By Cliff Clark
We occasionally talk about achieving long term financial freedom in the trading room. What is financial freedom? Financial freedom is basically achieved when you can create enough cash flow from your passive investments to cover your expenses comfortably. The best way to achieve this is to save, invest and live within your means. Most people that you hear say that they wish they could achieve financial freedom have never done any of the three, especially the third one. True wealth is rarely ever acquired quickly and for most it will take many years of planning and investing CONSISTENTLY to get there. There are many ways to get to financial freedom, here are a few tips to get you started:
- Educate yourself as much as you can from information that will help you on your financial journey. Unfortunately this is stuff you likely didn't learn in school so you'll have to acquire the information from your own studies.
- If you are married make sure you and your spouse are in tune when it comes to expenses, saving and investing. Money is one of the leading causes of divorce.
- Live within your means. That means that unless you have money to burn, stop buying unneeded material things like boats, RV's or new fancy cars that rapidly decrease in value.
- Try to live a clutter free life. Get rid of the all unneeded and unused items from your home. Decluttering and cleaning your home will help you simplify your life, give you extra space, which in turn will reduce stress and increase your quality of life.
- Do not have kids until you are financially and emotionally stable. Raising a family is expensive. The longer you can hold off the better.
- Develop a long term financial plan. Your financial plan should include income, expenses and how you plan to save and invest each year.
- Set financial goals on how much you should be saving per year and hold yourself accountable for achieving it. You should always make a habit of consistently tracking it. The same goes for expenses. If you are consistently over budget you'll never reach your goals.
- Have a disaster plan incase you lose a job or have unexpected expenses such as unexpected medical bills. An emergency fund that can cover 6-12 months of expenses should be maintained. You think it won't happen to you but you could be laid off tomorrow.
- As you increase you financial assets over time try to develop multiple streams of income. If one stream goes away you will still have other income to fall back on.
- As much as possible get rid of negative people from your life and connect with positive people who will encourage you on your life goals. I know this is sometimes hard because we may have family members or coworkers with negative views on life.
Life is not fair. We have to learn to play with the hand that was dealt to us. Many of us are starting from different places and we all won't be on the same timeline. But one thing is for sure. The earlier you start the sooner you will get there. I didn't really get started until my mid 30's and was still able to retired by my mid 50's. Imagine what you can do if you start in your 20's. It's never too late to get started.
2 trades for me today with +1.5R total
1st Trade QCOM +2R
148.39/149.97 exit 143.25
12% gap down under pivot support and 50ma after a strong daily double top rejection,. I took it on a congestion breakdown with a fairly wide stop, leaving my 2R target 50c over its ATR, slow but consistent move down with great RW, hit my target on the penny before it bounced.
2nd Trade AQB -0.5R
9.40/9.70 exit 9.56
I rarely trade stocks under $10 and even more rarely short them. I liked this daily chart as it broke its uptrend channel and stayed under a strong 9.50 support line enough room to its daily 50ma. I entered after a pullback with a fairly wide stop but only 1/3 of its ATR used at the time. It failed to break down with the strong market open and stayed in a narrow range.
I actually broke my plan with this trade as I lowered my stop to a pivot where price made a big bounce earlier at 11am with a large seller sitting there. My thought was that if it breaks that level again then it will likely...
1 trade for (-1R)
I took a BD on QCOM. I was worried about the target being close to the daily range, so I took a tighter stop on the 2 min chart. I am looking through PTS right now, most of the examples have 2 options for where to put your stop. It looks to me like one of the stops would be at the bottom of the main consolidation area, and the other at the bottom of where there has been a shakeout or turnaround bar (if there has been one). Due to the daily range I took the tighter one on this. In hindsight it seems obvious to take the wider stop, but in the moment it looked ok.
I was then looking at the 15 min 3BP on QCOM, but the reason I used a tighter stop in the first place was because of the range. The 15 min 3BP would have needed to have gone even further than the wider stop on the 2 min BD, so I didn't take it.
