Over Trading and Impulsive Trading creates stress.

Reduce Stress, Increase Profitability

Those of you that are Spike Members will have read this in SpikeSpeak, but I wanted to share ti with all my clients this evening and post to the Trade blog.

The best time to look for trades is when the market is closed.  Do your research when it is not flashing, gyrating, and trying to seduce you.  It is next to impossible to make good decisions while listening to the intraday noise. This takes years of practice and immense discipline.

Intraday monitoring reminds me of the Greek story of Odysseus.  As Alex reminds us in “Trading for a Living”, Sirens were sea creatures of Greek myths who sang so beautifully that sailors jumped overboard and drowned. When Odysseus wanted to hear the Sirens’ songs, he ordered his men to tie him to the mast and to put wax in their own ears. Odysseus heard the Sirens’ song but survived because his system would not let him jump.

The market acts like those sirens.  It seduces us to enter trades we should not make, and we see our mistakes only after the fact.  It pays to tie yourself to the mast and put beeswax in your ears, so as not to fall prey to the beautiful singing and dancing of the market.

I had to tie myself as a trader because I used to have an issue with jumping on anything that moved. There used to be days I would have 20 to 30 trades, but nothing to show for them. By end of the month I could have over 400 trades, and can you imagine the commissions?  I would earn a gold-plated Christmas card from my broker.

Several years ago I decided to limit the number of stocks that I monitor intraday to 10. I set alerts to look at them when they reach levels where I must make go / no go decisions based on my chosen strategy. I am forbidden to look for more trades during the day. I either get a trade out of my 10 monitored stocks or I don’t trade that day.

Furthermore, I go through my analytic process every night, and if I cannot do my nightly homework, I am not allowed to trade the next day.  This prevents impulsive trading when I want to watch the markets hear the Sirens.  I do not have a mast in my office, and so figuratively I tie myself to a chair and put beeswax in my ears.