Waiting To Open A Position

This is the second in a series of articles starting with the article of October 9, 2006 entitled “You Can’t Hurry Love or Winning Trades”.

One type is waiting to enter into a new trade.

Market Wizard Van Tharp calls this type of waiting “stalking a trade”. After studying hundreds of super successful traders/investors, he noticed that this was one of the 10 things super successful traders/investors had in common with each other.

He teaches this in his course called The Peak Performance Course For Investors & Traders. Also, he mentions this in a footnote in his book Financial Freedom Through Electronic Day Trading.

Here’s a metaphor illustrating what’s involved in this type of waiting.

Have you ever watched participants at a martial arts tournament? The tournaments are divided in a way that participants compete only against others with similar skill rankings. For example, the beginners (white, yellow and orange belts) compete only among themselves, the intermediate participants (green, blue and brown belts) compete only among themselves, and the experts (black belts) compete only among themselves.

Notice how a beginner fights. Usually, he starts punching and kicking while his opponent is on the other side of the mat far away from him. He's punching and kicking the air while he is still far away from his opponent. He might also be violently yelling and screaming while doing that. He attacks while his opponent is still out of range and cannot possibly be touched. He’s eager to attack. No point scored for that effort, no matter how hard or fast the kick since the opponent is not anywhere near striking distance and has ample time and opportunity to escape the attack.

Then notice how an expert or how a good intermediate participant fights. He waits. And waits. And waits some more. He sizes up his opponent. He observes how his opponent moves. Then he swiftly steps into (i.e. moves closer to) his opponent to get within striking distance to ensure that his chance of success is very high BEFORE doing any punching or kicking. Also notice no yelling or screaming until a split second before impact. Point scored, opponent defeated, all in a split second.

That’s what traders need to do. Wait. And wait. And wait some more. Size up the market. Observe how the market moves. Then swiftly and quietly make your move only when your chance for success is very high BEFORE entering an order to buy or sell.

We'll chat again soon ...

Copyright 2006 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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