The Path to Insanity

  • Short-term traders should think short-term
  • Long-term traders should think long-term
  • Lack of consistency will drive you insane

TIME HORIZONS - I can't stress enough how important it is to respect your time horizon expectations. Whenever you take a trade, you have an expectation for what kind of follow through you expect and when you should expect that follow through. If you find you have entered a trade with an expectation that it should follow through in a short period of time and you haven't found such follow through in that time, go ahead and exit the trade and stand aside. It's that simple. You were looking for something to happen within a certain time and it didn't. No point in hanging around. The market will always be there with new opportunities. I promise. Similarly, if you enter a trade with a longer-term time horizon, you need to respect this as well.

IDENTITY CRISIS - Don't jump to book profit at the first sign of green and don't stare at the chart every second of the day. Perhaps more importantly, if you have a longer-term time horizon, understand and embrace the fact that the trade may take time to play out and could even move against you before it materializes. If you enter a short-term trade and hang on for the long-term, or if you enter a long-term trade and exit in the short-term, you are not only going to lose your money fast, but you will find that you are going through an identity crisis that is likely to leave you mad. So know who you are and what you are looking for and stick to it. There is no room in trading for inconsistency. You will have a greater chance of success being consistent will an ill conceived strategy than employing a sound strategy that lacks consistency. Be consistent or go insane! Your choice. I know which path I want to be on.

Greater chance of success being consistent will ill conceived strategy than employing a sound strategy lacking consistency. Via @joelkruger

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