The Greek philosopher Aristotle wrote, “We are what we repeatedly do. Excellence, then, is not an act but a habit.”

The same is true of investment. Good investing is not an “event” like finding the next growth company or catching the next market turn. Rather, good investing is a disciplined process that converts research and training into a well-tested methodology, and then makes a habit of following that approach day after day.

Because profits are enjoyable, investors often believe that they are “paid” when their good ideas are comfortably working out, but that is an illusion. If you carefully study the returns of successful investors, you’ll find that their profits are more often a sort of delayed payment for actions they took much earlier: maintaining their investment discipline even when it wasn’t working in the short run; cutting losses when the evidence changed; and establishing investment positions when it was often uncomfortable to do so.

The financial markets may be efficient, but they are efficient in an interesting way. If all investors were identical and shared the same information, objectives, and temperaments, the markets might be efficient in the “academic” sense, and it would be impossible to outperform a buy-and-hold approach. But in reality, markets are full of greed, fear, uncertainty, and constant second-guessing. In that world, investors are scarcely willing to follow a well-grounded, thoroughly tested discipline once it has become uncomfortable. For those who do, their later success doesn’t emerge as “free money.” It emerges as delayed payment for the discipline to take scarce, useful actions when other investors were seeking comfort.

For example, it is difficult—particularly after a long market advance—to part with a richly priced investment position as market action begins to deteriorate. When a market advance has been rewarding, the natural inclination is to become attached to those rewards, to fall in love with the bullish “story,” and to ignore negative evidence.

It is equally difficult—particularly after a long market decline—to establish an investment position at depressed prices as market action begins to firm. When risk taking has been relentlessly punished, the natural inclination is to avoid risk. That is particularly true if investors have endured a series of whipsaws, where early purchases are followed by immediate price declines and trend-following signals to cut losses.

Discipline requires confidence, and confidence requires evidence. In any investment approach, it is critical to test that discipline against the longest history of data that you can obtain. As an investor, my greatest successes have resulted from the confidence to respond in uncertain environments, based on evidence that had proved to be effective in market cycles again and again throughout history. My single greatest disappointment was the result of a much earlier decision to ignore Depression-era data as outmoded, and then missing a large market rebound while I stress-tested my approach against that data. Test your investment approach in the most challenging conditions you can identify, because someday you will face those conditions.

Greg Morris is among the rare breed of investors who take systematic research, testing, and discipline seriously. Greg is a technical analyst. The book you are reading offers insights that he has gained from his own career as an investment manager. Greg’s investment approach is based on indicators that measure price trends, trading volume, the balance of advancing stocks versus declining stocks, and similar considerations. Aside from keeping investors generally aligned with prevailing trends, investment methods like this can be of enormous help in limiting significant market losses.

While my own investment discipline draws from some elements of technical analysis, it is also heavily weighted toward fundamental valuation, stock selection, economic measures, and other factors. Each approach has its benefits and challenges, depending on the market environment. Yet more important than these differences is what both of our approaches share in common, which is the insistence on a systematic investment process.

In addition to sharing the tools and insights of a skilled market technician, Greg shares the three key elements that distinguish an investment discipline from constant guessing:

1. Measuring the weight of the evidence.
2. Rules and guidelines to trade the weight of the evidence.
3. Strict discipline to follow the process.

The importance of each of those words—evidence, rules, guidelines, discipline, and, possibly most important, strict—can’t be understated.

Reliable market indicators are important, but they are not nearly enough. The essential feature of a successful investment discipline is to convert those indicators into objective guidance about when to take action, whether that action is to buy or to sell. Greg Morris brings decades of data and research together into a technically driven, rules-based approach that offers both investors and traders a solid footing to “dance with the trend.”

In nearly every long-term pursuit, the secret to success is the same. Find a set of daily actions that you expect to produce good results if you follow them consistently.

Then follow them consistently.