One more thing to add here. I know we’re mostly referring to patience for entry setups.
Maybe one thing that’s not so often discussed is patience in sitting on your hands and not exiting too early out of a winning position. Patience used to be one of biggest weaknesses, but I would say that it’s now probably one of my greatest strengths, possibly even to a point where it’s become an edge.
I can give an example with Uranium. I started building up positions in the Uranium space when it was still down at $25 to $28 /lb (currently at $83.30/lb).
After being fully positioned, I had to wait for months for the initial breakout, when it came I caught the entire 1st leg up until it topped in June earlier this year. I knew there would be a pullback, but no idea how big, turned out to be -30%, while my positions went from up +300% to +150%.
The old me would have panic sold during the drop, the “new” me understood that this secular bull was just getting started and it was just the first leg, the next leg would be even bigger, stronger and run for longer. Not easy to develop this kind of conviction, but as the chart shows, Uranium miners exploded out of the September bottom with even stronger energy than the first leg.
@Dollar_McGavin just want to say I really enjoy reading your posts and would totally buy your book.
I think there is a big difference between a traders’ mindset and an investors’ mindset when it comes to patience. Most members here want to get in and out of a position relatively quickly, with as much profit as possible.
It’s funny because I have a company RRSP where they match my contributions weekly, up to a certain amount annually. I know this account is to invest into my future, or retirement, so I only look at it maybe 2-3 times per year. I hardly think about it (plus, it’s managed by the bank). Whereas with my trading accounts, I work on them daily.
My motto has always been “Develop a long-term mindset to help achieve your short term goals, and always look at the bigger picture”, meaning find the long term trend and ride it using shorter term trades in that direction.
As an investor you would probably disagree with this method, but I think short term trading strategies combined with a long term investing mentality (patience) can be key to short term trading success.
However, this is not easy as most traders are undercapitalized and require high leveraged accounts to achieve the desired results, leading to high drawdown and ultimately, larger losses.
I was thinking that my posts were too long and wordy for most on this forum, but this was great to read. Thank you for that.
Yes, you’re absolutely right about the mindset differences. I started my trading “career” (if you can call losing money a “career” ) day trading and short term swing trading so I totally get why most members here want to trade short term.
I can relate as I was also doing something similar where I was putting my retirement contributions into tech stocks back from 2010 onwards. Never looked at it more than once a month when I was allocating into the tech stocks. The interesting part is that 5 years later, I had blown up 3 trading accounts while my retirement account was up over 400%. Took me another 2-3 years to shift to the longer term. As I said, I’m a slow learner!
On the contrary, I can totally see the logic in this. I agree that if you can accurately catch the short term moves, it would be way more profitable than just getting in at the beginning and out a few years later at the end.
But… (you knew this was coming, didn’t you )
This
It also requires much more mental discipline and enormous psychological strength to show up day after day, week after week in top trading form to profit from these short term moves.
After many years, I’ve learned to trade short term profitably. My biggest problem is that it’s tough for me to stay mentally disciplined day after day. So I applaud and respect anyone that can take short term profits out of the market, day in and day out, week after week. That takes some serious mental game.
For me, it’s also a lifestyle decision. I am the classic FOMO case, I hate missing big moves and it’s happened quite a few times in overnight moves, post weekend gaps or even limit up days where it’s impossible to get in. I also prefer the slow easy pace, where I don’t need to be in front of the computer to make money. I enjoy waking up in the morning to see my positions have jumped overnight, e.g. as gold broke through $2700 while I slept
One more thing to consider is that there are ways to maximize gains from long term strategies, where profitability is just as good if not better than short term trading. For example: position management, taking partial profits at major swing highs and adding them back in on the major bottoms, building up positions in assets at rock bottom prices etc.
Imagine buying Apple at $0.25 in 2002, selling it at $7.00 in 2007, rotating into US treasuries for 2 years, buying Apple back at $3.00 in 2009 and selling it at $200 earlier this summer. Even if we leave out the gains from the treasuries, a $10,000 investment in 2002 would be worth more than $18 million after 22 years: a 1,866x ROI just passively holding with all the free time you could ask for to enjoy life. That’s more than good enough for me, mate!
Thanks for your reply, very insightful, as usual. I have bookmarked it for future me.
Anyone not interested in taking the time to read this type of content is not cut out for this business. I love everything about investing/trading. Charts are my porn. I just wish I had started 20 years earlier.
This is what I need to start working on. Currently, I use a screener for stocks. I screen for relative volume above 2, market cap above $300 million, and price must be above $5 and cross/close above/below the 20 EMA on the daily TF. This gives me some nice setups and helps avoid the temptation of trading tops/bottoms.
To enter the trade, I want to see a nice pullback on the weekly TF and must see a trend established on the shorter TF such as 1 or 4H.
