Patience is a virtue many have but few can actually bring into practice. After Discipline, Patience has proved to be the ultimate Achilles heel of many stock market traders. Patience is the first cousin of Discipline if I can say that. If you haven’t yet mastered these two, trust me, you are not going to last long in this game.
So what exactly do I mean by patience and how does it integrate with trading. Let me give you my example. I have a trading system in Amibroker which displays possible buy and sell ranges. Unlike most systems, mine does not show Buy -Sell arrows. I am not comfortable with the idea of relying on a fully automated system, one which places the order on the exchange once the corresponding buy-sell is generated. I want to have the final say before placing the order. That’s just me. Now, once my system shows the buy-sell range, I look for some confirming indicators which I have added. I will not take the trade unless I get confirmation from them. Does that mean I lose out on trading opportunities? Hell no. It just delays my entry. I am happy to get in a trade I am pretty confident about instead of one where I have some doubt. Once I am in the trade, these very indicators help me stay in the trade long after my system has given the exit range.
You might be wondering where does Patience fit in all this? Patience helps me to stay on the sidelines until all my conditions are met. Sure, I can take the trade when the system spits out the first signal but that would entail me not following my trading rules (Discipline). Patience also helps me stay in the trade till my indicators are telling me to do so.
Trading is as much about staying on the sidelines as it about getting in. You have to recognize this. Patience is the bridge which helps you to successfully cross these sides. As much as I would like to deny it, Trading is a highly emotional game and that’s what makes it so very interesting. If you cannot control your emotions, this game is not for you. I always give the Cheetah analogy for trading. A trader should be like a Cheetah. A Cheetah will wait for hours together for the perfect set up, till all the conditions are favourable. He will wait for everything to align so that he can make a successful kill. He has the patience to wait for it. Once every condition is met, he doesn’t hold back or wastes time. He goes and makes the kill. A trader should be just that. Have patience till the perfect set up emerges and then get in the trade without thinking twice. This is what all successful traders do, day in and day out.
To summarize, you need loads of Patience before and after you get in a trade. Like Discipline, Patience is a must have in every traders emotional toolbox. Only YOU can develop patience. Once you have built a Trading system or trading Rules try to Paper trade them for at least a month. Check your Patience level when following the rules. It will take some time to develop, especially if you are the impatient types naturally. Trust me, you will notice a huge positive change in your trading once you master the art and virtue of Patience.
Have Patience, follow your rules and Make money.
To your Boring Success.