Much has been written on why we need to be patient in trading. Be patient to wait for setups. Be patient with your winners. Most of these writings are correct: a lot of money is lost by not being patient enough. FOMO is real.
However, no one hardly ever talks about how to become more patient! How do we discover our patience? That’s usually a big mystery.
That’s what I want to talk about in this article.
Patience Is Also A Form Of Action
– Auguste Rodin
Why are we impatient
But first, let’s go over why we cannot seem to find our patience. Because part of the solution is knowing what triggers our impatience. If we cannot figure that out, we have no chance at actually modifying our behaviour and becoming a more patient trader.
So let’s go over the four most common reasons why traders seem to want to hit that buy/sell button too early.
And boy, the first reason is a big one! Too many traders have too much time on their hands and just want to see some action! Has this scenario ever happened to you: you didn’t really have anything to do and you were just flipping through charts, hoping to “discover” something to trade. After 15 minutes, you couldn’t find something, so the next best thing is to start forcing trades.
“This trade isn’t really according to my trading plan rules, but it’s the best I could find”
This sort of thinking is killing your profitability! If there is nothing to trade, don’t trade. If you are bored, step away from the charts. Boredom can potentially have such a big impact on your trading that you seriously need to consider how many setups are really triple-A setups and how many you just took because, well, you didn’t have anything else to do!
Fear Of Missing Out
Every trader has been through this: you see a setup that is starting to look good, but what if it takes off without you? I guess you better make sure that you don’t miss this boat! Maybe you completely looked over a setup last time and you will not let this happen again, that’s for sure!
This is FOMO speaking. You’re scared to miss getting into this trade in the same way you’re scared that your restaurant will be fully booked on that special night or that you cannot find a hotel room for that weekend getaway trip. You just don’t want to miss it!
However, know that this cognitive bias can be battled and realising that fear of missing out exists to start off with, can be a huge help in becoming more patient. There’s always the next setup, the market doesn’t go anywhere.
Revenge trading can also be a big one in being impatient. Think about a time when you had to endure multiple losses. That equity drawdown hurts! An idea lights up in your mind: this one setup you just found could make up for those last losses easily. You still feel a bit angry about losing that last trade so you just think “f**k it, I’m getting in”.
This sort of thinking is probably recognisable by many traders, but making up for previous losses is never a valid trading strategy. You’re letting your mind be clouded by previous trading results and this leads to revenge trading. Afterwards, you realise that you should’ve been patient after all because guess what: the trade that was going to make up for your losses ended up a loss too! Revenge trading doesn’t work.
Patience Is Not Optional
Dennis Gartman, a successful trader and publisher of The Gartman Letter has this to say about the value of patience: “Proper patience is needed throughout the lifecycle of the trade, at entry, while holding and exit.” Regardless of your trading style, you will need to employ patience to get good trading results.
Even (and especially!) scalpers need to have incredible patience to see so many candlesticks go by before entering that one scalp when everything lines up. You need patience to let your winners run.
Without patience, you’ll fail as a trader.
Luckily, there are many ways to become a more patient trader. Instead of saying “just be more patient”, I’ll be describing the “how”. Some of these are very specific to trading but you’ll notice that others will also help you in becoming more patient in life. Often, the two will cross paths and make you a better trader and person.
This section has 3 distinct parts. The first deals with practical solutions for becoming more patient in your day to day trading. The second part will delve deeper into the psychology of patience and how we can battle this with simple psychology approaches. Finally, the third part is about finding patience outside of trading and applying this towards your trading routine.
1. Practical Solutions
Walk Away From The Charts
This might sound too simple to include, but it’s not. Walking away from the charts is an excellent way to control your patience! You can do this by just closing your charting platform, but also physically walking away and going for a walk, for example. Go grab a coffee or go bouldering (which is what I sometimes do).
It’s not the act of walking away that is important, but it’s the diversion in your thoughts that it triggers. You’ll start thinking about other things and in turn, forget about trading for a moment.
Even if you are still thinking about trading, being away from the charts can help with your thought process. It’s like counting to 10 for people who have anger or anxiety issues; it will momentarily remove that impulsiveness that caused you to be impatient in the first place. It’ll give you perspective on what you were about to do and you’ll realise that not trading was probably the best thing to do.
Use Price Alerts
Price alerts remove the need to be glued to the screens all day, watching the price bounce up and down. Once the price crosses a certain level, you’ll get notified and then, you can have a look. If you’re a trader who trades breaks or bounces of specific levels, this is a great way to free yourself from watching the charts and potentially losing your patience.
