Profitable Traders Do Nothing 99% Of the Time
What is the most important reason why most traders end up losing money in the market? It's simple: they do too much, they think too much, they see the graphics too much, they trade too much, they risk too much and so on.
The most successful traders and investors of our time spend 99% of their time waiting for opportunities and studying the markets, instead of exchanging them. Approximately 1% of your commercial effort is spent on the execution of operations and management positions. In other words, most of the time they are not doing ANYTHING. Can you say the same? Or, are you investing 99% of your time in entering and managing stores and only 1% of your time is waiting patiently?
If you ever read my articles about what crocodiles can teach us about trade or the sniper approach, it is obvious that my negotiation style is a low conviction and high frequency approach. So, why should you take a similar approach with your trade? Keep reading to discover ...
The 'hunting' implies a LOT of waiting.
Just as a crocodile spends most of its time stalking its prey, a profitable operator spends most of its time stalking good offices. You want to trade as a predator, not as a prey in the market, what I mean is that you want to be the trader who waits patiently in the "bushes" for the "easy deaths". You do not want to be the masses of prey (amateur traders) that are 'devoured' by professional traders every week.
How do you manage to be the predator and not the prey? It's really simple, wait, wait and wait more.
I like to say that I am in the "hurry up and wait" mode so that the right market conditions are presented. What this means is that I'm really excited to wait, because I know that waiting means I'm exercising self-control and I'm patient and disciplined, and I know that's how you make money in the markets. I have no problem in waiting for the correct configuration to be formed with the perfect confluence of the market, sometimes for weeks or even months.
The reason is simple, because I know in fact that trading with high frequency is the way in which money is lost in the market and trading with low frequency is the way to become a profitable trader. Each trader finally learns this fact with enough time and experience in the market.
Warren Buffet is a master of doing 'nothing'
My favorite metaphor and concept to teach people how to change is that of a sniper. The sniper negotiation approach, as defined in my article on this topic, is basically that I patiently wait like a sniper to align my predefined trading criteria, instead of negotiating or 'firing' at everything like a machine gunner.
It is perhaps not surprising that this is also the way in which the "biggest investor" manages himself and his activity in the market. I'm talking about nothing less than the great Buffet Warren, of course. Think about how you handle billions of dollars, it's not entering the market every day, that's for sure! All you have to do is read a book about him or see the recent documentary about him, "Becoming Warren Buffet", and you will see that he is an extremely patient and accurate investor.
Not only is Buffet patient and precise about the transactions it makes in the market, when it is ready, it is submerged, boots and everything. Sometimes, he even buys the entire company! I would call Mr. Buffet an investor of low conviction and low conviction. As traders, we can learn a lot from Mr. Buffet. While we are doing something a little different to long-term investment or "buy and hold", we should in fact model our swing trading approach after Mr. Buffet
Can you see it? The point here is that most of the time, profitable investors and traders are doing 'nothing' and, to no avail, I mean they are not entering into operations or managing operations. In fact, they may be studying or analyzing the market in the meantime, but this would count as 'stalking' their prey.
Change how you think about doing 'nothing'
It is innate for us humans to want a "quick emotion" in everything we do. It has been proven that the constant control of social networks in our phones increases the amount of dopamine (the chemical to feel good) in our brain, for example. We are a society addicted to doing what feels good more often than doing what IS good. We are born with a brain of players or speculators, who look for instant rewards and emotions in life and with money.
When it comes to trade, the ramifications for such behavior can be severe.
It can lead to treating your trading account as if it were a slot machine. Many traders end up entering stores, one after the other, as if they were pulling the arm of a slot machine over and over again in a casino. Of course, the difference is that, normally, we expect to lose in a casino, so most of us do not accept the money we need. In trading, many people believe that they will be profitable because of some "innate ability" they have, so they often risk more than they should or trade with money that they can not really afford to lose. Of course, once they start trading and get the dose of dopamine, it becomes an addiction that leads to the exploitation of their commercial accounts.
How do you change this poisonous trading mentality?
The way we circumnavigate our own defective business mentality is simply to understand, accept and then embrace the idea of doing nothing. Accept what you consider "boring" and meditate on it. Eventually, after some large commercial gains that resulted from patiently waiting for highly confluent exchanges, he will begin to realign his thought processes and the dopamine fever he used to enter the stores and play with them while they were live will change to the periods of time you are waiting for and stalking the market. When you feel that you are not doing enough, you are in the right area, you must be able to do nothing and you can do it by finding something else to replace that 'emptiness'.
Once you realize that being patient and studying the market or simply not looking at the market at all, will make you earn more money in the long term than the opposite, the chemistry of your brain will begin to 'flip', and soon you will . Expect the "hunt", even if that means waiting two weeks between exchanges.
conclusion
The market is slower than we imagined, and exchanges can take a long time. Take the following chart, for example: it shows that patience is needed to capture large movements, and we must ignore short-term "abrupt movements" that cause most operators to think too much and leave prematurely ...
The price action settings I market do not appear very often, and when we apply the TLS filtering rule and expect that confluence, business opportunities are further reduced. My negotiation courses can share my negotiation strategy, but they can not force me to be patient and wait for the right opportunity to arrive. It's one thing to have confidence in detecting exchanges, but do you trust your ability not to trade too much, even in the face of the constant temptation of graphics? If you know that this is your weakness (and I guess it is for most people who read this), spend MORE time getting that aspect of your commercial right, and I guarantee that your account balance will be appreciated.
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