Patience … Discipline … Discipline … Discipline … Patience
I know my sweet spot. Every trader should strive to know his or her sweet spot. We should strive to only take a trade when the market set up is in our sweet spot. We should strive to avoid trades out of our sweet spot.
If you, as a trader, do not know your trade set up with great intimacy, then how in the world will you know if you are exercising patience and discipline?
Once you know exactly what your sweet spot is and is not, then the real challenges begin.
The real challenges for me (and it could be different for you) are different nuances of patience and discipline.
- Patience to wait for just the right set up
- Discipline to sit on the sidelines and not getting pulled into a trade that does not fully satisfy my requirements
- Discipline to pull the trigger when the right trade comes along
- Discipline to remain detached from open positions and properly manage each trade according to trade management guidelines developed over decades of market speculation
- Patience to allow a position with a substantial profit potential the room and time to bear full fruit
The above challenges are very, very real. The markets can force a trader to let his or her guard down. The markets are all about forcing traders to make mistakes. Markets are constantly luring traders with such deceptive messages as:
“Trade now and trade often”
“You’re missing out on some good moves”
“The only way to make money is to trade”
In fact, there are times when NOT trading can be the action with the best outcome. Trading just to trade often leads to drawdowns. Then comes the urge to find trades in order to recover the drawdown. Often this leads to a worse drawdown. Before a trader knows it he or she can be in a 20% to 30% or greater drawdown resulting from trades that never really qualified as trades in the first place. This is when the capital drawdown becomes a significant emotional drawdown. Vicious cycles can easily come upon us as traders.