Once you get into the habit of using these, you’ll realise how much time you can save. My preferred way of setting alerts is by using the TradingView alert functionality.
Use Candle Close Alerts
Similarly, candle close alerts help you by only triggering if a certain time has passed, for example when a 4H candle has closed. I have set these repeating alerts on my phone and 5 minutes before a candle closes, they’ll go off. This means that every 4H, I’ll have a quick look at the markets and check if I need to adjust anything.
Again, they free up time and in the process, make sure I don’t get impatient. They are simple tricks but with a big impact on how you deal with trading.
If you really can’t control yourself and notice that you often get in or get out too early, this might be a good solution. Another trader called this “feeling the market”, meaning you start by opening small positions and only add to them if the market is doing what you expect it should do. You’ll be wrong many times, but at least you’ll be wrong on small amounts instead of full positions each time.
Similarly, if you have the problem of getting out too early and being impatient with letting your trades play out, start by taking small profits along the way. Psychologically, this will be easier than letting your entire position run and it’s sort of a middle way between closing the entire position (too soon) and completely letting it run.
You might notice that, because you get used to only closing small parts of your position, you will gradually become more confident with having positions open for a long time. The next step would then be to scale out less and less until you got to the point where you leave your trades untouched.
Checklists force you to not only have rules but also have the process in place to make sure you trade by those rules. A (physical) checklist will make you double check to see if you haven’t forgotten anything and besides rules, it can also contain general wisdom to live by. By going over them, you will unconsciously be more open to being a patient trader.
Some of the rules I have on my checklist are for example:
- Did the price bounce off a support/resistance area?
- Can I have a good R:R trade (2R or more)?
Some of the softer rules that still remind me of good practices are:
- Cut losses, let winners run
- Is this a FOMO trade or not? Are you patient enough?
I use checklists for pretty much everything where I need to make a decision in my trading and besides making my life easier, they also make me a much more patient trader.
Use Decision Triggers
Every weekend, I make my watchlist for both myself and the trade advisor members. While doing so, I make sure to map out specific levels that I want to see broken, before I even consider going into a trade. These are my decision triggers. As long as the price hasn’t broken the levels I defined, it’s just a potential setup. As the price breaks these levels, I will re-evaluate the setup and see if it’s something I want to trade or not.
By using decision triggers, I’m removing a part of the subjectivity that is part of discretionary trading. The rules are simple: if the price doesn’t break my level, there’s no trigger and no need for me to get impatient. The decision triggers remove the “should I get in?” question until I see what I want. In other words, they make sure I let the market come to me instead impatiently chasing the market myself.
Make a Daily Plan
Impatience often stems from impulsive behaviour. Impulsive behaviour stems from not having a plan. This can happen on different levels, such as trading without a trading plan but in this case, I’m talking about having a daily plan.
— Felix De Vliegher (@smartfxlearning) April 12, 2017
Every day, you should make a plan that has:
- Important economic news (if relevant)
- Setups you’re interested in
- If… then scenarios. If the price breaks X, then Y
The process of writing down a plan of the day will make it easier for you to follow it and as a result, become much less impulsive in how you make decisions. A more calculated trader means a trader who is patient, which is what it’s all about.
2. Psychology Tricks
Next up are psychology tricks! They’re not so much tricks, rather than ways you can become more patient if you follow the techniques described below. Of course, none of these are magic solutions and pretty much all depend on you integrating them into your trading routine. So it’s important to mention that you first need to find the discipline to consistently execute them. Once that’s the case, they will help you in more than one ways.
Find Reasons To Skip The Trade
A lot of traders are suffering from FOMO and enter either way too soon or enter on low-quality setups that they should’ve skipped completely. So here’s a simple change in mindset: instead of reasons to enter, find reasons why you should skip the setup.
As traders, we’re inclined to look at the things that help us validate the beliefs we already hold. By forcing ourselves to find things that oppose our beliefs, we can make better decisions. In many cases, this will result in a more patient approach where we are more selective with our trades.
We can expand this trick to trade management as well: if you’re in a losing position, instead of finding ways why you think the price will turn around in your favour, find reasons why this trade might not work out. On the other hand, if you’re in a winning trade, find reasons why you should stay with this trade instead of coming up with validation to close your winners early.
Envision The Negative Scenario
We touched on this topic in the previous paragraph, but traders are too often only occupied with the “success scenario”. They have no problem thinking about the increase in account balance if their trade will work out. However, the opposite scenario isn’t that fun to think about, so we prefer not giving it much thought.
