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This post is an excerpt from the most recent edition of The Felder Report PREMIUM:

What separates truly extraordinary investors from all the rest? It’s simple: They are extraordinarily discriminating.

I talk to a lot of investors. Every one of them is looking for that next, great trade. They’re researching, studying charts, reading annual reports and analyzing financial statements, whatever their process calls for, and they should be scouring the markets like this. You can’t expect to reap the rewards of any activity without first sowing the seeds in this way.

The one distinction, however, I notice between average traders and investors (and I’ll use them interchangeably here though they use very different methodologies) and really good ones is average traders put on far more trades than the really good ones do. I’m talking ten times as many trades, at least. Average traders put on trades all the time. They believe they really are capable of finding that many good ideas on a regular basis.

“Charlie and I decided long ago that in an investment lifetime it’s just too hard to make hundreds of smart decisions…. Therefore, we adopted a strategy that required our being smart – and not too smart at that – only a very few times. Indeed, we’ll now settle for one good idea a year.” -Warren Buffett, 1993 Berkshire Hathaway Letter to Shareholders

Really good traders, in stark contrast to all the others, are far more patient. They don’t put on a trade simply because they have an opinion about something or worse, someone they respect has an opinion about it. No. They wait for the perfect setup – the setup that they have profitably taken advantage of time and time again. Until it arrives, they do nothing.

“One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do…. I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime…. I wait for a situation that is like the proverbial, ‘shooting fish in a barrel.’” -Jim Rogers, Market Wizards

Now this is a lot harder than it sounds. And that’s exactly why the average trader can’t do it. It’s hard to watch potential trades go by and not act on them, especially if they would have been profitable – it’s hard not to kick yourself. And there’s something specific to the American work ethic where we feel lazy if we’re not constantly trying to accomplish something.

“I always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game – that is, to play the market only when I was satisfied that precedents favored my play…. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time.” -Jesse Livermore, Reminiscences of a Stock Operator

Once you’ve found a system, though, that suits your own personality and proves its worth over time, you learn to sit back and wait for everything to line up before you pull the trigger. And I can’t emphasize enough how infrequently this happens. Great investors probably only pull the trigger once for every one hundred opportunities they look at. For some, it’s even less than that.

“Only maybe one or two times a year do you see something that really, really excites you. And if you look at what excites you and then you look down the road, your record on those particular transactions is far superior to everything else, but the mistake I’d say 98% of money managers and individuals make is they feel like they got to be playing in a bunch of stuff.” -Stan Druckenmiller, Speech at the Lost Tree Club

You might just say extraordinary investors are the snobbiest of all the snobs in the marketplace. They turn their nose up to almost everything they see. It’s only on that very rare occasion when something comes along that is so attractive that they simply can’t not buy it that they finally give in. This extraordinary patience and discipline is exactly what leads to the extraordinary returns that set them apart from the rest.