But suppose we SAVE $50K per year, and earn 5% via INVESTING.

Now, starting at the same $50K, we'll only end up with $3.54M.

This is NOT enough to meet our goal.

19/

So, *some* combinations of SAVING and INVESTING will successfully get us to our goal.

And other combinations won't.

The "Saving vs Investing Frontier" tells us exactly *which* combinations will succeed and which won't.

20/

Here's how it works:

We take our SAVINGS per year on the X-axis. And our INVESTMENT returns per year on the Y-axis.

We draw a BLUE curve ("the frontier") that separates successful (SAVE, INVEST) combos from unsuccessful ones.

Like so

21/

This "frontier" is NOT perfect.

After all, both our savings and our investment returns are likely to vary from year to year.

And the "frontier" plot assumes that both will remain roughly constant.

That's not very realistic

22/

Still, I've found this "frontier" diagram useful for financial planning.

Given a "financial freedom" goal, this plot lets me visualize all possible (SAVE, INVEST) combos that will get me there.

This gives me a feel for how difficult the goal is, and how to plan for it.

22/

The idea is to be *conservative*.

For example, we want to SAVE so much that, EVEN if we materially under-perform the S&P 500 on the INVESTING side, we will STILL likely reach our goal.

Like so:

23/

If you're still with me, thank you very much!

FinTwit tends to focus a lot on INVESTING. And that's great.

But we should remember that SAVING is pretty important too -- especially during the early stages of our investing journey.

Have a great weekend!

/End

?

And know it like the back of your hand.
To give a final example, maybe you feel your impatience is because you have an urgency to make money that goes beyond a mere want and is a real, desperate, need.
Interestingly enough, most people try to solve this issue by coming down a time frame to try and generate more trades (and/or upping risk).
But here's the thing: lower time frame traders still need patience. In actual fact, they probably need even more of it because unlike the higher time frame traders who can perhaps check in less frequently, scalpers are forced to sit there watching actively. This really tests you.
Ultimately, patience is part of being a competent trader.

As traders, we all want to trade.

But good traders understand the money you make is not made in the trading, it's made in the waiting.
So, if you suffer from impatience:

1. Calculate the cost
2. Find the cause
3. Brainstorm the solutions
4. Choose the one most likely to be effective
5. Make a plan and implement it
6. Assess the impact going forward

This is how you progress.

And it works for endeavour.

At the same time, being busy with another job meant I was less likely to micro manage trades and mess them up
I also found that having an income took the pressure off trying to find trades but at the same time, knowing how hard I worked to earn 2k a month, meant I was far less likely to throw it away on an ill considered trade.
To conclude: having a full time shouldn't prevent successful trading but it does require careful planning.

22 years trading.

Here are some of the most important things I've learnt (Part 2/2):
19. Work on finding the base level of risk that is right for you. To do this, you should know your metrics (win/loss percentage etc)

You can’t afford to bet the farm on a trade. But if you trade like a pussy, you will never have a farm to be in the first place.
20. Risk can and should be varied from the base level.

There are benefits to risking a fixed percentage per trade but there are times (and trades) when you should push the envelope.

If you do not understand when these times are, you do not have enough experience.
21. Many traders make a mistake and then compound it in frustration by jumping into an ill-considered position or betting too big etc. This is illogical: If you have a flat tyre, you don't get out of the car and slash the other three. Don't be a cunt.
22. It is a bad habit to make the same mistake twice.

It is unforgivable to make the same mistake a third time.
23. Emotions should be dealt with like with calories. Absorb them and then burn them off before you enter the next trade.
24. If you have a problem, the process to solve it is by asking yourself:

- What is the problem?
- Why do I have it?
- How will I solve it?

Many make the mistake of leaving out the second part. Without considering why you have a problem you cannot effectively solve it.
25. Journal everything you do.

Question everything you read.

Test every idea you have.

Compare multiple outcomes on trades. (Start with whether it's a good idea to move to breakeven. Go onto whether it's beneficial to take partials)
26. Take time off to recharge when you feel you need it.

Time is a great healer.
27. Money comes and money goes as you win and lose.

The only number that matters is the amount you leave the casino with when you retire.
28. The true cost of trading isn't always limited to the money you think you're risking, the education you pay for or the time you spend learning.

The true cost isn't known at the start.

But one day, someone will bring you the bill and you'll remember these words.