Why trade in retirement?

“You’d be amazed at the number of older people taking up trading,” says Kevin Cook, an options strategist at TheStreet.com in Chicago. “I think it’s a combination of demographics and technology.” For many retired traders the intellectual challenge and camaraderie that often surround trading communities are definite attractions. The prospects of beating the market, much less trading themselves to riches, are sketchier.

Interesting. In my view, and judging from the retired people I talk to it comes down to thee reasons:

  1. You have some retirement self-directed funds you trade with. You are a buy-and-hold trader. Get a feel for a stock, buy it and hope for the best. If the market is bullish, you do well. Should the market crash – oh well, there is always someone to blame. You trade with maybe a small margin. But mostly you own the stocks you buy.

 

  1. You are excited about the trading as a process. (That’s me) You learn, read, study and practice. You don’t necessarily buy-and-hold. You take a portion of profits and manage the losses. This is what I call “Week Trading”. I might be in a trade less than a day, or up to 3-4 days. Not very often do I keep a trade over the weekend. Come Monday things might have changed! I also prefer not to keep a stock trade overnight. Currencies/commodities – yes. But that is not that practical since most stocks move fairly slowly. The balance here is to go in for a small slice of the movement, and have a fairly high lot size. And manage the stops.

 

  1. A combination of the 1 and 2. You have some long-term stocks, but have allocated some funds to Week Trade. If your capital is over $20,000 this is very smart.