Do More Sitting and Less Thinking

 | Oct 11, 2017 | 1:30 PM EDT
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Every market presents challenges, but too often traders and investors fail to understand what the real challenge is. The biggest challenge of the current market isn't guessing when the uptrend will end. We all know it won't last forever. The biggest challenge is staying patient with positions and not being distracted by anticipation of a potential change.

The easy thing to do in this market is to keep making predictions about what will happen next. I have seen more dramatic calls than usual lately, as the new highs keep piling up. Sitting and watching the market inch slowly upward every day is boring, even if you are making money. If you want some real entertainment, then predict some sort of disaster. You may be wrong, but at least it fills the time.

The real challenge of this market is to ride the momentum to the bitter end. That is how you outperform. It is almost impossible to not make premature sales when there are so many stocks that are so grossly overbought, but doing nothing is what has paid off the best.

The best traders are able to stay very patient for long periods of time and then act quickly and decisively when conditions change. When you are watching the market all day, there is a natural desire for action but as Jesse Livermore famously said "it was never my thinking that made the big money for me, it was always sitting."

Thinking too much when we have an uptrend like we have now can be a major handicap. The time will come when it is right to act, but it is the sitting that is working best.

Stay vigilant and make sure you understand what potential catalysts exist for a turn, but keep on sitting until there is some shift in the price action.

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