THE MOST DIFFICULT

part of trading isn't picking stocks, taking

or even dealing with the

. Without question, the toughest part of managing money is knowing when to sit tight then actually being able to pull it off.

In this game, less is often more. I don't care how cheap the commission rate is. Trading isn't like sit-ups: You can't just do a few extra reps and expect to get a better result. Indeed, in any number of situations, the best move to make is no move at all.

Yet doing nothing is harder than it looks. There's something about money flying around that prompts an inescapable, almost chemical urge to act to buy, to sell, to short, to cover, to write options whether you actually need to or not. And it's that unfortunate, almost druglike instinct that prompts many to hang themselves with foolish decisions right from the start. Yep, trading is easy; it's the sitting tight that's really tough.

Let's say you did the research, bought a stock and, low and behold, find yourself with a winner on your hands. You jumped into XYZ at $30, and now it's trading a solid five points higher. Human nature, with which we all must contend, prompts you to sell the stock, grab the profit and move on to another name. It's a self-destructive instinct that disciplined traders know how to squelch.

Indeed, when you've got a winner, the correct move is to sit tight and let it ride. After all, the stock doesn't know you bought it five points lower, and the fact that it's showing a profit is proof positive that, at least for now, you're on the right track. And although it feels good to take a profit, the big money is made in the big moves, and the big moves take time. Sitting tight, letting your winners run and not dumping them prematurely mark the differences between a meaningless 10% scalp and a 100% gain that actually has an effect on your overall profit-and-loss line. Winners are hard to come by. When one falls in your lap, don't be so quick to trade it away.

Sitting tight can be equally difficult even without a position in the market. Let's say, for example, that you're bullish on XYZ. Perhaps the company's product intrigues you, or you notice that management and insiders are buying stock. Maybe you see them as a takeover target or simply think the stock is undervalued.

There are thousands of great companies that end up being terrible trades, primarily because people don't have the patience to sit tight until the right time to buy comes along. And although I know plenty of traders who think a $50 stock that drops to $25 is a bargain, I look for strength, not weakness, as my cue for when it's time to get into a favorite name. The market isn't chaotic; it moves in trends. While no approach is foolproof, trends in the market tend to persist. It's the only edge I know.

So while there's a bid and offer for every stock, I've found the highest probability of success comes in waiting for positive price action (read: strength) in both the individual equity and group to which it belongs. For a stock to be a good investment in the long haul, it's got to start by going up in the here and now. There are often dozens of stocks I'd love to buy, but don't because they're not acting right, and I have the patience to sit still until they are. You can monitor stocks without actually putting money to work. That's what a watchlist is for!

Trading is about making choices. And because you can't bet on everything, the trades I do put on are my absolute top picks, those I feel compelled to make out of my own fully vested, greedy self-interest. But because those diamonds are few and far between, often the challenge is being able to sit tight and wait for the best opportunities to come along. I let a lot of balls fly over the plate before I take a swing at bat.

Unfortunately, many people operate under the "least objectionable" school of stock picking. They don't really know what they want to buy, simply that they want to buy something. So instead of waiting until an investment they're actually confident about, they opt for the best of whatever happens to be present at the moment. This leads to lower quality trades and higher turnover of positions. It's a lot harder to hold a stock you weren't enthusiastic about buying in the first place.

The trick is to be able to sit tight and wait until your first-tier investments those handful of names that you absolutely, positively must own come along. For me, that has recently meant sitting on significantly more cash than I'm normally used to holding. But I know what I like. And right now, at least when it comes to the equity market, there are few big ideas calling my name. It's not an opinion you'll often read from pundits because, simply put, doing nothing doesn't sell newsletters like a weekly list of "must own" picks.

I'm watching, waiting and sitting still. And as anyone who has ever tried to strap the safety on a fully funded brokerage account can attest, it's a lot more difficult than it might appear. Even if the yield on cash wasn't so miniscule, traders tend to be Type A personalities. We want to get in the game, not sit on the sidelines. But because you only need a few ideas a year to make good money, disciplined traders are able to sit on their hands now and then, waiting until the best-looking opportunities finally come along.

Tom Petty has it right: The waiting is the hardest part. And although we're accustomed to a cause-and-effect relationship where the more we put into a task the more we get out of it, when it comes to investing, extraneous activity is more of a hindrance than a help. While it's our actions that garner the most attention, it's often our inaction, being able to simply sit tight, that has the most significant effect on the bottom line.

Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.