So before I start scouting for education articles and reading books about investing and trading, it’s important for me to understand and to know myself, and to know what are my strengths, my preferences, and the available time that I can set aside for trading or investing.
I will start with my preferences, and move from there to my strengths, then to the time that I have available for me.
What would I like to be accomplishing? What kind of life do I want to have?
A couple of years ago, or maybe a bit less, the concept of leading a life where I can generate my own income, without having to work for someone and wait for my salary from month to month was almost inconceivable.
I used to say to myself: “I’ll just do well at my work, and have a safe source of income deposited into my bank account at the end of every month”, but the thing is that I also wanted to be financially free, and to be able to control my own time.
The more I educated myself about finance and about investing, the more I saw how a job can be a big life sucker, and it can also be a very risky thing to have.
Working from 8am to 6pm (the way I do now) means that every working day you are forced to spend 10 hours of your day working for someone else, and frankly speaking, I didn’t really like the idea of busting my ass off to make someone else rich.
It’s true, I’m getting paid for my service, but for 10 hours a day, I felt that I deserve to be paid much more, and I should be paid based on my efforts and not based on how many hours I clocked in.
The risk of having a job comes from the fact that my ability to generate income is directly connected to the fact that I’m working for someone, it meant that if any given day I get laid off, my income generation is halted to zero, and to be honest, the more I grasp this notion, the scarier having a job seems to me.
So I better start learning how to generate my own income very quickly.
Now, even though I still have a job, and still work from 8am till 6pm, I am aiming towards leading a life where I’m not working for anyone, and earn based on my effort and not based on my time, and where no matter what the conditions are in the world, I can still have a source of income flowing in.
One more preference I need to add, I want to be able to have a steady cash flow into my bank account, and I can only achieve that through trading, since value investing means freezing the funds for months and years on end before translating these profits into cash in the bank.
This way through trading I can create income, and through value investing I can create wealth.
What are my strengths? What am I good at?
I come from a background of engineering, I spent 7 years of my life studying and applying mechanical engineering in university all through my bachelor and my masters degree.
Engineers are famous for being logic driven people, and for being good analysts. I love to look at a chart or a graph and to try to derive a sensible and logical explanation of why the chart looks the way it does, and what it means.
But one thing I’m not a very big fan of, and that’s complication, I like simple things, that’s why I was never very good at the fluid dynamics course, because there was just too many complicated equations.
In order for me to solve any kind of problem, whether personal or work related, I first try to simplify it, and try to make it a 2D instead of a 3D problem, I try to eliminate any kind of unnecessary noise around it, and leave only the bare essential factors.
Also because of my engineering background, I had to be comfortable with my mathematics, and I had to be good with numbers, which I am.
So let’s sum it up, I’m good in interpreting charts, I have good analytical skills, I like to simplify the scenario that I’m dealing with, and I’m comfortable with numbers.
Chart interpretation, analytical skills, and the ability to simplify things render me a good candidate for trading using technical analysis.
Analytical skills, the ability to simplify things, and being comfortable with numbers, render me a good candidate for interpreting financial statements, and thus for value investing.
So again here, my skills allow me to be both a trader and an investor.
How much time am I willing to allocate for Trading or Investing?
Now I need to know if I can manage to allocate enough time to either trading or investing, or maybe both.
I live in the United Arab Emirates, and we are in a GMT+4 zone, so the stock market opens at 5:30pm or 6:30pm depending on winter or summer timing, in U.A.E we don’t have daylight savings changes.
So either way, 5:30pm or 6:30pm I can manage to come back from work and be present for the majority of the opening time. But everyday before trading I need to do my homework and scan the markets for trading opportunities, and this takes some time. So I would probably be trading the afternoon session of the market, since between 09:00am ET and 12:00am ET I would be scanning for opportunities and getting some rest after work, and between 12:00am and 02:00pm it’s a bit of a down time in the markets, not worth trading, so the best time for me would be between 02:00pm ET and market close at 04:00pm ET
Very well then, now I know that I have enough time to trade using technical analysis.
Now I’m not looking to be an active day trader, I’m more looking to be a swing trader, using hourly and daily time frames. So this means that I will have some free time that I can use to learn how to evaluate companies by interpreting their financial statements (i.e. Value Investing).
Also, I have my weekends that I can make use of to learn more about investing instead of trading, our weekends in U.A.E are Fridays and Saturdays.
So I believe that if I put a plan for my time, and consistently follow it, I can manage to have enough time to learn both how to trade and how to invest, especially that I will learn how to trade at the same time as I’m trading, since I registered in the Extended Learning Program offered by Online Trading Academy, and I will be mentored all during the trading session.
To sum things up, I will be aiming towards increasing my education on both trading using technical analysis, and value investing, since I believe that I can do well in either one of them, and I also believe that neither is better than the other, and they both work, and if properly applied they can be a valuable source of income that in a few years can allow me to quit my job and lead an independent life without having to obey anyone’s orders, and after I quit my day job I will have all the time in the world for my trading and investing.