This is going to sound incredibly simple, yet difficult to achieve. You’re going to need self-discipline and fortitude when chasing looks fun. It will be uncomfortable yet very profitable.
Your mind will tell you danger, yet it is the right thing to do. That’s why so few do it. Want to know how to improve your trading 30% instantly? Here’s how to do it.
Buy into long positions only when your chosen equity is on sale. What exactly does that mean? If you are going to buy stock ABC, only buy it when its down for the day. If you want to short a position, only sell it when its up on the day. The price is reduced or on sale when the market reduces prices on your chosen position. I know it’s simple, but it’s hard.
If you went to buy a new pair of Levi jeans, would you like it better on sale or at full price? Would you buy a few extra pairs of jeans if the price went up while you were trying them on? I don’t think so, but that is exactly what traders do when they chase stocks out of the gates like trying to catch a Pamplona bull. The trader on the other side of your chase is selling into your buying frenzy, knowing that trading is meant to extract money from those who have yet to learn their lessons.
I think women are more attuned to sale prices then men. My wife often tells me how much money we saved when she comes home from shopping. There is a lesson in this mindset that everyone can use in trading.
Learning to know what position you would like to own and then monitoring that position with alerts that scream “I’m on sale now” are a great way to fix this situation up to your advantage. Impulse trading by headlines and chasing and jumping on other traders’ trades without your own analysis leads to buying when often your stock is already into a full gallop higher.
Add a few trading mantras, and post them near your computer screen:
- I don’t chase. I let the market come to me.
- I only go long on red tapes, short on green tapes.
If you’re going to be a successful trader for the long term you will need to think differently than the mass of traders. A few new trading rules that you can stick to and follow through on can make a big difference. Entering your trades only when the market provides a discounted sale price is a good place to start. Then you can compare savings with your spouse.
Enuf said.