How project management made me a better trader/investor

dollar sign $  By Leo Reynolds on flickr

dollar sign $ By Leo Reynolds on flickr

I’ve recently moved back into the world of trading stocks and options.  Most of what I’m doing is small stuff but I’m enjoying it and making some money.

Some quick history – me and trading/investing

In the past, I’d been into investing quite heavily with the ‘buy and hold’ approach.  Find a company with good fundamentals and buy it at a good price.  Then hold it and wait for it to go up.

Not a bad long-term approach. I still have some core holdings that are long-term but I never just buy to hold any longer…I buy with a plan in mind. I know when I’ll sell. I know how much I’m willing to loose and how much I’m willing to earn from the trade.

Today, most of my investments are short trades that i hold for less than a week. Many are held overnight for quick in-and-out trades (call swing trades in the trading world). I do some daytrading (buy/sell in same day) but not a lot since I don’t have enough capital in one account to get past the daytrading rules.

Project Management & Trading/Investing?

So…how has project management helped me to be a better trader?

Simple…as a project manager, you focus on three things: Budget, Timeline and Scope

To be successful managing projects, you’ve got to plan well, spend well and execute well. You’ve got to know what you want to do, how much money you have to do it and then execute properly to accomplish the goal(s).

The same is true for trading.

To be a successful trader, you’ve got to plan well, spend well and execute well.  Just like managing projects, you’ve got to know what you want to do, how much money you have to do it and then execute properly to accomplish the goal(s).

In addition, just like being a good PM, you’ve got to know how to manage risk.  Same is true for traders….risk management is key to a long trading career.

There’s one major difference between trading and project management though…..and its a big one:

Trading uses your money….project management uses your bosses money.

It’s usually easier to spend someone else’s money:)

If you mess up on a project, someone can always allocate more money to the project to cover you…you mess up a trade, there’s nobody there to help….that’s where your budget and risk management come into play.  Put too much into a bad trade and you blow up your account.

Trading is all about having a plan and then working that plan.  Find the stock setups that work and then look for the right entry/exit.  Think about what you want to do and be patient and let the plan work.  Sounds similar to what a project manager does, no?

If anyone out there’s interested in learning more about trading, feel free to drop me a line.  For much more knowledge folks on the subject, check out or some of these good traders, investors and thinkers in the space:

  • Sam

    HI Eric, This is a wonderful post! Something I can relate to myself. -Sam 🙂

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  • I’ve always found “trading”, as opposed to “investing” interesting. For me, it’s much easier to pick a strong company that has a competitive advantage,, and look to hold it forever. I guess it’s a different skill, picking companies for a short term gain?

    • It is different, yet the same Daniel. There are some traders who will only trade leading companies. Those leading companies tend to be those companies with strong fundamentals, etc. Others trade purely on ‘chart’ using technical analysis and look to buy/sell those shares in a day. Some people combine both approaches.

      It’s an extremely interesting area…very very challenging too 🙂

      • How does the return vary? The benefit in long term “buy and hold” type investing, for me at least, is that I need to do very little, aside from keep an eye on the holding. It’d have to be a significant increase in income, right? It’d be interesting to calculate the expected value of trading versus investing over twelve months or so

        • I can’t provide any numbers for others, but for me I’m seeing monthly average returns of about 2% which annualizes to ~ 24% if I keep the 2% average per month. My 2% monthly return is after commissions and costs.

          Now…my buy and hold approach in the past saw averages of 5 or 10% per year increase on average.

          the short term approach, for me, is much better. I like to be hands on and this approach feels much better for me than buying something and just letting it sit there doing nothing.

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  • Hi Eric,

    I did some trading myself, and the biggest lesson I’ve learned, never play with money that you will need, because the factor of fear will be multiplied by 10.

    Anyway, I’ve published an article relating to the subject, What project managers can learn from day traders.

    • Excellent Advice and thanks for sharing the link. Great article.

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