The power of hindsight can be a frustrating thing when looking at the markets. Reflecting on examples where a brilliant stock has had a phenomenal run, it is easy to focus on the perfect outcomes without considering the time and patience required to be fully invested.
The reality is, even the biggest and best moves go through stagnant periods of consolidation and floundering that in real-time can take weeks or months, testing even the most tolerant investors. This is why it is so critical for traders to fully understand their own expectations and goals and ensure they are properly aligned with their strategy.
Some of the best examples of quality stocks advancing hundreds of percent often occur over 12, 18, or 24 months or more. Understanding the timeframe that is relevant to one’s strategy will help ensure one has the patience and resolve to fully exploit the opportunities that can play out over these extended periods.
Being fully invested with a sizeable account position in a stock that doubles or triples or even more, is a lucrative return for any trader. Yet for those focused on short trading periods that deliver quick, albeit profitable exits, watching a stock for which they had strong convictions continue to move higher and higher is a source of great frustration.
So, it is important to fully internalize your investment approach and philosophy so that you remain calm and focused when stocks take time to progress through their trend. It will also help remove frustration if you sell a stock per your plan and it continues to move higher. The aim for any investor is to remain calm and focused on executing their strategy.