One of the hardest lessons a trader learns is to do nothing at all. Being able to sit still, watch the screen and resist the temptation of firing off a trade is too much for some people. The Internet, the amazing drop in commissions, and the pulsating and riveting graphics of online trading programs have made it almost impossible to resist trading on impulse or inspiration. Is it really that unlike the casino with computer monitors replacing slot machines? Many people learn this lesson the hard way. It’s only when the account values drops to levels that are painfully low do they wise up. Then again some lose it all before this happens.
All successful traders and market wizards cite the ability to be patient as one of the key ingredients of their success. Warren Buffett likes to compare it to a batter coming up to the plate. Unlike baseball, there is no three strikes you are out rule. You don’t have to swing. You can wait and wait and watch one pitch go by after another until you get that “fat” pitch that you know you have a good chance of hitting.
Waiting for the opportunity though doesn’t apply to just buying. It’s even harder for many people to determine when to sell. I know it is for me. My most consistent self-criticism usually revolves around my decision to sell not to buy. I read where one super successful commodities trader put a position on that was working splendidly for him. He continued to leverage the trade into gigantic profits. Unable to resist taking profits, the trader left the country and traveled somewhere where he knew he would not be able to get quotes or news on the trade much less exit it. Some times waiting is the hardest thing to do. Sometimes doing nothing is the smartest thing to do.
When I feel my compulsive desire to trade coming on, I’ll drop everything and hastily drive to the ski slope to get a few market distracting turns in. Now that ski season is coming to a close, I’m really worried about what I’ll do to compensate for my trading proclivity.
Don’t mistake patience though for paralysis. I much rather would have a case of itchy fingers than a lack of conviction. And remember above all, the opportunities never stop.
We would love to hear about your experiences waiting for that fat pitch.