The statement “if most traders would learn to sit on their hands for 50% of the time they would make a lot more money” is a common piece of advice given to traders. The idea behind this advice is that many traders tend to overtrade, meaning they take too many positions in the market and make trades based on emotions rather than sound analysis.
By sitting on their hands for 50% of the time, traders would be forced to be more selective in the trades they take, only taking positions when the risk/reward ratio is favorable and the probability of success is high. This would reduce the number of losing trades and increase the profitability of winning trades.
However, it’s important to note that this advice is not a one-size-fits-all solution for all traders. Each trader has their own unique trading style and risk tolerance, and some traders may find success with a more active trading approach.
Discipline: Trading requires a great deal of discipline because it involves managing risk and making decisions based on logic rather than emotions. A disciplined trader will stick to their trading plan and only take trades that meet their criteria. They will also set stop-loss orders to limit their losses and adhere to strict risk management principles.
Patience: Patience is critical in trading because it can take time for the market to move in the desired direction. A patient trader will wait for the right opportunity to present itself and will not force trades or enter the market based on impulse. They will also have the patience to let their trades play out and not exit prematurely due to fear or greed.
Both discipline and patience are essential for managing emotions in trading. By having a clear trading plan, adhering to risk management principles, and waiting for the right opportunities, traders can avoid impulsive decisions that can lead to losses.
Ultimately, successful trading requires discipline, patience, and a well-defined trading plan that is based on sound analysis and risk management principles. By following these principles, traders can increase their chances of making consistent profits in the market.