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to floor cleaners, my office gets 10 calls a day from people selling something. But just because it's offered doesn't mean you should bid. There are a lot of companies I like and a lot of stocks I think look promising. That doesn't mean I buy them. To paraphrase

, I look at 50 deals a week. I choose one, and then watch it like a hawk.

In trading, as in most games, the best advice is usually the simplest. Not just because it's the easiest to remember, but because it works. And I never got a hit at bat or made a dollar in the market before I started adhering to one simple principle: Keep your eye on the ball. What most people don't realize is that 90% of "trading" is watching. I'm a trader, but there are many days I don't make a single transaction. And when it seems the whole world is kibitzing about Greenspan or the gross domestic product, I do what I always do: watch the market and watch my stocks. In my experience, the best indicator of the market is the market not the pundits, not the analysts, not the media, not the Fed, not hemlines or the stars.

That's why it's vitally important you follow your portfolio's prices. The occasional earnings-inspired blow-up aside, the big moves don't happen overnight, but develop over time. Meaningful trends take weeks or months to unfold they don't simply materialize out of nowhere. The Nasdaq didn't drop 60% overnight, but over the course of a full calendar year. Nobody can say they didn't have ample warning. If you've been long the major liquid names, you've had plenty of opportunity to get out. But you had to be watching your holdings and you had to have the guts to get out.

So I watch but not what you might think. People are always surprised to learn that once I buy a stock, I systematically avoid following any news about the company whatsoever. I find the fundamentals are a dangerous distraction. The more press releases, analyst research and Bloomberg stories I read, the more likely I am to care about companies. I don't care about companies and neither do my clients. What matters is the price action...plain and simple. That's what you should focus on.

Sure, mutual funds, brokers and others with a vested interest in collecting their management fees will suggest you ignore a stock's short-term movements. Either way, they get their 2%. But it's imperative that I know my holdings' every move not because I want to trade on every zig and zag, but simply because I need to know they occurred.

I watch where XYZ opens and how it closes. I watch where it trades intraday and in relation to its respective indexes. I watch the volume and its relationship to other markets like interest rates or commodities. I watch and watch and watch. And when I'm long, more than anything, what I'm obviously looking for is a tendency toward higher prices. Not an unnatural gap upward or big point pop, but the subtle yet steady emergence of a trend.

It's the same on the way down as it is on the way up. So if you're upset about General Electric closing below $40, keep in mind we first saw it trade that low back on March 12. If you've been long and wrong, the market has given you over a week's time to reduce your exposure but you had to be watching, or at least have planned ahead with some well-placed (albeit painful) stop-loss orders.

Where the Bulls Went APPLET PLACEHOLDER: archive= height=300 width=245 Data from March 24, 2000 through March 21, 2001 Source: DJNR

So what does all my watching and watching suggest to me now? While I don't make market recommendations, if "fixed income" is a foreign term to you, I suggest you widen your horizons and check out the bond market, which has soundly outperformed stocks. Equity-fund fans have bought dips on the assumption that rate cuts would benefit stocks, but it's bonds that have seen the big move as of late. Generally speaking, these are securities I'd like to be long right now.

As I've written before, nobody knows the future. So because there are no sure things, you have to be confident in your positions. Some people wait for an upgrade, economic number or earnings report before they trade. They want to make sure they're right. Unlike those who call a losing position a "buying opportunity," I find the best way to be confident is to be right. How do I know when I'm right? The market tells me, not Tom Galvin.

If a stock I buy moves higher, I don't need a research report to tell me I'm onto something. Trends tend to persist. The object isn't to guess what will happen nobody can do that consistently. It's to watch for what is already happening, and get on board.

Capitalistpig.com, a Chicago-based hedge fund. At the time of writing, Hoenig's fund was short shares of General Electric.