In today’s modern society patience is quite scarce as we don’t appreciate the importance of being patient as what we once did before the days of amazon prime, streaming your latest favourite series and having everything already on demand.
Everything is now geared towards instant or very little wait times, which for some has turned into instant gratification. As many want the reward but don’t want to wait to receive and when it comes to trading or even business that type of mindset and approach can lead to very big and costly mistakes.
Now I’m not blaming the younger generation as it isn’t their fault that society and their environment is now simply setup in this way as they only know what they have been brough up in. However, I feel it is very important that when you step into either trading or business as your trading should operate like a business too that you understand the true value and importance of patience. As it can be one of the most effective and simplest of ways to dramatically change your trading and begin turning into a profitable trader.
Patience is something you can easily learn and implement into your trading, business or even personal life.
Through learning to trade it has taught me how to become more patient in my personal life because I used to be very impulsive and have not a great deal of patience in the past. However, in the present I take more time making decisions and understand that certain things do take time. So the skills and knowledge you learn from trading can easily be transferred into other areas of your life too and I will talk more about this topic in next week’s article.
So, why is patience and important virtue to have in trading? It really comes down to how and why you are wanting to actually get involved in the markets. You want to take a trader in the hope of making a profit but when it comes to trading we know that there are thousands of different reasons for why you could get involved in the markets at any given point. To then make our lives easier, we then create certain principles and develop a trade plan that allows us to put all of our focus and attention into the markets only when certain criteria and conditions are met. This allows us to filter out everything else that is happening on the price charts and only pay attention to the markets some of our principles begin to be met as a setup specific to us is beginning to develop.
However, as we are now only looking to get involved in the markets when our specific principles have been met and needed market conditions have too been met we it means don’t need to be involved in the markets all the time but only at specific times.
This is the art of doing more by doing less.
What we are doing by using a trade plan that allows us to get involved in the markets only in certain market conditions and periods in times is filtering out poor quality trading setups and finding much more high-quality trading setups. As what you are doing by using principles and other variables in your trading is making it harder for you to actually get involved in the markets. Your trade plan essentially should be a checklist of things needing to be met and once everything is checked you then have the all clear to execute your trade.
But we aren’t the ones being assessed, instead it is the market being assessed. What we are doing is waiting for the market to give us confirmation it is okay to place our trade by using our trade plans principles as reason for entry.
What most new traders do is execute a trade and have no idea for what and why they took that trade so it’s simply a gamble on if they will be right or wrong. What we are doing by using our trade plan is first knowing exactly for how and why we are in a trade but more importantly we have waited for the market to give us confirmation to take the trade as it is the market that needs to meet our requirements for getting involved. By doing that our chance of success is much greater as we aren’t getting involved for any random reason, we are only able to get involved when the market meets every one of our requirements to get involved and so we have an edge. As the market came to us and gave us confirmation to take the trade rather than us going to the market to find any reason for how we can get involved.
Now where does patience come into this?
Well, as we now have specific requirements, filter and market conditions that all need to be in align with each other before we can take a trade from a developing setup these scenarios sometimes take time to develop.
Now how much time will vary on how frequent your desired setup is, how and what requirements you need to take the trade.
The setup you seek to trade is higher quality that is why it will take more time to develop as oppose to a poor quality setup as what you need is the market something you have no influence, power or control over to essentially fulfil a checklist you have created. So it’s down to the market of how fast and if you get involved in a trade setup, which in my opinion is a far better way to be trading as you then know when you are involved in a trade that isn’t just random it was intentional and deliberate.
Now as I said as we have no control on how frequent high-quality setups will be presented to us or if we can then actually get involved by all of our needed principles being met you will be tested through how patient you are to wait carefully and for the right moment.
If we consider professional traders, working at prop firms, hedge funds, institutions and so on who are trading investors money do you think they enter a trade at random?
No, they have specific criteria (Principles) that need to be met in order for them to execute a new position and more importantly they are patient able to wait for the perfect conditions before they even consider taking a trade as they want to make sure when they do get involved in the markets that they have the highest probability of being right.
Another great beneficial factor to being patient in your trading and only getting involved in the markets at certain times by waiting for a setup to develop then wait even further for all of entry requirements to be met, is that you don’t have to be stuck at price charts all day!
