I came across a headline yesterday while flipping through the collection of blogs I normally skim. It was “The value of doing nothing” from the MarketWatch site. While the article was talking more about the inclination of investors to tweak their portfolios when they would probably be better off leaving them alone, it reminded me of something else worth remembering.
One of the things that draws a lot of people in to trading is the action. I’m not saying that’s a good thing. In fact, it smacks of gambling in that regard, but what can you do. Trading can be fun in some ways.
Here’s the problem with wanting to be in on the action. It makes you do things you probably shouldn’t be doing from the perspective of trading performance. Many traders get in to trouble because they overtrade. There is a strong tendency after one has a great trade to get right back in to go after the next big score. Similarly, after taking a loss, many traders will jump back in with the idea that they need to make that money back right away. Both situations lead to bad trading decisions and the breaking of trading rules in a many cases.
The great thing about the financial markets is the opportunity they provide. The thing we always have to keep in mind, though, is that trading opportunities are not once in a lifetime things. They come along all the time. That is what’s really great about trading, at least to my mind. As much as it really hurts to miss that great trade – and I’ve done that plenty of times – you can take solace in the fact that another will present itself in the future.
So relax. Make sure you are sticking to your trading plan. Don’t let the rush of winning or the pain of losing make you take on trades that really aren’t what you should be doing. Don’t be afraid to take time off. Some of the best traders will tell you that they frequently take days or even weeks away from the markets to recharge and come back fresh. Remember that there will always be another opportunity and that you don’t have to be trading all the time.
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.
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