The title says it all! Trade only when you have a setup. So often, traders and investors will feel the need to get into a stock just for the sake of having action. When someone does this I instantly know that they are a gambler and really not a trader.
A trader does not want action, they want to make money. A trader wants to have the odds in his favor before entering a trade and putting his money on the line. A gambler wants to be in something, at all times. A gambler may say they want to make money, but they really want the action and feeling of having money on the line. Unfortunately, we all know that most gamblers will go broke rather quickly. Think about it, why do casinos and gambling parlors do so well? They do well because they have the odds in their favor every time someone places a bet. This is why we call the casino the house, they rarely lose.
The markets always give you an opportunity and a chart setup. Remember, the ebb and flow of markets is to rise, then consolidate or pullback, and then rise again. It is the traders job to learn and understand how that setup occurs. Usually, most people will jump on board when an equity has already spiked and then they wonder why they are almost instantly out of the money in a few days. I see it being done by amateur traders every single day. It amazes me how most people will want to buy things when they are parabolic instead of when they are on sale. I suppose this is part of the human psychology that controls most of us. The cure for chasing a stock when it is too high is to wait for a setup.
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