Friday, November 30, 2007

Practicing Patience

A member in the trading room today asked for a recipe for patience (tic I know). I've been thinking of making it a topic one day and this day is as good as any. No set formula have I found to work I must say and I am increasingly confident that patience is relative. We have sayings on the subject that patience if practiced will be rewarded, yet patience can be over used to the point of ruin, as well.


We all practice patience everyday. The dictionary uses several deifinitions that speak somewhat of suffering; for me however this works best: 3. quiet, steady perseverance; even-tempered care; diligence.


Every time we set a goal, we practice patience until we reach it; it's a required element; yet we seldom notice it until a decision needs to be made about the progress. So the longer the set goal, the less likely that we would focus on our required patience for it. Of course the shorter the goal's time frame, the more attention we are required to pay to it's progress, therefore, we notice the level of our patience more intensely. When we compact the time frame from years into minutes, the required focus itself tests our patience.

Take the oft asked question: Where do you want to be in 5 years? (sends shivers through my spine for reasons political) And let's take an obvious answer for this goal setting question: I want to be alive. You may laugh but I believe that is a goal we all share . OK so, do you patiently wait for that goal to be reached? Yes, and you also check in with your well being from time to time to make sure you reach that goal, and barring any unexpected circumstances the odds are in your favor. So what did you do to reach that goal in the last year. I bet you didn't fret over it daily or you'd be labeled a neurotic. I'd say the same should be practiced for shorter term goals after all you want to be alive next year, next month, next day and next hour and the next minute. Do you fret over it second by second? I think the answer is no, because it's a reasonable expectation.

Now look at it for trading. First of all, you should not enter a trade without a goal. Wait and see attitude does not serve for long in any circumstance. Second are you setting reasonable expectations? We can say "yes" if the stock you select has a track record for what you want. (For example, it's a reasonable expectation that GOOG will move 1+ points on a trade because that's how the stock moves historically.) Once the signal is given and you enter the trade, keep your goal in mind and check in to see if that stock is moving toward your goal. You have your stops set in case it is not, and the rest is up to circumstances beyond your control except for your patience.. yes the same one you use for long term outlook. Every moment you analyze, you make a decision and it tests your patience. Perhaps it also tests your confidence in yourself, but no more so then when you test your patience on your long term goal. It's the conception that is different because, anything reduced to a smaller area is under more pressure; that's just physics.

Therefore the question becomes not whether we are patient enough, nor is the answer that we need more of it, but whether we have a reasonable expectations in the goals we have set. If we do our homework before setting any goal, we should be able to rest easy enough short or long term and it's our view that needs to be adjusted, remembering that patience is tied to emotion more than to logic.

So how or where do we draw the line and how do we know when we have used enough patience? Perhaps a topic for another day and maybe less to do with reasonable expectations and more to do with recognizing reality.

4 comments:

Jason said...
This comment has been removed by a blog administrator.
Jason said...

hi anni, its jason "aka" jr2146 from mt room great blogs and very helpful in my trading, and keep them comming. jr2146

A. Leone said...

Hi Anni,

Found you at Stocktwits- highly recommended - I like you stock picks. These are top companies and you fine tune pivot points for us too. I was surprised today to find BDN listed. It came up on my APEX screener yesterday- very cool. You are the kicker I need to go ahead with it.

I also took the FTO trade and very delighted with it.

Last surprise was rare. We both have very similar political views.

gino flaim said...

reminds me of "nothing concentrates the mind like knowing that you will be hanged in the forth night"