Most of us have probably imagined how great it would be if we could get rich quick.
That does sound great, but unfortunately, it’s this type of thinking that gets many traders into trouble.
To make money investing and trading, patience is one of the necessary ingredients. First, we have to build our trading skills, then save enough capital to earn us the kind of money we are seeking, wait for the right market conditions and wait for our money to grow. It’s hardly the get-rich-quick process we have all fantasized about, but if we are determined to be profitable, it’s going to take time.
The Issue with Wanting Instant Gratification
Many of us want instant gratification and depending upon our style of trading, this will become a problem.
Longer-Term Investing Strategy
A long-term investor needs to buy and then hold on to a trade for a significant amount of time in order to reach their investing goals. Though there will be ups and downs between buying and selling, experienced long-term investors know that they simply have to wait it out.
On the other hand, beginning investors have a tendency to panic when others are panicking, act on their impulse to sell, and then buy the stock once again when it has reached its top. This usually winds up being a losing trade. If we are going to be successful long-term investor, patience is something we must learn.
Shorter-Term Investing Strategy
For those of us that are shorter-term traders like swing traders, we still need to resist the temptation to sell prematurely. Yes, trades are held for a much shorter amount of time, but it is still important for us to wait for the right time to sell.
Impatient traders, says expert, Dr. Van K. Tharp, have a tendency to exhibit a future-oriented focus. As impatient traders, we imagine how much money we can amass in the future, but we also have an immediate need for that money. In order for us to become less impatient, we will have to learn to direct our attention to the more immediate future. How can we do this?
Well, unless we can acknowledge that we are one of those impatient traders, we can’t change. It isn’t as easy as it may seem at first. Many of us have difficulty admitting that we have limitations. We feel it is a reflection of who we are as a person, so we deny it.
An Exercise to Combat the Desire for Instant Gratification
A good way to combat this is to make it less personal.
For example, we can imagine that are watching a movie with a character facing a similar challenge, but that person is not us. We are simply observers:
- As an objective observer, what do we notice about the character and what can that character change about themselves to achieve their goal?
- We can also imagine that we are looking through the viewfinder on a camera with a wide-angle lens. Everything far away in the future is clear and focused, but what is right in front of us is blurry and unfocused.
- Now pretend that you are changing the lens to one with the capability of focusing on near objects. Suddenly, we are able to see what is in front of us very clearly just by changing our lens.
The different lenses represent our thoughts and behaviour. When we are impatient and looking far off into the distance, we act impulsively and too quickly. When we slow down and think things through, we will be much more likely to achieve our goals.
Impatience Usually Comes Out of Fear
It is also important for us to recognize that our impatience may be telling us that we are fearful of what the consequences of a trade will be.
When we are anxious about the possibility of a loss, we may close a trade because we are afraid that if we don’t, we will risk an even bigger loss.
The truth is, it is best to face the consequences of a trade directly rather than acting impulsively. We should ask whether we are able to afford the loss of capital by making several trades or if we are perhaps exaggerating how dire those consequences really are.
We must consider the consequences in a realistic manner and then decide if we are willing to face them.
Conclusion
We have all had moments when we have been disciplined and patient. We need to remind ourselves of this when our inclination is to react quickly. It is important to consider what we did in that situation to remain patient and how it felt. Use those moments to model the behaviour we want to exhibit when trading.
Impatience can sabotage our success. All it will do is result in disappointment and losses. By working towards becoming more patient, we will reap the rewards of our labor and achieve our goals.
Terry
P.S. If you’d like to get started with your stock investing/trading journey while minimising your mistakes, here are 3 resources you might useful.
- The first is my comprehensive blog post: Going From Absolute Novice To Confident Investor (The Complete Stock Investing Guide). It goes through all the steps you need to take in order to become a confident investor and reach your financial goals.
- The second is our FREE 10 Stock Criteria Checklist, which helps you identify what I consider to be the financially strongest 1% of stocks in the market at any time in less than 5 minutes. Click here to learn more.
- The third is our FREE 90-Minute Online Masterclass, where I’ll show you how I personally anticipate market crashes in advance and prepare for them. Click here to learn more if you’re interested.
