Sitting As A Strategy

At times money comes easy in the market, a time where you can do no wrong, we all witnessed this with the biotechs a few months ago, basically you couldn’t miss.   Making money is not the hard part, keeping it is the real challenge.  There comes a time when it is best to do nothing (swing traders) and this by far is the hardest thing to do as a trader. Patience and inactivity are the two hardest virtues to master in trading in my opinion.  While the casino is open and you are staring at your screen you can make yourself justify a lot of trades, and if you run a newsletter or manage money for other people then patience and inactivity becomes even harder in this new transparent to the second environment–for you newbies in the OPM or in the newsletter world this is when you will realize that managing emotions is just as important if not more important than managing the capital.

Here are some of the things you can do;

  • Tune out the noise now more than ever, in tricky/possible inflection points in the market people tend to get more opinionated, combative, and tend to be in a battle with the market as oppose to going with the flow.
  • Make sure you do your homework before the market opens and before you look at the futures, this will help you to stay away from some intraday plays that were not in your plan and it will help with your bias.
  • Find some type of distraction during the day, because every small intraday bounce will feel like the beginning of something big and you will want to get involve, every single down tick will feel like the beginning of a correction. The key here is not to catch “A Bottom” or ” A Top” but to be involved and take advantage of the trend when all the emotional dust has settled.
  • Realize that there is a time to be aggressive and there is time to just move a couple of pawns around just to get a feel for the environment.
  • The market is like the restaurant business or most businesses for that matter where they probably lose money or just grind it out 4 out of the 7 days and make all their money in 3 days.  80% of your gains will probably come in 20% of the 252 trading days.  For those who I manage money for see this, inactivity, then we start moving pawns around, then we get aggressive when we get the fat pitch.  Some might say that timing the market doesn’t work, like everything in life, it works for some and it doesn’t work for others, sometimes it works, sometimes it doesn’t.


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