In this post:
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- What has been the most challenging aspect of trading for me?
- What is responsible for many losses in Wall Street?
- What does Jesse Livermore say is made by sitting, not trading?
Jesse Livermore has a few phrases of wisdom when it comes to trading and time:
“Money is made by sitting, not trading”
“It takes time to make money”
“The desire for constant action, irrespective of underlying conditions, is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”
My background as a very hands on person who likes to build things and get stuff done, has required me to practice zen-like control over myself; To constantly refine my self-discipline. I like to be productive, make things happen, and take the bull by the horn. But this isn’t how the market works. No matter what I do, I can’t affect the market and therefore I can’t put more effort into the market to then get the outcome I want.
I can only put more effort into myself, and that effort comes in the form of self control, discipline, and the ability to wait. Waiting for the right entry, then waiting for the position to grow, and waiting for the right exit.
In trading, our action is actually just a moment in time when we press the buy or sell button. Everything else is prepping, planning, or waiting. This concept has been the most challenging aspect of trading for me. I would be home watching my screens in my fuzzy bunny slippers, sipping tea, and listening to music in the background while I knew my friends, and just about everyone else in the world, was out there doing work and getting stuff done.
I sometimes would feel guilty about this but I would assuage my guilt every time I lost money on a trade, knowing that those with a job were making money, not losing it. I knew that I was going to have to “wait” a few years, one trading day at a time, to build my skills.
One way I was able to feed my desire to be active and productive was to practice with the ON Demand feature from ThinkorSwim. I have written about this in the past if you want to look into it.
My time spent with On Demand also helped me to realize just how long things can take in the market. How long we may have to wait for the setup to manifest itself the way we want it? How long we may still have to wait for the position to finally take off in earnest? And how long it may actually take for that killer trend to run its course.
And the weird part is that it sneaks up on us. Often times I will look back at a ticker that I was scoping out, only to see that it moved 30-50+%… but it took 60 days. That is an amazing return in a very reasonable amount of time when you think about it. But having to live through that, one day at a time, one decision at a time, one exhilarating pop or disheartening pullback at a time. It can be an agonizing 60 days with the constant worry of what may be right around the corner to take it all away.
The challenge for me is that, if done correctly, I pushed the buy button once or twice in the beginning, and then I don’t do anything for 60 days when the next action is for me to press the sell button. Ultimately this is the dream we as traders aspire for: to have our money grow without us having to babysit it or have to be at the computer all the time.
But it involves waiting, and the only action we took probably amounted to a grand total of 10 minutes to execute the trades.
So I leave you with some final words from the wise, and patient, Jesse Livermore:
“Men who can both be right and sit tight are uncommon.”
“Don’t give me timing, give me time.”
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