Every day thousands of people try to get your attention. For traders, there are thousands of stocks, ETFs, and funds to choose from; hundreds of trading signals; and countless media outlets, newsletters, and books telling you about the next "can't miss" opportunity.
How can a trader make good decisions in the midst of all these distractions?
Guard your attention
Nicolas Darvas used to tear out the stock tables from the newspaper and throw the rest of it away. This enabled him to focus on the price action and ignore the hype and distractions. I try to take a similar approach of focusing on price and volume. I still pay some attention to the news but I find it almost unbearable to watch BNN or CNBC. Predictions and forecasts might have some value, but they can be dangerous because they bias your mind.
In my opinion one must be very careful what information you let into your mind, because it is extremely difficult to remove a bias once it is entrenched.
Doing better vs doing more
I prefer to focus on one or two trade strategies and strive to do them better. Even simple strategies have nuances that are not apparent at first. People who change strategies too quickly will never be as successful as those who focus and learn how to overcome the subtle obstacles.
But it is easy to drift into doing more instead of doing better. Distractions are like sirens, calling you to "try this", "try that", "don't miss this big opportunity".
It is okay to say no
I have to constantly remind myself of this. It is okay to say no when I hear "it is a good time to buy XYZ because it has been beaten up and is trading below book value", or stock ABC "will be announcing a revolutionary new product." Let those opportunities go to people with other trading strategies. I will focus on mine.
| Most market participants are looking for instant gratification and a 100% success rate. When they lose money a few times in a row, they just jump on the next “big” thing; never spending enough time to specialize in one particular setup. - Ivanhoff Capital |
Related Posts:
- Focus on the best performing stocks
- Understand psychology -- why all-time highs outperform
- Set stops and stick to them
- Learn from the past: Trend-trading Potash Corp 2006-2008
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