Patience

Posted on February 10, 2010 by Darren Miller, Ph.D.

I grew up in the Northwest corner of Wyoming and as such loved the outdoors. One of my favorite activities was fishing, especially fly fishing. I used to fly fish in Yellowstone park quite regularly and loved the challenge of landing a huge fish with the small hook disguised as a fly. The problem I had though was that I could literally go through 30 different flies trying to find the one that would work. This was not an easy process and at times was very frustrating. Over the years I learned patience from this process because I knew if I found the right fly I’d land the big one.

When I first started trading I had a similar frustration at times as I moved from one stock to another trying to land the big one. After several failed attempts I found what works for me and haven’t really ventured far from that. I still have to exercise patience as some times I feel like getting in the market even though my strategy tells me not to.

As a premium seller I am an odds maker of sorts and when you have to pay out it hurts, financially and mentally. Every option cycle I’m in the market selling that low probability chance that the market will make it to a certain level by expiration. At times it’s gut wrenching while at other times I find myself extremely bored.  I find myself wanting to trade something, anything, and then I remember to exercise patience and move on. At times I have to physically remove myself from the office and go do something else.

Yes, cash is a position, and you can keep out of the markets if you’re not comfortable shorting (buy a put for heaven’s sake) or don’t know how. My point is that if you are trading to trade, your odds of success are low. Stop! It’s been rather easy lately to make a decent return trading as it seemed that every dip was bought and stocks didn’t know how to make a lower low. The market has changed recently and it may be some time before solid opportunities present themselves again. Protect your trading capital so when a high probable trade comes along, you can act upon it.