When I was a young man, a wise investor told me that three things are necessary to make money in the stock market – patience, patience, and more patience. Another well-worn piece of wisdom is never try to catch a falling knife. Several I bought went bankrupt.
To develop any skill, you need the motivation to do so.
So, let’s begin there.
The quickest way to get motivated to develop patience, is to understand the true cost of impatience.
Many traders can probably claim impatience as a trait that costs them money, but this will be based on a vague idea. I suspect almost none of them will be able to tell you exactly what it costs them.
At the same time, the amount that may be lost due to impatience will likely be larger than thought.
Why?
Opportunity cost.
If impatience is resulting in losses, these are likely impacting on your bet size and/or psychology which, in turn, can sabotage faster progress.
So, the first job is to pin a monetary amount on impatience.
As a starting point, work out what it is costing you over your last 30 trades.
This means looking at the outcome of ALL decisions where impatience played a part.
But here is the point that never seems to be spoken about.
And this is where I’m going to throw you a real curveball:
Not every trait that you think is bad, is bad in reality.
It is perfectly possible you might find the net result of impatience is a positive outcome.
How is that possible?
Let’s consider a theoretical finding.
Let’s say you recognise that sometimes you jump the gun on a trade entry and get in early.
Maybe you flagged it up as being “impatient” on five separate trades. The last three trades you got in before what you wanted to see, actually occurred.
The trades subsequently went wrong and each one lost.
A 3R cost overall due to “impatience”.
But maybe you find the other two trades meant you got in on moves that became big winners.
Let’s assume one made you 2R and another made 4R: 6R overall.
So, the net result of impatience across the sample size?
+3R.
I have seen this sort of thing before among some traders.
They think something is costing them money when in actual fact, it’s not.
This is the result of recency bias.
In the above example, the three, back-to-back losses, are forefront in the brain.
The two huge wins before them are diminished.
And the trader doesn’t have the stats to let them know their brain is deceiving them.
So, it is possible, impatience pays.
To be clear: I’m not saying this is the case. I’m playing devil’s advocate.
You can find some really interesting things when you study performance.
Now of course, one shouldn’t come to a conclusion based on five trades but there is something to think about here.
- Is impatience really costing you?
- If so, how much?
Next, when solving a problem, you have to look at why you have it. Many traders seem to be aware of their problem but try to solve it without understanding why they have it.
For example, they say: “I am impatient. So, I must be patient. I’m going to sit here all day and force myself not to take a trade unless I see an amazing trade.” But what if you don’t know what an amazing trade looks like?
If you are impatient because you don’t know what you are looking for, then everything seems like a potential opportunity. Say to your friend/partner/child: “Today we are going to look at this chart and make some money by betting which way it’s going to go”.
Then go quiet and stare at it. Don’t say anything until they do.
They will likely say something like: “So what are you waiting for?” And that’s the million-dollar question: What are you waiting for?
So, in this scenario, the way to tackle the issue would be to become more familiar with your edge.
As I’ve said so many times: know what you want to see, where you want to see it and when you want to see it.
And know it like the back of your hand.
To give a final example, maybe you feel your impatience is because you have an urgency to make money that goes beyond a mere want and is a real, desperate, need.
Interestingly enough, most people try to solve this issue by coming down a time frame to try and generate more trades (and/or upping risk).
But here’s the thing: lower time frame traders still need patience. In actual fact, they probably need even more of it because unlike the higher time frame traders who can perhaps check in less frequently, scalpers are forced to sit there watching actively. This really tests you.
Ultimately, patience is part of being a competent trader.
As traders, we all want to trade.
But good traders understand the money you make is not made in the trading, it’s made in the waiting.
So, if you suffer from impatience:
- Calculate the cost
- Find the cause
- Brainstorm the solutions
- Choose the one most likely to be effective
- Make a plan and implement it
- Assess the impact going forward
This is how you progress.
And it works for endeavour.
