The Boredom Of Making 100 % Annual Returns On Your Investments Year After Year

It is March 12, 2010 and I am bored out of my mind. I am a “pajama stock trader” which means I spend six and a half hours every trading day of the year in front of two computer screens trading 96 stock markets on line. I do not get days off; I must do this every day. That is the downside; the upside is I work for myself and to get to work I roll out of bed every day and walk to my computers in my pajamas. The only commuting I do is to the kitchen for coffee; about 15 cups a day.

Today the market is going nowhere. I just closed out six trades: BPOP +$25, SD +$29, LNET -$90, SMTB +$6, SOMX +$7, APWR +$52, TOTAL CLOSED OUT = +$29. BIG WOOP!

It’s a beautiful day and I would rather go fishing or skiing in the mountains, but instead I sit here for six and a half hours to make twenty nine bucks.

Should I hang it up? Should I give up? Well I do not think so. And this is why. If I look at my trading statistics for the past 3 months or so and I add everything up, the good, the bad and the terrible I can see that I am making an annual equivalent of well over 100% annual returns a year on my investment.

And dear people if you can maintain 100% annual returns on your investment for five years you are going to be rich. It really hardly makes much difference what you start with. Quite a few years ago I wrote a book, “How I Quit My Job and turned $6,000 into a Half Million Trading”. Being as I was not a market guru at the time and nobody quoted me in the Wall Street Journal I figured nobody would believe me. So half the book is simply copies of broker statements to prove that I made well over 100% for six straight years in a row. And because I was not working any real job I took out most of the money to live on. So I did not maximize the compounding effect.

So you think I was lucky? Do you think this was just a flash in the pan when the markets were different? Do you think this can be done with a small amount of money but the returns will be reduced as soon as one gets into big money?

Well I traded managed money for several years also and I pushed a couple billion dollars worth of trades through the marketplace. Most of this is on my web site. But guess what? I made over 100% trading millions of dollars also.

But the point I really want to make in this article is that back then in different markets and even when trading millions of dollars most of the trading days were boring and it does not make any difference how much money a person is trading or the markets they trade. Most trading is boring.

I have been researching all kinds of markets for nearly two decades and two major points of my research are these: 1) 85 % of the time markets move sideways rather than up or down. 2) Using the trading strategies that we use about 60% of our profits come from about 5% of our trades.

Do a little extrapolation from these figures and you can predict that nine out of every ten days of trading are going to be uneventful and not very exciting.

A good trader is someone who can sit there and follow the rules day after day after day. I talk to a lot of trader wannabees. When I tell them truthfully that I think it is quite possible for an average Joe to sit at home in front of computers and starting with a modest amount of money, to become rich in a few years, they start to salivate. That sounds so easy.

But quite surprisingly most would-be traders drop out because they expect a lot of excitement and what they get is so routine that it becomes boring. I frequently tell wannabe traders that one of the most important activities they must engage in is accurate record keeping. I must spend at least 90 minutes at the end of each market day just doing spread sheets. Ho Hum, that is not very exciting, but if you fail to keep accurate records you will never be a good trader.

But one of the worst mistakes that bored wannabe traders make is to try to introduce excitement into the trading day by taking trades outside of the rules of their trading systems. Without going into the many stories I have heard, let me just say that is the fastest track to trader extinction.

One of the great myths pushed upon would-be investors by financial advisors and brokers is that high returns on your investments mean high risk and that low returns mean low risk.

The one thing I have learned from my research is that risk and returns are not statistically related. What is related to risk and returns is the amount of trades taken and the length of time those trades are held.

I have been able to get very high returns with low risk for many many years in all kinds of market environments. But to do this I must trade intensively day after day, week after week, month after month and year after year. And after all these years I put my stuff up on a web site every day, several times a day, to prove it. It’s right there day after day. I can’t fake it and you can’t argue with it.

But nevertheless most days are boring. Even making 100% a year is boring.

If you want excitement take up sky diving. But if you want to get rich and be a really good trader and be willing to do it on your own, you much commit yourself to years of just doing the same thing over and over again.

But trust me, if you can do that you will be financially rewarded and you can wear pajamas as your work uniform!

Author Bio: Robert Buran, StockBrain2010 on Twitter, is the author of “How I Quit My Job and Turned $6,000 Into a Half Million Trading”. He has traded small accounts and traded millions of dollars. His website http://www.short-term-stocktrading.com posts real time stock trades several times daily.

Category: Finances
Keywords: Short term stock trading, stock market investing, reducing trading risk, high investment returns

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