Is Trading a Skill or an Asset?

I have a question for you.

Do you think trading is a skill?

Or do you think, trading is an asset?

Have you ever thought about this kind of a question?

Let me give you an example.

Let's say there is a person who is a full time intraday trader.

So he gets up in the morning, gets ready, plans his trading day, and at 9:15, he starts his intraday trading, and till 3:30, he uses his trading skills to make money, in front of the charts, doing his intraday trading.

Now, is that a skill or is that kind of trading activity an asset?

I would call that a skill because, the trader is using his intraday trading skills to earn money.

In that situation, trading would be called as a skill.

I would not call it an asset, in that particular situation, because an asset is something, that puts money in your pocket, whether you work or not, as per Robert Kiyosaki's definition.

Now, in the case of the full time intraday trader, he was not only investing his money in the market, he was always also investing his time.

This is the reason why, I don't call it an asset, because an asset is something that gives you money without requiring your time.

So the next question is, if trading requires our time, how do we convert trading into an asset?

Or in other words, how do we earn money from trading without investing much of our time or without spending time on the chart in front of our laptop?

I have found a very simple solution for this.

If you choose to become a positional trader, instead of an intraday trader, it allows you to convert the skill of trading, into an asset.

So for example, when the market closes at 3:30, you could decide to track a certain number of stocks and use a specific strategy to apply on those stocks.

Within half an hour, you can complete all of your analysis, if you are following a certain set of fixed rules, which removes all of the mental thinking from your analysis.

So in that way, if you are investing half an hour per day, on your trading, and then you are putting your orders, and just ensuring that the next day those orders get filled, that way you are putting only 2.5 hours of your time in trading, on a weekly basis.

Now each week has got 168 hours.

Out of 168 hours, if you are investing 2.5 hours of your time, that equates to less than 2% of your entire weeks’ time.

Less than 2% of your entire weeks’ time means you are hardly investing your time in your trading.

But you still have positions in the market, which if you have selected well, can make you a consistently profitable professional trader.

So in this scenario, I would consider trading as an asset.

I would consider trading more as an asset than as a skill, if you are into positional trading and investing the least amount of your precious time in trading.

So please think about this question again.

Do you want to use trading as a skill or do you want to use trading as an asset, that generates income for you without requiring much of your time?

Thank you.

Regards,

Rohit Musale, CFA

6 February 2023