In trading, how can we wait for the opportunity to appear?

The term "waiting" in trading is truly an inescapable subject.

Just as Livermore described his own experience,every time he could patiently wait for opportunities that met his trading criteria,he was always able to make money.However,the problem often arose from his inability to wait.

Sometimes,when looking at the market,it seems like a good opportunity and one can't resist entering the market before the right point,resulting in a trapped position that isn't well managed.Or,after waiting for an opportunity for too long,one might be tempted to trade in other markets when they see a good opportunity,only to find that when the real opportunity for their target market arrives,they have no capital left to invest.

In trading,there are really very few people who can truly adhere to their discipline and strictly wait for opportunities.

How can we manage to strictly wait for opportunities to arise?

First,we must understand what kind of opportunities we are waiting for.

A friend once told me that he was bullish on lithium carbonate futures at a low position and was planning to use a low leverage with 500,000 to bottom-fish lithium carbonate.See the image below for the daily K-line chart of lithium carbonate.

Indeed,after a significant drop,lithium carbonate has shown signs of stabilizing at the bottom,and it is feasible to bottom-fish without leverage or with very low leverage.

However,when I asked this friend under what conditions he planned to open a position,what price needed to be reached,or what pattern needed to appear to open a position?What are the stop-loss or supplementary position standards?How does one plan to close a profitable position?How are the positions to be used,etc.?

The result was that my questions left him completely bewildered.This situation is quite common among us traders.Many people can spot opportunities and even recognize good ones,but they lack their own execution standards and have not delved into a fixed set of trading instruments.Often,they act on impulse,switching between technical analysis and fundamental analysis,using Bollinger Bands one day,moving averages the next,and then looking at trading volume and volatility the day after.When asked what opportunity they are waiting for,the answer is always "waiting for a good opportunity."

We have all seen documentaries about the animal kingdom.On the savannah,when a lion is hunting,there may be hundreds of zebras in a herd,but it will focus on the weakest one,with a clear target and a lethal strike.

However,when we trade,if we don't even have a clear target,we will be in disarray when hunting,wanting to catch every one,but ending up with nothing,and ultimately suffering heavy losses.

So,how can we find a clear target?

In fact,a clear target is not found; it is defined by oneself.

For example,if you want to find an opportunity at the bottom,what exactly constitutes the bottom?At what point does the decline reach the bottom?

At this point,you need to set a clear numerical value,and this value is your entry criterion.Once this level is reached,you enter the market,set your profit targets and stop losses,establish position sizing standards,and balance the relationship between the win-loss ratio and the success rate.This way,every entry and exit has a traceable pattern,with clear goals,and you will no longer find yourself unable to find opportunities or feeling overwhelmed by too many opportunities.

Of course,having confidence in trading opportunities is essential for patient waiting.

Building a trading system alone can only tell you where the trading opportunities are,but it is not enough to give you sufficient confidence in these opportunities.

How can we build enough confidence?It is crucial to personally verify things for oneself.

I have always emphasized that one's own trading methods must be personally verified.If you adopt someone else's trading methods without having verified them yourself,and you lack confidence,you will not be able to use that method effectively.

There are many ways to verify trading systems on the market today,such as backtesting software or simulation accounts built into trading software.You can use historical market data from the past few decades or projected future market scenarios to test your methods,understanding the trading frequency,distribution of trading opportunities,profitability,maximum consecutive losses,maximum amount of money lost in a row,and the extent of the maximum drawdown,among other things.

Once you have verified these points,future trading will be like an open-book exam for you.The answers may not be 100% accurate,but passing is absolutely guaranteed.The level of tension in an open-book exam is completely different from that of a closed-book exam.An open-book exam is like taking a tranquilizer; with such confidence in trading,you can naturally wait for opportunities and hold onto profits.

Additionally,you should also try to watch the market less frequently,unless you are engaged in ultra-short-term trading.In other cases,try to place your orders and then go about your business without constantly monitoring the market.

This is because the market is always fluctuating,with candlestick charts constantly moving,and different instruments creating thousands of opportunities.These are all temptations of real money,and not many people can resist such temptations.

To avoid these temptations,the best method is to minimize contact.Less contact means less temptation,and using this physical method can help us maintain a calm and impulsive heart.

Focus only on the instruments you trade,and do not look at those you do not trade.Similarly,focus only on the trading timeframes relevant to your strategy and ignore the rest.

Exercise regularly and cultivate some hobbies of your own.Do not devote all your time and energy to trading.Over time,you will be able to balance the relationship between life and trading,and you will be able to curb the greed in trading,achieving a state of giving and taking.