Overtrading = Failure

Whether you are in a position or in cash, not trading is one of the hardest things to do.  Yet most money is either made or not lost by doing exactly that.  Sitting on your hands and either following a system to the letter or being extremely disciplined in your approach.

Almost all failure in trading comes from either thinking outwith your set strategy or in overtrading.  As I watch the market storm back, knowing that my system wasn’t able to grab further gains, I am relaxed, as I know my opportunity will come.

One thing I must not do is get disheartened that I missed the bottom this time.  So often I am able to grab near the bottom of all major moves.  But this incredible V shaped bottom is simply one that got away.  Fact is, unless you got in yesterday, most of the gains today happened in the futures overnight and buying into a large gap up is often very dangerous.

Capital preservation is critical in such a volatile market.  I will remain humble and wait for my signals.  After all. it’s a marathon, not a sprint.

Market News:

U.S. stocks rallied on Thursday, with the Dow industrials climbing more than 400 points for the first time in three years, as investors applauded the Federal Reserve’s pledge that it would be patient in increasing interest rates.

The CBOE Volatility Index, a measure of investor uncertainty, fell nearly 14 percent to 16.81.

Thursday data had jobless claims falling by 6,000 to 289,000 last week, the lowest since early November.

And, the Conference Board’s index of leading indicators advanced in November for a third consecutive month, signalling the U.S. economy is picking up steam heading into the new year.

American motorists are paying less than $2.50 a gallon at the pump for the first time in more than five years, with retail gasoline prices falling to an average $2.477 a gallon Wednesday night, according to the AAA.

Friday:

Earnings: Blackberry, CarMax, Finish Line

10:00 a.m.: Chicago Fed President Charles Evans

12:30 p.m.: Richmond Fed President Jeffrey Lacker

News Sources:  CNN Money & CNBC