Trading is fun, but it’s tough to make a living from it. The majority of traders lose money because they are not disciplined enough. A clear advantage of working within the framework of a regular savings plan in Singapore for traders is that you can create structures and discipline in your trading account by creating an automated process without thinking about it all the time.
Here are six advantages of a regular savings plan for traders:
You can become more profitable.
One great benefit of working according to a regular savings plan for traders has enhanced profitability. There are many reasons why this leads to higher returns for traders, including the fact that research has shown that traders who trade more frequently, which is part of an automatic process, are better able to tolerate higher risk. This enhanced ability allows them to place larger bets with more significant returns. The automated savings plan also helps traders to remain calm under fire and not overreact to the market during fast-moving periods where volatility often leads to lower returns for average retail traders.
You can remove emotional decisions from your trading.
When you remove emotion from investing and saving, you can take a more objective approach to better results and enhanced returns. Emotions such as fear and greed often lead to bad decision-making, and when we remove these emotions from our thought processes, we can truly see clearly. A trader who works according to a regular savings plan for traders takes away the excitement or disappointment associated with every trade because trades are automatically traded based on predefined rules rather than based on how they feel at any given moment in time.
You can make use of small windows of opportunity in the market.
One great benefit of a regular savings plan for traders is that it enables you to take advantage of smaller windows of opportunity that appear in the market, such as pullbacks and low volatility periods. This strategy enables retail traders who might not otherwise have enough capital or trading time to join in these types of markets. When such opportunities arise, they can be acted on quickly within a structured routine without worrying about any involved emotions.
You can become a more consistent trader.
When you develop a regular savings plan for traders, you remove the worry of having enough capital from your mind, which allows you to work on other parts of your trading strategy, such as risk management and position sizing. It means that you can focus on becoming a more consistent trader because these elements do not rely on external factors, such as how much money you have in your account at any given time. By having fixed amounts removed from your account regularly, even if the market doesn’t perform according to your expectations or desires, then there will still be money left over for you to trade with.
You can perform better during significant market corrections.
A great benefit of having a regular savings plan for traders is that it allows you to weather the storm when financial markets undergo larger than usual market corrections, which happen once every 3-5 years, according to historical data. It allows retail traders who might otherwise panic and sell at the worst time possible to remain calm under fire because it is just another day within their specific trading routine which they follow without exception.
Advice from a pro-trader on why you need a savings plan
Traders do not plan for their retirements; they become traders because it makes them happy.
Happiness is a funny thing (if it can even be defined – which I doubt). Some people seem to be happier doing one thing than another, and this happiness gives them energy, focus, and motivation to succeed. It also helps them deal with the inevitable failures. It helps them get back up after they fall and to get ready for the next trade or adventure.
It’s no wonder that traders don’t make savings plans for retirement; However, some do plan on quitting at a certain point (nobody I know has ever admitted they might continue), it is not necessarily their primary objective. For most, the objective is to make more money by day trading.
For some, this might be a half-truth, or it might simply be a method of coping with the realities of life. Realities such as:
- Traders reject conventional wisdom and discipline.
- There is a ceiling for success. that cannot be broken (most traders will never become millionaires).
- Traders must trade for a living.
Those who can cope with these realities might succeed and live happily ever after unless the market changes or their results change. It’s still too early to tell whether there is such a thing as a “perfect” trader or system that will produce consistent results no matter what. But one thing is sure; even the perfect trader cannot escape the realities…
Like most traders I know, I have faced all of these realities at some point. They are accurate enough to prevent me from getting rich quickly by day trading alone. Day Trading is fun, it’s challenging, and it can be profitable for those with the right combination of skills. However, like most people, I know that trading alone is not much of a retirement plan; day trading can never replace a full-time job.
So I have started to look at other ways to become financially independent (while still working part-time) through trading. Starting up a savings plan is step 1 to long-term financial independence.
