The Art of Patience in Trading: How Impatience Affects Trading Success

When it comes to trading, patience is often the key to long-term success. But as someone who has experienced impatience firsthand, I can tell you that it's not always easy to resist the urge to act quickly.

The Power of Patience

As a seasoned trader, I've often found myself in situations where I'm tempted to rush into decisions without thinking them through. Whether it's waiting for a trade to reach a take profit (TP) level or closing a position to lock in profits, the temptation to act quickly can be overwhelming. However, the impatience that drives us to act hastily can often lead to poor decision-making and missed opportunities.

Impatience can be a double-edged sword in the world of trading. On one hand, it might feel urgent to act, but on the other hand, it can diminish our ability to think rationally and make sound decisions. In fact, one of the most successful hedge fund managers, when asked about the hardest thing to do, said, "Sometimes the hardest thing is to do nothing."

Impatience Is a Societal Trait

Our impatience isn't something we're naturally born with; society propagates the fast-paced culture that pushes us to act quickly. From childhood, we're taught to complete tasks as fast as possible. For example, in school, the pressure to finish assignments within a given timeframe can lead to rushing and taking shortcuts. At home, the need to complete household chores quickly can make us expedite tasks without considering their quality or efficiency.

As we grow older, we continue to perpetuate this impatience. The fast-paced lifestyle we lead is driven by the need to achieve our goals in a short amount of time. However, this mentality can often lead to poor decision-making in trading. We might be overly focused on quick profits and short-term gains, which can ultimately cost us more in the long run.

The Consequences of Impatience in Trading

One of the main reasons why many traders take profits early is their fear of losing money. They might think, "If I take the profit now, I won't risk losing it." However, no one has ever gone broke by taking profits; it's when we hold on to losing positions that we typically end up with significant losses.

Another common behavior is when a trader holds onto a losing position, thinking they can "get their money back" at a lower price. This "mortgage the house," or supermarket mentality, can be dangerous. Instead of cutting losses quickly, traders might continue to invest in a losing position in the hope of a future rebound. This not only leads to further losses but also prolongs the period of underperformance.

Patience: The Key to Long-term Success

To achieve long-term success in trading, patience is essential. When a trade is going well, the temptation to take partial profits can be strong. However, a true winning trader understands that the key lies in holding onto the position and allowing for further gains. As quoted by Tom Hougaard, a successful entrepreneur, 'If I am in a winning position, I donrsquo;t sit and congratulate myself. No, I want to get that position bigger and bigger.'

Instead of closing a position early to avoid losses, traders should be willing to hold onto a losing position long enough to recoup any initial losses. This mindset not only helps in saving capital but also removes the psychological burden of constantly worrying about potential losses.

Conclusion

In the world of trading, patience is a crucial virtue. While it's understandable to feel the urge to act quickly, resisting this urge can lead to better decision-making and ultimately greater success. By adopting a patient and disciplined approach, traders can overcome the challenges posed by impatience and achieve their long-term goals.

Remember, the hardest thing to do is often to do nothing. By avoiding the impulse to take partial profits or close losing positions too quickly, traders can cultivate a winning mindset and achieve long-term success in the markets.

Have you stopped adding to your losers and taking partial profits? Let me know in the comments below.