Learning to be masterfully inactive doesn’t come easily, but it pays.

The master himself said:

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.”

The Difference between
“Masterful Inactivity” and “Inactivity”

Inactivity means putting your feet up on some tropical island and wondering how the ocean got to be that beautiful shade of green-blue.

Masterful inactivity means that you’re not acting like a headless chicken, wasting your time and energy on dozens of trades. (Not unless you’ve got a computer program executing them.) If you take on too many trades, there’s a danger that you won’t see the forest for the trees.

Masterfully inactive traders listen, read, research and learn. As an M.I.T., you should be on the look out for the sort of trades I mentioned last time – trades where a trend is getting underway and where there’s a story that can help drive a significant price change. Masterful inactivity used to be easier than it is today. The Internet has made it all too easy to enter a big trade with as much thought as you’d give to choosing a pair of socks.

Above all, masterful inactivity means only taking trades where the risk-reward ratio is strongly in your favor.