“He that can have patience can have what he will.” - Benjamin Franklin
I believe that one of the most underrated character attributes of a successful trader is patience. It doesn’t matter whether you are a short-term, medium-term or long-term trader, whether you only trade foreign exchange or other financial products, patience is still applicable in several different situations.Patience is important when considering how you manage your trade exits, whether it be at a loss or profit. If you lack patience you may have difficulty seeing a trade through until it hits its take profit level, and in order to achieve consistent long-term trading success, it is important that you do allow trades to take their course.
Sometimes when you enter a trade, there is a sense of optimism that this will be the one trade that makes your year. Your analysis has been thorough and the trade meets all of your criteria. Then, after you enter the trade, the price moves very little in the short term. Your thorough analysis and optimism may have led you subconsciously to have an unrealistic expectation of this trade.
When, in the immediate future after entry, it fails to meet those expectations, you may become frustrated and close the position in disappointment, even though it may still be meeting your entry criteria. Patience is again required in this situation.
Another problem that some traders face is that even when they set themselves a realistic goal (30% return per year for example), they then expect to achieve that return in the first few weeks rather than taking a longer term view over the next 12 months.
Twenty per cent per year is only just over 1.5 per cent per month yet some traders will expect to achieve their goals too quickly and may adopt some poor trading habits as a result. Patience is an important character attribute that traders need.
Picture this for a moment. You have made the decision to start trading and employ me to coach you through the early stages. One of the first questions I ask you is about the goals you have set yourself. I then add that I have a goal for you — in 12 months’ time, I want you to have traded on a regular basis and have every dollar that you started with. I don’t want you to have made any money; I just want you to have held on to all the money you started with yet traded along the way.
Imagine your response. Deep down in your mind is the underlying desire and motivation to make lots of money from trading and here I am telling you to make nothing in your first 12 months. This will most likely not sit well with you.
However, the reality is that the significant majority don’t have every dollar they started with after their first 12 months. With this considered, my goal is quite realistic and one well worth aiming for. Many traders would love to have every dollar they started with after 12 months.
The purpose of setting you this goal is twofold. First, I want you to focus on the importance of protecting the money you have as opposed to focusing on making heaps of money. You must adopt a very defensive posture where most of your trading decisions revolve around protecting your trading capital.
Second, I want you to appreciate that developing a trading plan that is right for you and acquiring the skills and attributes that you require takes time. It is most likely going to take a lot more time than you want it to, but again that is the harsh reality of trading.
When starting out, I believe that many people view trading as easy money; however, it may be the hardest easy money there is!
Trading has relatively straightforward concepts, yet it is amazing how many people make a mess of it. Once they realise that it isn’t as easy as they initially thought, they try to overcomplicate their approach believing that a complex solution is required. Unfortunately, this is often not the case and they end up travelling down the wrong path.
There are many professions in the world where you wouldn’t expect yourself to achieve a certain level of proficiency and skill instantly. You wouldn’t expect yourself to jump in the cockpit of the latest offering from Boeing or Airbus and be piloting it half-way across the world. Yet, some people believe that trading will be easy, and you will be profitable from day one. Sadly, this is rarely the case.
A Patient Mindset
You would have thought previously about why some people are so successful in life and others are not. How many books have been written about having a positive attitude and taking action towards your goals? There is, and always has been, a single ingredient that separates people who are successful in life from people who are not. It is the mind and how we use it to drive ourselves towards the goals we set. Unfortunately, many people live their lives with an endless series of ‘what if’ questions that they ask themselves.
When most people start trading, they never consider whether they are well prepared and have the necessary skills and attributes to be successful. This is likely to be one of the last things on their mind. Somewhere along the path of trading, however, most people come to a realisation that trading is probably not as easy as they first thought.
With this humbling realisation comes a search and investigation into what makes a successful trader. They seek out what they need to do and learn about, in order to make all this money they dreamed of initially. They attend courses, converse with other traders further along the path of trading than themselves and make a committed effort to learning this new craft.
Successful trading still has its foundations deep within the individual themselves.
It is probably only when people start trading for real with their own real money, that they begin to feel the emotional strains and pressures and then realise that they themselves may be a bigger part of the overall equation than they thought initially.
This again comes back to the importance of being patient in your journey of becoming a consistently profitable trader. It simply will not happen overnight
You must be patient with yourself and the whole journey. It will take time to acquire and develop the skills necessary to consistently profit from trading.
The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.