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 stocktwits.com or some of these good traders, investors and thinkers in the space:
- Art of Trading – @traderstewie on Twitter
- Gtotoy Blog and Day Trader Boot Camp – @gtotoy on Twitter (i recently joined DTBC and love it!)
- Michael Bigger – @biggercapital on Twitter
- Investing with Options – @steveplace on Twitter
- Joe Fahmy – @jfahmy on Twitter
- Barry Ritholtz – @ritholtz on Twitter
- Joshua Brown – @thereformedbroker on Twitter