannot be biased towards any stock and you must learn to go with the flow of the market, like a Taoist monk, and not try to force the market to conform to your wishes.
So how do you go with the flow? Easy! You need to become very observant to what is happening with every stock in every sector of the market every day, month and year. If you want to make money you have to show up every day and grind it out, 80% of the time you are going to break even or lose money, and 10% of the time you are going to make a nice chunk of change.
Yes, there are a few outlier traders who can consistently churn out $1,200 to $3,000 a day 60% to 70% of the time, but they are a rare breed and the eat, sleep, breathe, and bleed the stock market. Most successful day traders spend 2 to 4 hours actually trading and 10 to 15 hours a day researching the news, stock charts, income statements, statistics, etc.
Want to know what it takes to day trade? Below is my personal schedule and links to all of my tools used for just one day of active trading. Once you finish reading this schedule, I want you to imagine doing this for 241 days a year and then ask yourself if it’s really worth trying to time the market.
My trading day starts the evening before the trading day. I get home from work at 5 PM and immediately start preparing while mixing my time with personal life.
5 to 6 PM Getting home from work and take the dog for a walk:
- Listen to the daily Market Chess Market Recap video
- Read the Bulls On Wallstreet Trading Watchlist on my phone
- Listen to the Share Planner market recap video with Ryan Mallory
- Scroll through my day trading Twitter feed to see what stocks were talked about the most after the market closed.
7 to 8 PM Cook & eat dinner
- Listen to the Chat with Trader’s podcast while cooking to stay motivated
8 to 10 PM Watch TV with the family
- Read the Market Watch Daily Earnings Summary
- Run FinViz scanners to identify which stocks have the highest potential for movement (up or down) the next day
- Identify 5 to 10 potential stocks for the morning and research news to understand they are moving
- Highlight the 2 or 3 stock tickers that I believe have the best chance of success
10 / 11 PM go to bed
- Vividly dream about all of the charts I just reviewed
4 AM wake up
- Review the Stock Market Pre-Market Top Gaining / Loser list
- Identify 3 to 5 stock tickers from this list and read the news and twitter to find out why they are moving this morning
- Scan the Briefing.com Page One news summary
- Listen to the @VegasTrader66 pre-market live webcast
- Listen to the Stage5Trading Trader Bite morning video
- Review @AmyATrade’s morning watchlist tweet
- Review Read the @SMB Capital morning watchlist tweet
- Read the @Chartseer morning watch list tweet
5:30 PM cook some eggs and eat standing in front of my computer
- Identify 5 stock tickers to watch for the open
- Did any of the stocks from last night’s list make it on anyone else’s list?
- Did any of the stocks from last night’s list make the Pre-Market Gapper list?
- Log into top secret private day trader chat room with my mentor
- Post my 5 stocks to watch this morning to the chatroom along with evidence as to why I think they are going to move including links to news articles or SEC filings
- Communicate what my predictions are, where my entry and exits are going to be and what real-time ticker behavior I need to see before making a decision to buy or sell.
- Read what the other chatroom members are following, review their choices and adjust my top 5 list as needed
6 AM Take a shower and get ready for work
6:15 am 15 Minutes to market open
- Start watching live stock ticker activity for excessive pre-market trading activity
- Choose my top 2-3 stocks and only watch those as the market opens
- Listen to @PaulJSingh‘s morning swing trade report (requires a paid membership)
6:30 AM The Market Opens!
Sit on my hands for the first 5 minutes to see what the stock tickers are doing
• Read the activity in the chat
• Begin stalking entries in my top 3 stocks
• Find an entry and buy find hit your exit and sell (win or lose)
• Don’t get emotional keep your losses under$20 per trade & target $50 to $200 wins
• Buy, sell, buy, sell. It’s a game of double Dutch. Don’t jump in until you are confident.
7:15 AM Iron a shirt and monitor my trades
7:30 AM exit all trades and go to work
I didn’t want to exit before leaving for work?
Now as I drive to work I have to watch the ticker on my cell phone at every stop sign I come to manage my risk. I could set an automatic stop, but the trading algorithmic robots out there may fake a drop and stop me out before the stock sky rockets. Sounds crazy? This is exactly what happens to me 9 out of 10 times when I drive to work and set a hard stop.
8 AM to 4:30 PM
- Go to morning management meeting and secretly watch my stock tickers under the table while I talk to the team about today’s projects
- Eventually exit my trades
- Work the rest of the day
5 to 6 PM take the dog for a walk and
- Repeat steps from yesterday…
Now do you still want to try and time the market? I didn’t think so. Save yourself a lot of stress and headaches. Invest in VTSAX / VTSMX / VTI. Set it and forget it!