A while back I posted the outcome of earning just 5% a week for a year in a $10,000 trading account. The total profits were over $126,000.00 dollars!
Of course, this was a hypothetical scenario with the point being small modest gains consistently add up to a pile of money in the end. Reality dictates that you will have losing weeks along the way, occasional disaster trades, and of course bear markets overall that you didn’t see coming.
One of the most difficult things to do in trading is to do nothing. We are so ingrained that action precedes results and profits. It is what makes trading such a mysterious profession. The markets don’t care if you have a CFA or CMT designation. You could be a high school dropout , a janitor, a stay-at-home mom or dad and do just as well as the smartest hedge fund manager on Wall Street.
That coupled with the trade brokers apps designed to get you to trade repeatedly and the gamification of trading has led to many busted trading bankrolls. Sitting on your hands waiting patiently for entries that can really earn you a good living is so difficult. You must master your emotional control and rely on alerts you preset so that you can enter trades without hesitation. It’s why I write about this topic so often, as a reminder to myself, because I need it.
One of the most difficult things to do in trading is to do nothing.
It only takes a few good trades a month to make a great living at trading. What will prevent that is consistently entering mediocre trades that you entered because of someone else’s opinion or a news headline. How many times have regretted entering these trades? Avoid the pain of mediocre trades that you lack absolute clarity and conviction.
Even worse is entering trades because you must have some action always going. The thrill of the markets(gamification) is addicting and allows an opioid like rush when it works. Watching tickers all day long is the first mistake you make towards entering poor trades. The irrationality of intraday price moves is astounding. If you ever joined a trading program they always have trades going for the sake of training. It’s an exercise in failure for the sake of having skin in the game.
I once was playing blackjack at a high limit table and a real gambler stood next to me. He was so excited as he explained his adrenalin high from playing twenty-one. He literally yelled “I love this rush” while jumping up and down after a few big wins. Jumping Jim was entertaining to watch. He was literally high from the rush. The downtime while the dealer was shuffling up a new shoe was painful for him. He had to have some money on the line to be satisfied.
Some of the best traders may only have 30-40% winning trades, but a few of these winners makes them a bundle of cash in the long run. Be self-disciplined enough to patiently wait for the trade where the cash is just sitting there for you to take. In the end the traders with the most patience win.
Enuf said.