But we should. By envisioning the negative scenario (e.g. “I will lose this trade”), a lot of the wishful thinking will go away and instead, we are a bit more realistic about what could happen. Think about your average win rate. If your historical trade data shows that you win trades 50% of the times, why do you magically expect that every trade will be a winner? Still, many think this way. If we haven’t entered the trade yet, thinking the win-only scenario makes us jump into trades, whereas we should’ve been patient.
I know traders who assume by default that every trade they enter will be a loser. It’s a great strategy. Not only does this help deal with losses, but it requires that trader to critically think if this is really a trade worth taking. It automatically pushes the trader to be patient and only consider the best setups.
Document What Triggers You To Lose Patience
Every time you lose patience, it’s likely you’ll do something like entering a trade too early or entering suboptimal trades. Shortly after, you’ll realise that you made a mistake and became impatient. If this happens, stop for a moment and write down WHY you did what you did.
When you take the time to write down how you feel, it’ll become much more obvious what is causing you to be impatient. Maybe you didn’t sleep well the night before and you feel like a zombie today. Maybe you feel annoyed because you had 5 losers already and you felt like you needed to make it right. Maybe you have some personal issues going on that make it incredibly hard to focus on trading right now.
1. STOP trading for a moment
2. write down your TRIGGERS ( why you did what you did)
Whatever it is, when you write it down, you bring the causes to the surface. I bet that when you discover that after three sleepless nights you trade less patient, you’ll start paying attention to these triggers. It’s the best way to change your impatient behaviour. A technique such as the 5 Whys is a very effective way of dealing with root causes that are a bit harder to find.
Talk To Yourself
This might seem too easy to be useful, but I know it can help you become more patient. Before you make a decision, take a moment to talk to yourself. Just go through the reasons for what you’re about to do and you’ll realise that if you speak (aloud) to yourself, it becomes much easier to discover potential things you do wrong.
Another trick that involves talking to yourself is talking to your future self. Think for a moment what your future self would think about the decision you’re about to make. If you cannot agree with the feeling that your future self would be happy with what you’re about to do, it’s very likely that you shouldn’t do it.
Basically, this is a technique that involves trying to persuade yourself to not doing anything stupid. By talking to yourself, you’ll less likely make impatient decisions and will become a better trader overall.
3. Growing Your Patience
Finally, I want to talk about growing your patience. These are techniques that are not necessarily related to trading, but rather about becoming a more patient person in general. Growing your patience as a person will have a definite effect on your trading and as such, it’s worth exploring this topic as well.
Meditation has many proven benefits such as training your ability to focus and reducing stress. But it can also be used to find more patience in life and by extension – your trading. When we’re calmer and are focused on what we do, we will automatically have less inclination to fall victim to impatient behaviour.
A good way to start with meditation is by using the Headspace app. It has specific sessions to train your patience and even though it’s not specifically focused on trading, you will see the benefits of these meditation sessions on how you are in the markets.
Notice The Physical Signals
Being impatient will often be accompanied by physical signals that can make you notice your behaviour. Examples of this are muscle tension, shallow breathing and hyperventilation, restless feet, hand clenching and so on. Once you know about these physical signals, you can start to notice when they happen and intervene at this point.
Upgrade Your Attitude Towards Discomfort
So many of us have the belief that being comfortable is the only state we will tolerate. We are impatient because we don’t like the state of discomfort we’re in and want to do something about it, as quickly as possible. But trading is so often about doing exactly the opposite of what feels comfortable.
So get out of this comfort zone. Get used to that feeling of discomfort, it’s something that becomes easier over time. Once you are able to do this, you’ll see that you become a more calm and patient person and your trading will improve.
The ability to stay patient is often one of the most difficult things to do as a trader. One must have patience, but it’s often not clear how to do this. In this article, I’ve laid out multiple approaches, both practical, psychological and applied to daily life, to make you a more patient trader.
These are the 14 approaches:
- Practical Solutions
- Walk Away From The Charts
- Use Price Alerts
- Use Candle Close Alerts
- Scale In/Out
- Use Checklists
- Use Decision Triggers
- Make A Daily Plan
- Psychology Tricks
- Find Reasons To Skip The Trade
- Envision The Negative Scenario
- Document What Triggers You To Lose Patience
- Talk To Yourself
- Growing Your Patience
- Notice The Physical Signals
- Upgrade Your Attitude Towards Discomfort
This, in turn, will allow you to make better and more focused decisions and make you a better trader overall.
If you’d like to become a more patient trader but still not sure where to start? Contact me and we can work together to find a solution!