The problem when trading different instruments all the time is when I close the entire position then I move on and tend to lose any further opportunities to scale in and maximize profits on that particular instrument. But, this approach has been netting me 1:1 to 1:4 regularly, which I am extremely happy with. Some of these trades do take weeks to play out though, which ties up my limited capital. But, I’m certainly going in the right direction.
I treat currencies and commodities differently as I mostly trade with the weekly trend looking for a break and retest (S&R) as a signal on the shorter TF’s.
@MattyMoney , I’m not sure if this helps but this is what I do. Part of my process is multi-level trend analysis. I’ll state again that 99.9% of time is spent on analysis, very little on actually “trading”, i.e. entering / exiting positions. I can’t say how invaluable this has been for me. Knowing where the dominant trend is lets me know where I can safely add to a winning position.
Here’s an example of a silver trade. This is from a paper trading account that I use to experiment with and sharpen entry / exit timing. You can see where I highlighted scaling in (July 25 & Aug 6) to the initial position on an intermediate term dip (yellow moving average). As the trend started to turn the market gave me an opportunity to add to the position on Sept 3 and again on Oct 9.
One thing to keep in mind is that I’m specifically trading the intermediate term trends in this paper account, my real portfolio trades the much longer secular term cycles. Intermediate trends can last for months and usually give you about 1-2 fantastic opportunities per year. The chart shows the 2nd best opportunity of the year in silver which I anticipate will make a head turning run over the next weeks & months. BTW, the best 2024 intermediate opportunity was in Feb/Mar. The better even longer term opportunities were in 2023 and the ultimate secular term opportunity was in March 2020 with the first dip in Oct 2022. My opinion, of course.
Here is also a screenshot of the “paper portfolio” that I started in July earlier this year. Yes, I paper trade to experiment with ideas and sharpen my timing. There’s currently 24 positions open in the paper portfolio, I figure 40 is the maximum I can handle so there are still 16 positions left to fill. I am constantly on the lookout for the best opportunities. Once there are 40 open positions, a position stays open (to let profits run) until it reaches the end of the trend or until a better opportunity comes along to replace the worst performing position. Please ignore the position sizing as it doesn’t accurately reflect the balance, as I said it’s more for experimenting and practicing to sharpen my timing.
And for full transparency here is a screenshot of the trades that didn’t work out and I closed them when the markets started moving against my position.
@MattyMoney
Sorry, there’s one more thing I forgot to add.
You can see there are some open positions in the portfolio that are in the red, which I’m currently still building. Yes, they are in the red but they are right in the middle of an Oil & Gas intermediate term trend change. The Oil & Gas charts still look good so I stay in and continue to build and will add to winning positions whenever the market presents an opportunity.
If I’m wrong on the intermediate term trend change then I’ll exit and they’ll end up as closed trades.
When the market’s messing with me, I stick to my plan and try not to panic-sell in a freak-out moment. It also help when I take a break to clear my head (or play a game) keeps me from making dumb moves. I remind myself it’s all part of the ride—like a roller coaster, except with actual money. Staying chill and focused on the long game works wonders!
Personally, I try to stick to my trading plan and focus on what I can control, like my strategy and risk management. I also take regular breaks to clear my mind and avoid emotional decision-making.
When the market gets volatile, I focus on grounding myself by stepping back and reviewing my trading plan and risk management strategies. I also find that taking a moment to analyze the bigger picture and remind myself of my long-term goals helps maintain perspective and discipline.
Exactly. This is what makes most people fail. Trading as a get-rich-quick solution to solve immediate financial issues is the beginning of failure, as it forces you to take bad trades and go against your rules.
Staying grounded during market challenges involves sticking to a disciplined routine, practicing mindfulness, and focusing on long-term goals. I set clear risk management rules and take regular breaks to reflect. Keeping a journal helps me track emotions and decisions, reinforcing my learning and maintaining a calm mindset throughout the process.
Trading puts my patience and emotions to the test, seriously tho. For me, staying grounded is all about sticking to my plan and always reminding myself that not every trade will be a win.
And sometimes when I noticed how crazy markets become, I take a break.
I got greedy yesterday and loss 2900$ in one day, When I made a loss of 500$ to recover that loss I start making risky trade and loss all my balance, Now I’m down to last my 450$.
I believe profit and loss are part of a trader’s journey. Emotions can easily take over at times, but I see it as part of the learning process. Each win and loss teaches me something valuable, and I know that overcoming these emotional challenges is key to becoming a better, more disciplined trader. It’s all about growth, and I view every setback as an opportunity to improve my strategy.
) day trading and short term swing trading so I totally get why most members here want to trade short term.
Staying chill and focused on the long game works wonders!