At The Close: When Not To Trade by Danish Kapur
Is waiting on the sidelines the ideal way to make a profit?
There are so many different ways to analyze markets: technical, fundamental, and quantitative. But the essence of these methods is the underlying psychology of the market participants. The markets move more because of what investors think of various economic developments than what those developments actually are, and so it is worth understanding the behavior of price movements in order to make better investing decisions.
Self-control is necessary in order to use any technical indicator. Markets are repetitive in nature, and patience and discipline are the qualities that most differentiate one investor from another.
Sometimes we force ourselves to invest even when we’re not comfortable doing so because everyone else is doing it. The result often is a short-term satisfaction: We may be uneasy about investing, but we try to find comfort by thinking that our investments will grow over time. But often over the long term, we get caught on the wrong side of the market and end up feeling more pain than satisfaction. History tells us that it is always better to go through a small pain for a short period of time than get into a situation where the pain turns into a long-term, never-healing wound.