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Are you an efficient trader?

Most traders start out with a dream. Usually, a part of that dream is once you're a successful trader, you will have more time to enjoy things in life such as spending time with your family, friends, hobbies, time in nature and start other business opportunities. Besides making money, for many, the main reason to start trading is actually to no longer spend 40-60 hours a week sitting in an office staring at a screen.

Unfortunately, many traders end up doing the exact opposite. Staring at their screens for hours each day, looking at charts and quotes. They don't really have a precise plan of their trading day. Instead, they wake up, turn on their charts and wait for what they perceive as a trading opportunity. Needless to say, this often leads to overtrading unless the trader has matured enough to be mostly free from such flaws.

Still, being an active day trader means a lot of in and out trades during the day, and being very talented he usually comes out ahead at the end of the day. Trading the E-Mini S&P 500 he manages to make a profit of 2 points a day on average. He is trading two contracts so that's 2.0 x $50 x 2 = $200. Placing 10 trades on average each day, paying $5 round turn per trade, that's 10 x 2 x $5 = $100 commissions we have to subtract.His actual profit after commissions is $100. Trading for 8 hours each day, that's $12.50 per hour…for doing a quite exhausting job! Ouch.

Let's look at a second trader. He knows his business very well after investing a considerable amount of time and money to learn about the markets. Our second trader trades a system with precise trading rules, also in the E-Mini S&P 500 for example with the Ambush System.

He knows exactly what times of the day to take action. In his case, when to place his entry order and when to exit his positions each day. This way, he can easily plan his day, knowing that he won't have to watch the markets at all. Being a professional, he takes his trading business very seriously and religiously by tracking each trade, checks his fill prices, and so on. Still, he doesn't need more than 10 minutes each day to run his trading business. On average he makes about $105 per trade per contract. Never making more than one trade a day, and subtracts a $5 commission which leaves him at $100. As he just needs 10 minutes each day to place his orders, that's $600 per hour on the days where he actually trades!

What a difference compared to our first trader, the chart watcher! Did the light turn on for you?This is huge, and once you realized this truth you can make a big step forwards in your trading career.

Happy Trading!




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Saturday, 15 May 2021

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Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.