If you think you should be trading all your life, you are very wrong. And I am not saying that you do not trade, which is what you are passionate about -like me- but once you get certain benefits, it would be interesting for you to do what I am going to tell you next and I tell you because I learned it from my mentor trading (Jake Bernstein) and other great professionals (like Tom Busby, among others) and it is the following …
Invest in Other Profitable Businesses
All the great professional traders I know who live from trading also invest in other businesses. In other words, they have an open mind to get money with other activities than trading themselves. They actively invest in lucrative businesses in different areas (Media, New Technologies, Alternative Energy, Start-ups, Marketing and Advertising, Biotechnology, Nanotechnology, Precious Stones, etc.). Think about this…
Trading can become a very lonely activity (and I do not recommend joining trading chats or trading rooms to mitigate such loneliness), very cold (we deal with numbers every day) and can get tired (yes, make money it is not all). So my recommendation to every student who is consistently making money is that …
Set aside money for investments
When I started earning money, my mentor taught me how to diversify. And I’m not talking about diversifying money into other financial assets, other futures or commodity markets. I mean investments that can offer you the highest possible return on investment. And now I explain the reason.
When you start making money with trading, it is because you have developed your system or you follow the profitable system of a trader. When you start to know the rules of a “game” you begin to develop certain skills – sometimes without realizing it – and you also get a certain “nose” so it will allow you to get the performance or not. Let me give you an example.
If you already get results in trading and follow a system, surely you have observed certain patterns in the markets so many times that just by looking at the price action you can predict with high probability what the market is going to do. You no longer need indicators and of course, you do not need anyone to tell you what to do or not do in the market. You are in a state of mastery and although you do have punctual losses, you do not exceed the gains in absolute terms.
And once you have achieved that mastery when you hear a business opportunity, they tell you about a new idea and explain how they will carry it out, they invite you as a potential investor to participate in a fund to inject capital into a large project, then you will know how to identify if It is a good investment or not. You can guess if investing 100,000 (or just € 10,000) will mean a return on investment. And you can do it -in part- thanks to the analysis capacity that you have developed in the markets. I’m going to give you a personal case.
Watch this video and at the end answer this question: Would you have invested your money to help finance this project in exchange for participation?
I hope you got the message. Wouldn’t it be true that if you had been among the 100 initial investors you would not have thought twice about investing – even if it was a small sum of money – in this project? The reason is simple: It is a revolution in an industry and it is an innovative technique that will completely change the way that beekeepers are going to collect the honey that you eat. The lesson is obvious:
Don’t Re-Invest All Your Profits in Doing More Trading
The professional trades I mentioned to you at the beginning think about constantly moving your money. They make your money make more money. They never exchange time for money. They are always looking for ways to capitalize on their capital to generate more capital. That is the key.
Therefore, I also diversify and do not focus solely and exclusively on re-investing the benefits of trading in doing more trading in leveraging more or speculating longer.
That is why I will invest in advertising and marketing companies, I will invest in new media or some cases I have co-created them, in new companies, in creating companies, in start-ups, in projects where my “nose” tells me that it is necessary to invest, in advertising media, in financing projects that have to do with the environment or 3D printing, etc.
I am always looking to monetize, monetize, re-invest in activities parallel to the activity of trading.
Hope this makes sense to you too. I hope you see the meaning of never exchanging time for money. Time is, after all, the most valuable asset that I have and that you have. It is more valuable than money. Because to generate the money you need time but there comes a time when you have to set aside a% of your profits from your trading and re-invest it in other businesses that can mean a high return on investment.
And I end with the phrase “Don’t put all your eggs in one basket” which sums up very well what I just told you.