Another key to successful daytrading: PATIENCE
I am a firm believer that many potentially successful daytraders fail out of boredom and lack of patience. They recognize that they can't make money without making trades, and therefore... they trade, and trade, and trade, and trade. What they fail to realize is that the quality of the trades is the key, whereas the volume of the trades can be irrelevent or even detrimental. Overtrading has killed many a daytrader.
There was a pertinent quote regarding patience in Reminiscences of a Stock Operator, "There is the plain fool who does the wrong thing at all times anywhere, but there is the Wall Street fool who thinks he must trade all the time."
My favorite quote about patience comes from Jim Rogers in Market Wizards, "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." Until he finds a trade that obvious, he just sits on the sidelines and watches the market.
Another Market Wizards quote from Mark Weinstein, "Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week, waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferable one that is also sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading."
Thinking of the value of patience came to me today, on a day that I didn't initiate a single trade (although I closed out an overnight hold this morning). I attempted to enter several promising trades this morning, but didn't chase after the trade when the initial entry failed. This afternoon, I stalked several outstanding candidates for overnight holds, but was unable to buy the stocks at "my price". As a result, I didn't make a single trade. => And, I didn't lose a single dollar. I strongly believe that my success is greatly amplified by steadfastly refusing to enter trades unless my odds of success are extremely high. Some days (although very infrequently) I don't find a single trade that meets my criteria. But as a result of this very strict trade screening, my losing days are nearly eliminated.
The moral of the story: Don't rush into that next trade, it may be a loser!
Good luck,
-Eric |
