All traders pay attention to money but few are aware of the importance of time. Time is just as crucial as money-the more you have, the more likely you are to win.

Most people start out with too little money, and most traders do not give themselves enough time to learn. Trading is very different from physics or mathematics, where genius reveals itself early. In science, if you're not a star by the time you're 25, you'll never be one. Trading, on the contrary, is an old man's game, and now increasingly a woman's. Patience is a virtue and memory a great asset. If you slightly improve each year, you can grow into a brilliant trader.

My friend Lou Taylor, to whom Trading for a Living was dedicated, used to say, "if I become half a percent smarter each year, I'll be a genius by the time I die." As always with him, there was a great deal of wisdom in his joke.

Raise your eyes from the keyboard and think about two goals-to learn to trade and to make money. Which comes first and which comes second? Stop killing yourself trying to make a lot of money in a hurry. Learn to trade, and the money will follow. An intelligent horse trainer does not overload a young horse. Training comes first, pulling heavy loads comes later.

You learn best by making many small trades and analyzing your performance. The more you trade, the more you learn. Play for small stakes to reduce the pressure and concentrate on quality. You can always in-crease your size later. The goal is to acquire enough experience so that most actions become nearly automatic. A trader whose experience has taught him a lot of practical skills can focus on strategy-what he wants to do-instead of worrying about his next step. If you are serious about trading, you have got to put time into it. Markets have to be studied, trading methods dissected and rated, sys tems designed and applied, decisions made and recorded. All of this adds up to a fair bit of work. What is a fair bit? Two examples come to mind, at opposite ends of the spectrum.

At the hard-working end, I think of a top-rated American futures money manager in whose apartment I once stayed. We lived under the same roof, but I hardly ever saw him. He would leave for the office before 7 A . M ., return after 10 P . M ., and fall asleep in his clothes in the living room. He worked like that six days a week, but on a Sunday he took it easy. In the morning he would go for a game of squash at a club before running back to the office to prepare for the opening on Monday. No wife, no girlfriend, no pastimes, and no friends-but man, was he raking in millions!

At the relaxed, but still very disciplined end, I think of a middle-aged Chinese trader whom I visited in his mansion when the stock markets were reeling throughout Asia. He had made a fortune in the two bull markets of the previous 10 years and told me that he needed just one more Asian bull market to make all the money he wanted. He was prepared to wait for several years for the next one, but mean-while looked after his family, collected art, and played a lot of golf. He spent a few hours a week downloading the data and watching his indicators.

How much time should you spend analyzing markets and doing your homework? A beginner must spend every minute of his waking hours learning the basics. How much time will you need at the next stage, once you've become a competent semiprofessional trader? We are talking about position trading and not day-trading, which forces one to stay in front of the screen all day. The answer depends on how fast you work and how many markets you trade.

You must dedicate a certain amount of time to the markets each day. Amateurs and gamblers make a typical mistake. When markets are inactive, they stop watching and lose touch. They wake up after hear ing the news of a runaway move. By that time, the markets are run ning-the amateurs have missed yet another train and now they chase it, hoping to hop aboard a runaway trend.

An organized trader tracks his markets, whether he trades them at the moment or not. He notices when a listless range starts rubbing against a resistance, buys early, and when amateurs start piling into the rally, he takes profits, selling to lazy latecomers. A serious trader is ahead of the game because he does his homework day in and day out.

How much time will you need? For every stock you must get a handle on its key fundamentals, including its industry group. For futures, there are the additional factors of supply and demand, seasonals, and spreads between delivery months. You need to make a calendar of events that may impact your market, such as Federal Reserve announcements or earnings reports. You need to study weekly charts for the past several years and daily charts for at least a year. You need to apply indicators, learn which work best with that market, and test their parameters.

Unless you are a genius or a speed demon, it is hard to accomplish this in less than two hours. And that is just an entry fee into any trading vehicle. Afterward the daily grind begins. A serious trader reviews weekly and daily charts each day. You have to compare your market with other related ones. You have to make daily notes and write down your plans for the day ahead. To do this properly, you'll need at least 15 minutes per stock or future.

And this is in a fairly routine day. What about the day when your market hits support or resistance, or breaks out of its trading range, and a trade seems imminent? Then you might spend closer to an hour ana lyzing it, measuring risk and reward, and deciding on your entry points and profit targets.

So let us turn the question around: If you have an hour a day for analysis, how many markets should you follow? Three, maybe four. If you have two hours, you may be able to follow six, eight, or even ten. The ABC system for organizing homework may allow you to double the number of markets. Whatever you do, remember, quality is more important than quantity.

Before you add a stock to your list, decide whether you have enough time to track it, day in and day out. You may skip a day once in a while, but even then you should at least glance at your markets. Daily home-work is essential, and the number of markets you may follow depends on how much time you have each day. When we get out of touch, we grow cold. Even professionals take a few days to get back in touch with their markets after a vacation. These are the stages of development:

Beginner: At the start, track approximately six, but no more than 10 trading vehicles. You can always add more later. It is better to start with fewer markets and follow them well than to start with a lot and fall behind.

Daily homework is essential for developing a feel for the markets. Allocate time to study your markets each day. Even if you come home late at night from your job or a party, you can still find 10 minutes to download the data and glance at your five or six stocks. You can update your mental picture of them even if you don't plan to trade them tomorrow. A beginner who follows too many stocks bites off more than he can chew, falls behind, and becomes demoralized. Better to follow a small number, get to know them well, and add more later.

