4 Steps to Getting Money Work for You

One of the greatest benefits of trading the financial market is that there are so many way to take money from the market. Some traders like being a scalper and cashing in via the tick charts. Others might even go to the extreme of slowly dripping money out of the market via the weekly and monthly charts only.

Irrespective of how you trade the market, it is important to remember that, as market traders, you want to free yourself from having to work for money. In other words, you want to let money work hard for you. However, before you get too excited, I just want to clarify that the term letting money work for you does not mean NOT doing anything and hoping that money will pop out from no where. Instead, it just represents the potential of allowing the financial market to help you build income while you spend time on other opportunities.

With that, I will be talking about the idea of letting money work for you and how to go about doing it.

1. Identify What the Other Opportunities Are

• Spending time with family and/or dear ones
• Identifying new money making opportunities
• Spending time with hobbies
• Travelling or volunteering
• Taking lessons on skills you’ve been dying to learn E.g. Cooking, Interior Design etc

Net Return = Opportunities + Trading (Less)

> Trading (All the Time)

Another point to note is that the Net Return can be in tangible as well as intangibles forms. For example, by trading less and spending more time with family, you are a happier person.

2. Adjust Your End Goal

This may involve re-adjusting your trading system or trading rules. It can be challenging and that's fine. Take your time to do it but what ever you do, you must adjust it. Do not hope to trade less using the same rules or trading system and expect to achieve the same goals.

For some traders, they like the idea of letting money work for them but they neglect that, sometimes, they need to make certain sacrifices. If your opportunities are financially less rewarding, you need to ask yourself - is that ok? Will you be comfortable making less money but be happier? Alternatively, are you ok risking more per trade? These are some of the questions that you need to validate and be comfortable with when you re-adjust your goals. Again, you need to focus and remember that the net return will be greater then trading (all the time) in the longer term when adjusting your goals.

3. The Key Ingredients to Letting Money Work for You

Using Orders

When entering the market, use Limit Orders, Stop Orders or Take Profit Orders. It does not matter which one you use, the key is to be able to enter the market without you having to watch the market actively.

Improved Stop Loss Management

Since you will be spending less time in front of the market, you will need to place your stop orders where it will completely invalidate your trade. In other words, you might need a wider stop loss so that you will not get stop out by intraday volatility. For example, if you are a technical trader, you might consider placing your stops using daily charts instead of hourly charts.

Routine

Pending on the type of trader you are and the system you use, having a good trading routine is crucial. By doing so, you can are actively managing your time between trading and non-trading activities. The advantage of that is that you are actively managing your time and balancing your priorities.

4. The Balancing Act

After going through step 1-3, many traders become idealistic and make goals that are ambitious without realising the difference when spending less time trading. For example, traders who use to spend 4 hours trading will find it rather difficult when they shrink it to 30 mins a day. They are battling because they have moved outside their comfort zone and they are faced with uncertainties.

For others, they feel uncomfortable because they are stuck on to the belief that money doesn’t come so easily. In their view, trading 30 mins a day will not lead them to same rewards unless they increase their risk per trade. Of course, that becomes a new issue which they are struggling to overcome.

In short, the chances are, you will end up in loop (between Step 1-3) when finding out the best way to let money work for you. You will reevaluate the benefits of the opportunities (identified in Step 1) and then readjust your end goals (in Step 2) countless number of times before you find the right balance.

With all honesty, making changes is normal and being outside your comfort zone is a good thing. However, make sure to be patient and make gradual changes (instead of leap changes). Believe in yourself and, before you know it, money will be working hard for you.

Conclusion

Thank you for reading and do send your feedback or questions via the comment box below.

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