Journal of Finance study concluded "Trading is hazardous to your wealth."
Rates of trades return were about 6.5% less than the overall market. This is due to transaction cost, higher risk, poor money management, stop losses, and position sizing. Furthermore, individuals compete against large investment bankers, and other investors. One stat that is often quoted is that 90% of traders lose. In addition, they are spending lots of time and effort on an unrewarding venture.
There is a better way.
Jim Roger, has been successful on investing, and here is what he says you should do to be successful:
Take your money, put it in Treasury bills or a money-market fund. Just sit back, go to the beach, go to the movies, play checkers, do whatever you want to.
Then something will come along where you know it's right. Take all your money out of the money-market fund, put it in whatever it happens to be and stay with it for three or four or five or 10 years, whatever it is.
You'll know when to sell again, because you'll know more about it than anybody else. Take your money out, put it back in the money-market fund, and wait for the next thing to come along. When it does, you'll make a whole lot of money.
Another successful investor is Warren Buffett. What does he say?
Your default position should always be short-term instruments. And whenever you see anything intelligent to do, you should do it.
It is well known that Buffett follows his own advise and that in Berkshire Hathaway they are sitting on cash and equivalents of more than $46 billion, which is about 27% of the company's current market value.
Now the issue is being patient, waiting for the right opportunity, recognizing it and then acting on it, and again being patient. Like what Buffett has said, you should be investing base on buying a business.
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