Many times in an up trend, less is more. My biggest profits were made trading a stock in an up trend for 100-300 points not daily scalping. My best trading is in trends where my decisions are made at the open and close with no requirement to sit in front of a screen all day. There are different strategies for different markets but bull markets are the least complicated, you ride the best stocks up that are under institutional accumulation.
The following excerpt taken from Edwin Lefèvre’s book: Reminiscences of a Stock Operator. It is currently ranked #2 in the most helpful trader book poll that is being conducted. It is a book written about one of the most successful traders of all time, Jesse Livermore. It explains the simplicity of trading in a bull market, sticking with winners and letting them grow. I strongly recommend reading it if you haven’t done so yet.
Most – let us call ‘em customers – are alike. You find very few who can truthfully say that Wall Street doesn’t owe them money… Well, there was one old chap who was not like the others. To begin with, he was a much older man. Another thing was that he never volunteered advice and never bragged about his winnings. He was a great hand for listening very attentively to the others. He did not seem very keen to get tips – that is, he never asked the talkers what they’d heard or what they knew. But when somebody gave him one he always thanked the tipster very politely. Sometimes he thanked the tipster again – when the tip turned out O.K. But if it went wrong he never whined, so that nobody could tell whether he followed it or let it slide by. It was a legend of the office that the old jigger was rich and could swing quite a line. But he wasn’t donating much to the firm in the way of commissions; at least not that anyone could see. His name was Partridge, but they nicknamed him Turkey behind his back, because he was so thick-chested and had a habit of strutting about the various rooms, with the point of his chin resting on his breast.
The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others, used to go to old Partridge and tell him what some friend of a friend of an insider had advised them to do in a certain stock. (They would ask for advice) and the old chap’s answer was always the same… “You know, it’s a bull market!” … Time and again I heard him say, “Well, this is a bull market you know!” as though he were giving to you a priceless talisman wrapped up in a million-dollar accident-insurance policy. And of course I did not get his meaning.
One day a fellow named Elmer Hardwood rushed into the office, wrote out an order and gave it to the clerk. Then he rushed over to where Mr. Partridge… “I just sold my Climax Motors. My people say the market is entitled to a reaction and that I’ll be able to buy it back cheaper. So you’d better do likewise. That is, if you’ve still got yours”.
Elmer looked suspiciously at the man to whom he had given the original tip to buy. The amateur or gratuitous, tipster always thinks he owns the receiver of his top body and soul, even before he knows how the tip is going to turn out…
“Well, now is the time to take your profit and get in again on the next dip”…
But Mr. Partridge shook his head regretfully and whined, “No! No! I can’t do that!”
“Didn’t I give you the tip to buy it?”
“You did, Mr. Harwood, and I am very grateful to you, Indeed, I am sir. But—“
“Hold on! Let me talk! And didn’t that stock go up seven points in ten days? Didn’t it”
“It did, and I am much obliged to you, my dear boy. But I couldn’t think of selling that stock”… Why it’s a bull market! The old fellow said it as though he had given a long and detailed explanation. “My dear boy, if I sold that stock now I’d lose my position; and then where would I be?” … When you are as old as I am and you’ve been through as many booms and panics as I have, you’ll know that to lose your position is something nobody can afford; not even John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don’t feel like throwing away a second tuition fee.
Big money was not in individual fluctuations but in the main movements – that is, not reading in the tape but in sizing up the entire market and its trend.