“I just wait until there is money lying in the corner and all I have to do is go over there and pick it up. I do nothing in the meantime.” - Jim Rogers
I’ve read a lot of books on trading and investing. There's no shortage of famous sayings but the above quote resonates with me because patience has been the hardest thing for me to learn. If I would’ve taken this quote to heart and incorporated it into my trading psyche, I would have saved myself a lot of money and more importantly a ton of time.
Early on my extreme lack of patience led to over trading. This was always my greatest vice. I'd take marginal setups to make sure I didn’t miss a breakout or a trend. For some reason I felt like I had to catch every move in the market. If I missed anything I would become extremely frustrated. I just couldn’t miss a move. No way. Talk about FOMO (Fear Of Missing Out). I had FOMO before it was even coined.
I digress. Back to the quote. What does it really mean? The quote will have a different meaning depending upon your trading time frame. For me (swing trader and position trader) this is what it means:
Have patience. Wait and do very little to nothing until the best possible opportunities present themselves. You don’t have to trade every day, week or month. The good thing about not trading is you're not exposed to any risk. You won’t lose money. There will always be another opportunity right around the corner.
Some of the best opportunities present themselves at market extremes. When everyone is running for the exit or when you’re getting trading tips from your Uber driver or your Dentist, a bottom or top is probably very near.
Opportunities take time to develop. Don’t force a trade by pretending to see something that isn’t there. Wait until all your indicators line up and the risk vs. reward is at least 3 to 1.
Markets can surprise you by going much higher or lower than most people think. Wait until the dust settles and don’t worry about trying to catch that first 10 to 15 percent of a move. You want to focus on capturing the “meat” of the trend.
Searching for that next big move or that great opportunity is a lot of fun and can be very exciting and profitable. However, from my experience avoiding a string of bad losses from over trading or chasing a hot trend is just as important.
Right now we are seeing large gains in cannabis, blockchain and technology stocks as well as the cryptocurrencies. If you’ve participated in these trends that’s great but don’t forget that we are no longer in the first few innings of this ball game.
Bull markets can make people feel a lot smarter than they actually are. As the amount of participants increase and the headlines take over, it seems like everyone is making "easy money".
Trading during the dotcom bubble, the commodity and real estate boom and the financial crisis, shaped who I am as a trader. At some point in the near future greed will take over and cloud good judgement. It's only a matter of time before most of that "easy money" will be given back. This is why you need to control your inner FOMO.
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