Intermediate: You may track several dozen stocks or futures at this stage. Analyzing each will take just as much time as it did when you were a beginner, but you'll analyze them more deeply. A serious ama teur or a semiprofessional trader can use his time more efficiently with the help of the ABC Rating System (see next page).

Some good traders choose not to expand the number of stocks or futures they trade. A person might concentrate only on soybeans and their products, or only currencies, or only five or six technology stocks. In addition to analyzing your markets, expect to spend a minimum of five to six hours a week reading books and articles and interacting with other traders on the Internet.

After about a year or longer at this stage you will face an important choice: to treat trading as a mildly profitable hobby or to try to rise to the professional level. In that case, you will need to dedicate more time to trading. You will have to make sacrifices in other areas of your life and spend at least four to six hours a day working in the markets.

Professional: people who trade for a living tend to drop other professional interests. The markets demand time and attention, and money management is more challenging because the account is much bigger.

A professional trader almost always uses some version of the ABC Rating System, unless he chooses to trade just a handful of markets. He spends more time researching the markets. At the same time, he reviews them faster, thanks to his greater level of expertise. He spends several hours each week reading, deepening his analysis and improv ing his money management, and also keeping track of new develop ments on the Internet.

The rewards are very good at this stage, but a professional who has put years into getting there does not become intoxicated with the results. He lives very well, but continues to work harder than most beginners. Traders at this level love the markets and derive a great deal of satisfaction from them, like skiers enjoy tall mountains.

Managing Time with the ABC Rating System

Markets generate colossal volumes of information. No human can process all the available data of neutral investment portfolio. No one can have in mind all the fundamental values, the economic trends, the technical indicators, the intraday action, and the buying and selling by insiders and market makers while making a trading decision. We want to be thorough in our research, but it can never be complete. We need to select a relatively small number of markets and design a trading plan in order to channel the incoming information into a more manageable stream.

Trading is not about being brilliant, not about making forecasts, and not about scanning a huge universe of trading vehicles. Trading is about managing-our capital, our time, our analysis, and ourselves. If we manage right, we'll grind out profits.

Managing time is an important aspect of success. Find out how much time you need, depending on your personal style, to research a new market and track it daily. The ABC Rating System is designed to deliver major time savings, allowing you to track and trade more mar kets in the same time. This system is not for beginners, but an inter mediate or expert trader can definitely benefit from it.

The ABC Rating System, shown to me by D. Guppy, is a system for managing time. It helps us concentrate on the markets in which a trade seems imminent and spend less time in less promising markets. The ABC system calls for a quick weekly review of all stocks like Warren Buffett or futures that you track and sorting them into three groups: A for those you think you might trade tomorrow, B for those you think you may trade later in the week, and C for those you do not expect to trade in the coming week.

The best time to run the ABC system is on weekends, after you have downloaded all your data. Prepare a spreadsheet with a horizontal line for every stock or future you follow. Put their names in the left column. Use vertical columns to record your A, B, and C ratings, one column per day. Prepare the weekly and daily templates in your trading software. Drop the first market into the weekly template. Does it look like you might want to trade this stock tomorrow? For instance, if you only trade from the long side and the weekly chart is in a solid downtrend, you will not trade it next week. In that case, mark it with a C and move on. Drop the next market into your weekly template. If it looks like a possible trade, then drop it into your daily template. Does it look like you might want to trade it on Monday? If so, put an A into your spreadsheet. If it looks like an unlikely trade on Monday but possibly later that week, put a B in your spreadsheet. Now move to the next market and drop it into the weekly template. Repeat this process until you go through your entire list.

Keep a good pace, do not slow down. You should be done with each market in well under one minute. Remember, good trades should leap at you from the screen and grab you by the face-it's me, trade me! If you have to squint at a chart, there's probably no trade.

The real work begins after you have filled in your ABC spreadsheet. Now you must study each stock or future you have marked with an A. Apply your trading system, set up entry levels, stops, and profit targets, and write down your orders for the day ahead. Do this for every mar ket you have rated an A, leaving aside all others. After the closing on Monday, go through all your A-rated markets. If you have entered them, fill in a page in your trading diary and continue to manage those trades according to your plan. If your entry orders have not been trig gered, review those markets again-do you still want to enter on Tuesday? Filtering out B and C groups saves time and lets you con centrate on the most promising trades.

Repeat the procedure after the closing on Tuesday, but now also review the markets you rated B over the weekend. Now is the time to decide whether you can upgrade them to an A and start monitoring them daily or downgrade them to a C and leave them alone until the weekend.

Earlier, we reviewed the action plan, a spreadsheet for recording your orders for the day ahead. That and the ABC system lend themselves to being combined into a single spreadsheet. Each horizontal line holds a trading vehicle, and each vertical column one trading day. The cells are filled with the letters A, B, or C, indicating your rating for that stock or future for the day ahead. Red triangles in the corners identify those cells in which you have inserted comments that tell you how to trade them.

Boredom is the trader's enemy. It is hard to watch a market day after day while it goes nowhere. A professional must track his markets, but no one enjoys watching paint dry. The ABC system provides an ele gant solution. It lets you monitor all your markets in a quick and effi cient manner, while dedicating most of your time and attention to the most promising trades. Once you get used to applying the ABC system, you can easily double the number of markets you follow and increase your trading opportunities.