When you first step into trading you are excited to get going and start your trading journey and what I used to do was spend hours just staring at the price charts when I didn’t need to just encase something happened. At the time I didn’t have a fully developed trade plan either so when I was getting involved in trades it was for whatever reason I came up with at the time.
But when you start trading with a plan that is built by specific conditions and requirements you don’t need to be at the price charts all day. You only need to be at the price charts when your trading strategy is beginning to present an opportunity to you. I don’t believe you need to be stuck behind your desk or computer all day watching each candlestick develop as I believe it’s a complete waste of time.
When you stepped into trading odds are it was for one of two reasons;
1. To make a positive return on investment (ROI) on your money.
2. To have more time do the things you want to do in your life.
Patience literally allows you to get closer to both of them goals.
By being patient and waiting for the market to produce them higher quality setups for you to then get involved in there is a greater chance of being profitable, as the odds are more stacked in your favour than against you. As you are finding valid reasons for why you should be getting involved in the market!
Patience as I said before lets you do more by doing less. What I mean by this is that when you are trading with a principle based trade plan that tells you when you need to be involved in the market and you don’t need to be involved, then you can achieve more by doing bless in both trading and other parts of your life.
When you are patiently waiting for the market to present a trade setup and fulfil your entry reasons you have a better chance of being right than wrong, if not in the short term then definitely in the long term. So you could be making a bigger longer-term profit – ROI by taking fewer higher quality trades than taking more poorer quality trades.
Again, when patiently waiting to take a trade you are either waiting for a setup to present itself or waiting for you entry reasons to be met to then have confirmation to get involved in that setup by executing a position in the market.
So when waiting if there is no setups present on the price chart you don’t need by stuck behind the desk and equally if you are waiting for your entry reasons to be met then depending on what time frame you are trading (Swing trading or Day trading) you can keep checking the charts until they are fulfilled.
For example; lets say you want to go long on GBP/USD using the 1HR timeframe but in order to take the trade you need a HHHC candlestick. Until you have your entry candle you cant take the trade so you can check the price chart a few minutes prior before the candle closes and wait to see if you have a valid entry candle.
I don’t see the point of sitting there stuck behind your trading desk waiting for a single 1HR candle to develop when you can do other tasks for 55 minutes then just make sure you are looking at the price chart a few minutes before it closes. If you then get your signal you can take the trade, however if you don’t just go off and do what you want for another 55 minutes or analyse the rest of your portfolio to see if there is any other opportunities in the market for you to get involved in.
To me sitting there watching a single candle or being behind price charts when you have no reason to be is counter intuitive as it’s a complete wate of time, you might as well do something more productive with your time. But at the same time, you are still doing your job as a trader too as you are simply being patient and waiting for all your requirements to be before taking a trade. Just because you aren’t sat behind your desk doesn’t mean you aren’t doing your job as a trader, as all you are doing being patient which can you take you very far in your trading career and without it you won’t get very far.
How can you then become more patient in your trading?
Well from personal experience the best way is to follow a written progressive step by step process/trade plan. As you can’t move onto the next step of your trade plan until you have the step before that checked off, as you need each part ticked off to progress onto the next step. So, you literally have no choice but to be patient as you can’t hurry the market up and if diverge from the plan do something your plan doesn’t tell you to do then it is a bad trade taken.
Another way to gain experience in the importance of patience is failure, as sometimes you need to experience yourself to feel the emotions to learn the true value and importance. One time you might be faced with a situation where you have some of your trade plans rules met but not all of them but you can’t wait no longer and so you decide to execute your trade without full confirmation to if you should get involved in the setup. If the trade, then results in a loss you will learn a quick painful lesson as you could have avoided getting involved in that trade if you followed your plan.
In complete transparency however, the only way you become better at being patient is with experience of actually being patient in the markets and it will become easier as time goes on. You will also appreciate the true value of this virtue and come to realise how by not trading with patience can lead to very bad results in your trading.
I hope that you enjoyed this read and it was able to provide insight as to why patience is a very important asset to anyone who has the desire to be consistently profitable but also how you can do more by doing less!