PATIENCE IS ALSO A FORM OF ACTION!
When it comes to trading, be it stocks and shares, commodities etc, we all have one thing in common, we are all trying to improve our financial situation in some way, be it day trading, long term investment trading or anything in between.
We do our research and buy stocks in the hope that they will go up, and quite often some do and we make a profit.
The big financial institutions more often than not, sit back and let the markets fluctuate/bounce around, and they wait until towards the end of trading day before they step up and place their trades.
These people are market movers and are more than capable of causing ripples in the market if they want. Not something that happens too often, but it can.
Ok, but what has this to do with me trading?
Believe it or not, it is a good idea to understand the corporate mindset and the sort of people at that level that are trading in the markets.
What do these people have in abundance, that we don’t really see a lot of on many trading boards (this one included amongst many people)?… Ok, obviously they have knowledge, but this isn’t what I am talking about here.
They have the action of calmness and patience! That’s right, they are more than aware that patience is a form of action, and a very good one in the right environment.
I’m sure a few of you have been in meetings and dealt with management within a corporate environment, if so, you will know that the best players in that team are the ones that will watch others during that meeting acting rashly under a stressful situation, they will study others calmly and only step forward and act when the cards have been placed on the table.
Ok, that’s all well and good to know, but how does anyone compete against them?
Here’s the thing, you DON’T COMPETE AGAINST THEM, you JOIN THEM.
The way you do this is you also adapt this patience mindset and allow the markets to do their thing, allow stocks to move and catch a part of that movement. This could be a bullish movement or a bearish movement, but either way, you can catch this.
Sounds good, but how do I know when to step in and catch this?
Again, YOU DON’T. Your goal as a trader should not be to try to catch the very beginning of a trending stock, your job should be to be able to spot a trending stock and step in on some of that trend. If you keep doing this across the board with multiple stocks, you will now be catching profits across multiple stocks and this all begins to add up to a tidy sum.
Also, your goal is not to predict when a stock will stop trending because nobody knows the answer to this. Your goal should be to set in place stop losses so that they cut in at certain calculated positions.
By adding certain tried and tested formulas to your trading, AND MOST IMPORTANTLY, STICKING TO THEM, you are taking out emotions and becoming the trader that the professional institutions are, or train up.
As said above, what these people have that most others don’t, is patience and a tried and tested system. Yes, of course they also lose trades, but they win a lot more than they lose. Also, even on their losing trades, they do not veer away from their system as they know that their system works more often than it doesn’t.
You may be surprised to know that professional traders from within many corporate institutions not only are aware of the many hundreds of thousands of “EMOTIONAL TRADERS” out there, but they almost rely on them, and like clockwork, the emotional traders often play right into their hands.
How do I know this? I spent years supervising a system support team within a corporate financial banking environment and our team supported many traders within this environment, so I was fortunate enough to talk with them and get to see what goes on.
Well that was a boring read and I didn’t really get any tips on trading!
What this should have gotten across is that “PATIENCE and knowing when to step forward for a trade, is a STRONG ACTION, and it is also YOUR BIGGEST ALLY!” <– Believe it or not, having this quality is what stops quite a lot of traders from getting their accounts burnt out.
Yes, of course so is knowledge and knowing how to analyse trends, goes without saying. If one doesn’t know that then they are basically gambling.
Something else worth noting is that when markets have corrections, a high percentage of traders will panic, some sell out to try to protect whatever they still have, some get stopped out etc. Institutions see this as part and parcel of their trading and more often than not, this doesn’t actually phase them as institutions don’t overstretch their investment budget. If one has done this, then it may hurt more than we would like when a market correction/pullback happens.
To understand how to read when the market is trending, and having the patience to CALMLY stand back and wait until the trending pattern opens the door for you to step in, this will definitely serve you well and make you a better trader.