Attitude Check: Patience Is A Virtue
By Quint Tatro Oct 19, 2007 2:00 pm
One must understand that trading is a long road to haul that will ultimately be filled with many good days, many bad days, and many days where money stands still.
Somewhere along the winding road towards success in trading, a person learns that it takes much time, persistence and patience to achieve the goals set forth. Unfortunately, not all are willing to accept this and fall short simply because they never grasp the hard work and persistence it takes to become a proficient trader.
Due to my unique role as a trader and a moderator for others, I can always get a good feel in the onset of whether a person will be able to make the long haul that it takes to become successful. While I fully believe that anyone can become successful at trading, I have never been able to change this internal variable that seems to be present in those that desire to skip over the hard work, or take a short cut to success. I would assume it is the same trait that keeps people from completing other goals in life that simply become too hard or take too much time to achieve. Initially, many goals seem easy, exciting and within our grasp, however once we start down the path we quickly learn that anything worth doing, typically takes two simple things, hard work and time, trading is no different.
What is the best trading attitude to have and how can it help you succeed? Find out in Attitude Check: Where's Yours? and Overcoming the Fear Factor.
The financial markets are filled with participants that possess a variety of personalities and skill sets. The unlimited upside attracts all kinds, of which all are seeking to leave with more money than they came with, which ultimately means you are in competition with them all. In order to be successful one must possess reasonable expectations and understand that it is a long road to haul that will ultimately be filled with many good days, many bad days, and many days where money stands still.
Once this is truly understood and grasped, I have learned that this perspective lifts a heavy burden and gives most the peace of mind to push forward, should they choose to do so. Furthermore, it becomes the basis for an unwritten rule that most traders learn to adopt hopefully before they make a fatal mistake.
The rule is simple and can be applied to many other areas in life: Slow and steady wins the race.
I have seen this played out on many different levels and in many different scenarios and while at times the allure of short cuts, which in trading is the equivalent to consistent oversized bets, rapid fire trading or speculative gambles, can be great. They will ultimately bring a trader down and keep them from achieving their desired results.
Slow and steady can be easily displayed through the basic math 'Rule of 72.' Say for example a person has a trading account of $50,000. The rule of 72 says that if the trader averages 10%, it will take 7.2 years for the money to double. This means that in approximately 14 years the initial $50k will be $200k and in another 7.2 years, the money would be $400k. As you become a better trader, these figures obviously increase however it is only through consistent and methodical progress that goals are met and expectations are exceeded.
So often we desire to skip over the hard work and feel as though we deserve to achieve these results sooner. Stories of quick riches flutter through the air and there will always be some recent overnight success story that draws much attention. Unfortunately, what you never hear of is the vast majority who attempt to take shortcuts and end up out of the game altogether. There accounts go down in flames and the person becomes bitter, assuming that the market is 'not for them,' or 'a big ponzi scheme.' Unfortunately, this bad taste, is a direct result of their approach and it was always a matter of time before they met the same fate.
The financial markets do possess unlimited opportunity and I have witnessed and can personally attest to how trading can change your life. However, it must all be kept in perspective and understood that it is only time, patience and persistence that will pay off. Short cuts will not work and the sooner a trader realizes this and embraces it, the better off he will be.
No positions in stocks mentioned.
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