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Investing is choosing good companies, finding them at a decent price, waiting long term, and ideally hoping they go up.
Trading is taking advantage of patterns and the chart, the momentums… things that we see happening in the current economic environment. You might see a stock or sector move into resistance and start to sell off.
Trading allows you to jump in to make money quickly, by taking advantage of what’s going on right now in the chart. We aren’t paying attention to the news, we see an opportunity to go in, snatch some cash, and get out.
But you can make the mistake of overtrading.
If you are watching the market going up and down and trying to make predictions, you could possibly get a prediction wrong. If you get your prediction wrong four times, the next trade you make is most likely to be a bad one.
We don’t hit continuous home runs.
So when you hit a home run, practice on your next trade. This is where people make $5,000-$10,000, and then turn around and lose it by overtrading.
Sit on your hands and be patient. Take the most highly probable set ups. When you see it’s the one, put your cash to work.
Practice, paper trade, and don’t double down for the next one.
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Image and article originally from thebrownreport.com. Read the original article here.