Most of the traders lose their hard earned money in the markets because they do too much – they think too much, they too much time looking at charts, they over-trade, and they risk too much than they should. You can read charts all day long but if you do not know what to trade, you will not succeed.
In this day and age, the majority of successful traders and investors spend most of their time waiting for right opportunities studying the markets rather than trading. They spend least amount of their time executing trades and managing positions.
The Hunt Is On For The Big One
As a trader you want to be the professional who waits patiently in the bushes for the good trades. You do not want to be the mass of amateurs who get eaten by the professionals each week.
How do you avoid becoming the victim and be the predator? It is easy, you wait, wait and wait some more.
Being patient is an essential part of trading the markets. You need to wait for the right setup to form. You need to be patient and you need to be disciplined enough to wait for the right market setup to form.
If you are trading with high frequency, you are likely to lose money and trading with low frequency means you are profitable. Over time, every trader eventually learns this fact.
Warren Buffet is an expert at doing nothing
Warren Buffet, the richest man in the world, is an extremely patient and precise investor. He does not enter the stock market every day and he certainly does not trade on the same stocks he bought a long time ago.
Mr. Buffet, like other investors, has a low-frequency and high-conviction trading strategy. This is because he does not trade too often and makes his decision with a high degree of conviction. You can learn a great deal from Mr. Buffet’s trading strategy, it is just a matter of adopting his style and applying it to your own situation.
In the majority of cases, the most profitable investors and traders are not doing anything else other than studying and analyzing the market.
Learn how to do ‘nothing’
It is in our nature to want quick thrills. If we feel that doing something will give us a quick rush, we are likely to do it.
When you trade, you are putting your hard-earned money at risk.
It can lead to treating your trading account as if it is a slot machine. The more you trade, the more you are addicted to the dopamine rush. Once you get that dopamine hit, it becomes an addiction that leads to blowing out your trading accounts.
How do you change the mindset of these traders?
The only to go around this incorrect trading mindset, is to understand and accept the idea of doing nothing. Welcome what you consider as ‘boring’ and you will start re-align your thinking process after few big trading wins that resulted from waiting patiently for high probability trade setups.
You will be able to see the market from a whole new angle once you have done your market research, and you will be able to spot opportunities much faster than you ever did before.
Conclusion
The market is slow, and it can take a long time to play out. There are some trading setups that appear less often and trades are often not as obvious. This is why we have filters that are set up to help us reduce our trading activity. If you know this is your weakness, spend more time to get that aspect of your trading right, and your account balance will thank you.