The Opportunity Cost of Trading

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When I was sixteen and bought my first car, I did everything to keep that car on the road by myself. When it was time to wash the car, it was me who applied the elbow grease. Even though my car was a $300 beater, NOBODY touched it except me. Now, before you suggest I have control issues, let me explain: I couldn't afford to let anyone touch it. I had to do everything myself because I had no money to pay others to do it for me.

Today, all that has changed. Now, I don't do anything besides drive my car. I have a guy that changes my oil, an automatic car wash that keeps it clean, and another guy to handle repairs.

I also have a detailer for my RV, a plumber for the house, and an electrician for everything, on speed dial. So, what happened? Did I become less capable with age? Well, yeah, I probably did, but I am capable of changing my own oil, or crawl under the car with a hose to spray off the salt, if I want to. But should I? After years of work, I can afford to pay someone else to change it, and I get the luxury of enjoying that time doing things I find far more preferable.

Opportunity cost is defined as: the loss of potential gain from other alternatives when one alternative is chosen. It's a concept I first learned of in college Economics and is one of those lessons that really stuck with me. Let's say I could be earning $50/hr doing whatever it is that I normally do to earn money. Now let's say that my lawn needs to be mowed and it will take two hours to do it. Should I pay the neighbor kid $15/hr to do that job? If you run the math the answer is obvious. You could earn $100 in those two hours and pay out $30 to get another job done. You come out ahead $70. Or you could do it yourself, earn nothing, but also pay out nothing, and come out at $0.

Some people will argue they'd do it on the weekend when they wouldn't be earning anything anyway, and thus they are actually earning $30 by cutting the lawn. My argument would be that instead of calculating their opportunity cost based solely on what they earn 8 hours a day 5 days a week, they should calculate it including their off-work/weekend/family time. We all need a break now and then, after all! This will lower your hourly earnings number, but will allow you to make opportunity cost decisions that leave time for enjoying life as well.

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Your opportunity cost is something you should consider with trading also. Here at Wanderer, we spend roughly twelve man hours EVERY DAY pouring over charts, reading news, and looking for trading opportunities. This isn't rocket science. We will teach you how to do the same work. How to analyze charts, how to spot setups, how to calculate reward-to-risk, and how to execute the correct trade for the situation. You could easily spend the same twelve hours, and might even be more efficient than we are, getting the same work done in half the time. But should you?

For less than $2/day you can have Wanderer Financial, with a proven track record, do it for you. Forget all the legwork, all you have to do is look at the pre-screened alerts, and execute the order. What makes us worth the annual cost isn't that we are so brilliant, or have any particular edge that you couldn't have. Remember, we teach you exactly how to do this. What makes us worth it is your oppportunity cost. We do the hard work for you, and by splitting the cost with your fellow members, you are able to employ professional stock screeners for less than $2 per day! That's easy math.