Sitting Tight
The hardest skill in speculation is not finding the right position — it is holding it. "Sitting tight" means staying in a correct trade through all the normal fluctuations, noise, and psychological pressure that would otherwise shake you out before the full move plays out.
"It never was my thinking that made the big money for me. It was always my sitting. Men who can both be right and sit tight are uncommon." — Jesse Livermore, Reminiscences of a Stock Operator
The Old Turkey Lesson
The clearest illustration in reminiscences-of-a-stock-operator is Mr. Partridge ("Old Turkey"), a veteran speculator who refuses to trade in and out of his positions. When younger traders tell him about a "reaction" he should sell into, he always replies: "You know, it's a bull market."
His logic: in a bull market, the correct position is long. Exiting to re-enter at a lower price requires two correct decisions (when to exit and when to re-enter) instead of one. The cost of being wrong on either is losing the position — and losing the position in a genuine bull market is a bigger loss than any short-term fluctuation.
The principle scales beyond bulls and bears: whatever the correct position is, the skill is in holding it long enough for it to pay.
Why Traders Fail at This
trading-psychology explains the mechanism. Natural impulses run backwards:
- When a position goes against you, hope causes you to hold too long
- When a position goes in your favor, fear causes you to exit too soon
Sitting tight is the opposite of instinct. It requires a deliberate reversal: cut losses quickly, let profits run.
A second failure mode: scalping instincts. Traders trained on small moves feel compelled to "take something off" every time they have a profit. This is correct for short-term trades but destroys big-trend performance. The big money comes from the big moves, and the big moves require sitting through all the smaller fluctuations.
The "Sleeping Point" Corollary
A related principle: size your position so you can sit through it. If you are too big, every fluctuation becomes unbearable and you are forced out at the worst times. "Sell down to the sleeping point" means reducing a position to the size where you can hold it without watching every tick. This is a practical constraint on sitting tight — you cannot hold what you cannot psychologically tolerate.
Pat Hearne's Trailing Stop System
Pat Hearne, a professional gambler who applied betting discipline to stocks, solved the same problem mechanically: he would only sell a position when it had given back a specified percentage from its high. This is the trailing stop — it enforces sitting tight on winning trades by making the exit condition objective, not emotional.
Connection to Scalping vs. Trend Following
Sitting tight is the dividing line between scalping and trend following. Scalpers deliberately avoid holding through fluctuations — they take many small wins and their edge is in execution speed and volume. Trend followers sit through the noise to capture the large directional move.
Livermore's most important lesson was learning he was a trend follower, not a scalper, and that his bucket-shop scalping habits were destroying his edge in real markets.