This market is a very good example what it means to be impatient and have no discipline. For me it is a very good lesson which I need to repeat myself every time I try to make trades when the market is not ready.

What actually happened? In the beginning of August the market showed a follow through day and IBD later changed their market indicator to “confirmed rally”. However they warned the market is not ready yet. However I could see couple stocks doing well during the bear market. At that time it was AFAM, which rallied no matter what the entire market did. My screener showed some results and I thought it was the time to jump into those stocks because it was the time when they would rally and I had to be there not to miss it.

Today it is Life Partners Holding (LPHI) which shows similar resistance against today’s sell off. I was also tempted to buy it, but the lesson the market is giving me again and again tells me to resist.

The very first rule of Reverse Scale System is to buy new stocks only when the market is in confirmed rally, which means the 50 day MA is above 200 day MA and in uptrend.

It was not in August when I bought my quick-rich stocks, it is not today. Today I closed two positions, because they touched my stop loss. I am also eager to jump back to those stocks because tomorrow they will definitely rally back up. But I don’t know it. I do not have information saying it will happen and it will grow only and only up. This is not my system rule as well so by doing it I will brake the rule again.

The next stock picking rule says I should pick up only stocks which have growing momentum and none of those stocks which plummeted today are showing any growing momentum. Should I be fishing their bottom? Lose another money because nobody knows where the stock market stops its slump?

Well I need to learn from this lesson to wait for the market telling me that this is the rigth time for buying new stocks. Until then I will be saving more money for future trades and wait.