Trading itself is simple, but many people complicate it. In fact, as long as one learns to wait, trading can become easy. But waiting cannot be aimless 'just waiting'; it is about being patient until the market shows a trend that matches one’s judgment. This is the meaning of waiting.
However, trading is difficult because very few people are willing to wait and it is hard to control the desire for impulsive actions. True trading experts understand that waiting is not inactivity, but a wise choice that reflects respect for the market and patience.
As Buffett said: Investing is a game, and the winners are always those who know how to patiently wait.
The significance of waiting
1. Avoid blind decision-making
In trading, blind decision-making is often the root cause of failure. Many people rush to enter the market without thoroughly analyzing market trends or the fundamentals of the target asset, acting impulsively or following others' advice. This behavior often leads to 'being trapped.'
For example: If you immediately buy a hot stock upon hearing a recommendation in the stock market without carefully researching the company's financial condition and industry prospects, you may get trapped at a high price. Conversely, if you patiently wait, analyze multiple investment targets carefully, and choose those with excellent fundamentals, you can effectively reduce risks.
2. Capture the best timing
Market fluctuations are hard to predict, and even top investors cannot accurately judge the bottom or the top. But by waiting, we can observe market trends more calmly and seize better trading opportunities.
Trend traders usually choose to enter after a clear upward or downward trend is established. This practice effectively avoids frequent entries and exits in a volatile market, reducing trading costs. Once a trend is established, following the trend makes it easier to achieve considerable returns.
3. Cultivate patience and discipline
Trading is a psychological battle, and patience and discipline are the keys to victory. Learning to wait can help us restrain short-term impulses and stick to the trading plan. In waiting, we learn not to be disturbed by short-term fluctuations, cultivating stronger emotional control. At the same time, this habit is also very beneficial for life.
How to learn to wait
1. Develop a trading plan
A clear trading plan is the foundation for waiting. The plan should include investment goals, risk tolerance, buying and selling conditions, stop-loss and take-profit points, etc.
For example, as a value investor, one can set a buy-in when a stock's price-to-earnings ratio is below the industry average and its fundamentals are sound; sell when the target price is reached or when the fundamentals deteriorate. With a clear plan, the trading process will be much calmer.
2. Conduct in-depth market analysis
Waiting does not mean doing nothing; it means making full use of time to study the market. By reading financial news, researching company reports, and analyzing technical indicators, one can deepen their understanding of the market. Paying attention to macroeconomic changes such as interest rates, inflation, and economic growth can also help better grasp trends and rhythms.
3. Cultivate patience and willpower
The process of waiting is often accompanied by anxiety and temptation, which requires the cultivation of psychological quality. Activities such as meditation, reading, or exercising can enhance self-control, allowing for a calmer approach in trading.
Examples of waiting
Buffett's philosophy of waiting
Investment master Buffett's success is inseparable from 'waiting.' He always spends a lot of time researching companies, waiting for worthy long-term holdings to appear.
For example, during the 2008 financial crisis, Buffett did not go with the flow, but patiently waited. When U.S. bank stocks fell significantly to a reasonable range, he decisively took action and ultimately achieved substantial returns.
Waiting of trend traders
Trend traders usually wait until the trend is clear before entering. For example, when the stock market is in an upward trend, they choose to buy strong stocks until the trend reverses. This method can avoid ineffective operations in a volatile market and improve the success rate.
Misunderstandings of waiting
1. Overwaiting
Waiting is important, but too much waiting is counterproductive. If one keeps waiting for a 'better' opportunity, they may miss the current chance. For instance, in the stock market, if one always wants to wait for a lower price to buy in, they might watch the stock rise all the way.
2. Indecision
Waiting is not indecision. Waiting is planned and goal-oriented, while indecision reflects a lack of confidence and decisiveness. During waiting, one should maintain a clear mindset and take decisive action when opportunities arise.
Life lessons from waiting
Waiting is not only a required course in trading but also a wisdom in life.
Success takes time
Success is never achieved overnight, but is the accumulation of time and effort. In the process of pursuing goals, one needs to patiently accumulate experience and continuously grow.
Relationships also require waiting
In relationships, patiently waiting is even more important. Rather than rushing to pursue a relationship, it’s better to improve oneself. When the right person comes along, you will be in a position to grasp happiness.
Waiting is the cornerstone of trading. But waiting does not mean being passive; it is a wise buildup of potential. Learning to understand the rhythm of ambush and strike like a cheetah is the true essence of trading!