I wrote an article a few weeks back outlining common mistakes new traders tend to make. If you missed it, find it here.
It is not uncommon for me to, at times, go back and review the articles I have written. In doing so with the article mentioned above, I realized I left out one of the most crucial pieces of being a successful trader.
I have written about it previously at my Google blog corner, however, believe in this stock market climate; it needs to be discussed and written about again.
I know the concept of patience isn’t sexy. It can be seen as counterintuitive and perhaps at first glance, irrelevant to trading. But as a stock speculator for the past 11 or so years, I will tell you, without it, you will join the 95% of traders who fail.
Warren Buffett said, “the stock market is a device from transferring money from the impatient to the patient”. Obviously when I started out many years ago, this statement didn’t resonate with me and I thought the old man was very dated in his teachings and perhaps even senile.
Warren Buffett was actually right! Why did I even doubt him, he's a billionaire!
In order for you to succeed in the stockmarket, you must learn to be patient.
Show me an impatient trader and I will tell you, that man has failed at trading. Patience is a must if you want to succeed in this game.
It isn’t easy, but neither is trading. Do you think a device which holds the potential to give you millions will be easy? Of course not!
Patience may mean going a few hours or days without entering a trade. Being patient may mean, on average, only taking a handful of trades per month. Being patient may mean, removing yourself from the computer every day or several times throughout the day. Being patient may mean, analyzing a stock for a lengthy period of time to then come to the conclusion that you will pass on the play.
Being patient may mean…
…Okay, I think you’ve got the message, you must be patient.
Yes, I know, it is hard.
You go on twitter and whatever social media outlet you choose to connect with fellow traders and see some very impressive PnLs (Profits and Losses). Understandably, you want to get in on the action too. But wanting to jump in a trade for the “action” of the trade negates my whole patience spiel and I guarantee you, you WILL lose your money.
Now if you’re in this game (and you better believe it’s as competitive as training for the navy seals) to lose money then go on ahead and act impulsively.
If you’re in this game to join the ranks of the small 5% that take money away from the 95%, you need to be patient.
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