Trading patience is something that most people would agree is a hugely beneficial talent to have. Not only does it help us to avoid marginal opportunities and find trades where there really aren’t any, but it also helps us to retain enough focus to take our planned trades when they do show up. Given that so many people have issues with following their plan, nurturing trading patience is an absolute must.
Impatience, hindsight trading and despair
Traders who are impatient are often those who struggle. And the struggle leads to a destabilizing despair that can lead to even more of an impatient tendency. Many traders in spite of what they might believe, have at least a semblance of logical and perhaps even successful trading plan. But when you don’t follow your plan, all too often there’s that gut wrenching feeling when looking back at your charts and finding that your terrible day would have been a good one if only you had followed your plan. Seeing this is one of the most infuriating elements of trading.
Find your trigger
There are many different triggers that sabotage trading patience and the propensity to follow our plan. The amount of stress we experience in everyday life can be a big factor that impacts on our ability to remain patient. Willpower and self-discipline are beginning to be recognized as expendable resources – and when we have to deal with situations that require a lot of effort for us to keep calm, it can become harder and harder to remain patient in our trading.
Not wanting to miss out is another trigger that often follows missing a number of trades that turned out to be theoretical winners. The frustration of then trying to “make up” for missed trades only to take losers can condition us into wanting to take a trade before it fully triggers in so as to not experience the pain of missing our planned trades.
Ambiguity and a lack of belief in a plan can lead to finding opportunities outside of it. Seeing ‘better’ opportunities and convincing yourself of one of a plethora of reasons the market offers to why your plan might not work, are sure-fire ways to not maintaining the resolve to follow it.
Nurture your trading patience
There are many ways you can help yourself to develop your trading patience. If you find that you’re able to be patient to begin with in the session but as time goes on it becomes a struggle, it may well be that the emotional exertion of being disciplined and focused enough to wait for your trades is depleting your willpower. It might be beneficial in this scenario, to fix a short trading window during the day and evaluate your relative performance to see if you are better able to follow your plan because of this.
However, to increase your emotional capacity, it is wise to identify any stress factors in your life and remove the ones that you realistically can. But really, this isn’t increasing your capacity for stress, but clearing some of the things that deplete it. Meditation can help to increase emotional capacity.
“The mindset of a trader” is a phrase that is often used and in the context of not wanting to miss out, it’s very relevant. The mindset you should strive for is identifying how good an opportunity is and executing a trade effectively and to the best of your ability – not hoping for some good trades. Instead, you should do your utmost to go into the trading day with no expectations and with the goal of simply trading your plan.
Being clear in your plan and trusting it is simple but requires effort on the trader’s part. Effort in terms of recording observations to formulate a complete plan and effort in terms of thoroughly back-testing it so that you can be confident in what results it has the potential to achieve over time. Making sure that you take the time to be as specific as possible in your rules can also help you to unequivocally say whether a potential setup qualifies as a trade or not.
Take the time to nurture your trading patience isn’t necessarily the easiest of exercises a trader can choose to undertake. It may require a great amount of personal observation and behavioral dissection. But the value to you as a trader is potentially astronomical – it can be the difference between being one of the many traders who perpetually loses money and one of the few who has patience, belief and above all, have consistent success.
For more updates from Mark and the team at NetPicks, be sure to visit their trading tips blog at NetPicks.com.