Patience is a Virtue
We all want to make money. After all, isn't that why we subject ourselves to the stress of trading? One thing I have learned while balancing a trading career with a teaching and lecturing schedule that would kill a lesser man, is that there will always be opportunity in the markets. All too often I see new students leaving the class, armed with trading knowledge and live trading experience, all too eager to jump on any trading opportunity that crosses their path. Inevitably this leads to financial disaster.
I was there once. I left the Online Trading Academy class in 1998 ready to take on Wall Street. Quickly the market humbled me as I realized that I had to choose my battles. I can only hope that you will take these words to heart and avoid many of the same pitfalls and setbacks I experienced early in my trading career. I used to fall prey to the lure of a fast moving trend, beckoning me to jump in head first only to realize I just bought the top of the market.
Teaching trading has taught me patience. Students often ask me if I become frustrated when I see a great move in the markets that I cannot participate in due to my being in the classroom. I can honestly say I do not anymore. I learned that the markets are abundant with opportunity and another one, just like the one I missed, will present itself to me when I am able to take advantage of it. Or not… such is the nature of trading.
This brings me to my point. Trading done correctly should be boring. A trader should prepare for the markets by planning their trades and then acting on the plan. If you find yourself with an adrenaline rush while trading, you are trading with emotion and not with logic. This is bound to cloud your judgment and cause you to make mistakes. A successful trader is one who picks their battles and only takes trades with high probability of success. This is what separates successful trading from gambling. What is high probability? It comes when you have confirmation of a trend, or perhaps waiting for a close above or below a resistance or support line with volume confirmation. Maybe it is waiting to take a trade until after a major economic release so that you can trade what the true reaction is instead of what you think it will be.
A successful trader does not overtrade. A successful trader waits for the right opportunity to enter the markets and has a sound plan which includes an entry target, a profit target, and most importantly, a stop loss. As a successful trader, you will pass on many trades that could have made a profit, but will also pass on many more that would have cost you money had you taken them. The trader with the most trades doesn't win anything other than the thanks of the brokerage for paying the bills! You must become disciplined and trade with patience to truly be successful in these volatile markets.
If you are unsure how to develop your discipline or a trading plan, I highly suggest you see me or any of my colleagues at one of our classes at the Online Trading Academy office nearest you. We teach you how to develop the discipline needed to trade as well as how to recognize high probability opportunities in any market.
I am finishing up a class in Online Trading Academy's San Jose center, with a great bunch of students who have done an excellent job of sticking to the discipline of maintaining small losses and looking for the right trades to enter. I will be at Online Trading Academy New York for a Broad Market Analysis class and Active Investor class the second week of July before heading to beautiful Online Trading Academy Singapore for a month to teach the Forex Trader class, Professional Trader class, and speak at the Invest Fair 08. I hope to see you soon.
Until next time, may your trades be green and your losses small!
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A member of the Market Technicians Association and the Chartered Financial Analyst Institute, Brandon has appeared as a guest on CNBC Asia's Cash Flow and conducted special seminars for CNBC staff on technical analysis. He has published articles in The Trader's Journal Magazine and was interviewed in Share Investor Magazine. Brandon was also an industry expert speaker at the Asia Traders and Investors Conference 2008. As a former stockbroker, brokerage trader, and hedge fund trader, Brandon brings various market views and insight to his trading classes and lectures. A wealth of knowledge, he has held NASD securities series 7 and 63 licenses. An Online Trading Academy graduate himself in 1998, Brandon has been trading equities, options, forex, and futures in his own account since. 