Читать книгу Psychological Analysis - Adam Sarhan - Страница 54

When Warren Buffett describes his first investment—the $144.75 he put in the market in 1942—he provides two key details: the price he paid, and the time the investment was held. To make money in any market, anywhere in the world, you need two basic components: time and price. Put simply, profits are a function of time.

Time is a necessary and critical component of any successful market strategy, even for short‐term traders. To realize profits in the market, you need to learn how to allow time to pass. That means you have to work patience into the hard rules you develop for your trading strategy so you don't overreact to temporary market fluctuations (a.k.a. wiggles and jiggles).

The second component in our profit equation is price. You need the price to move in your favor. When you take a long position in a stock, you want it to go up, and if it does, your strategy should have rules in place to determine when you will sell. If the price fails to rise, you should also have rules for determining when to sell and cut your losses.