If A + B + C, then D.

The answer is patience.  In this equation, or one much like it, we just may find the answer to impatience. For instance, let’s assume D is a high probability trade opportunity and A, B, and C are the factors that must be present to produce D. If there is no A, B, and C then there is no D.  Notice I did not say A, B, OR C, nor did I say not A BUT B and C: I said A, B, AND C.  There’s that word again.  We cannot be tempted to replace the word AND with any other word, especially OR or BUT.  If we do then we open ourselves up to any number of trading errors based solely on our inability to practice patience.

There is an A + B BUT no C.

Here we fall victim to not wanting to miss something, or what we refer to as the fear of missing out.  We rationalize, allow our ego to convince us that we should not miss this opportunity, and we enter the trade knowing full well that our trading edge is not as sharp as it should be.  We say to ourselves: “A + B looks really good so why wait around for C?  What if C never comes?  Then I risk missing a great opportunity. I would really hate to miss the move while waiting on C.”  Wrong!  We impatiently pull the trigger, breaking our rules.

There is an A or B or C BUT no A + B +C.

Here we rationalize and jump the gun believing that maybe, just maybe,  our analysis is missing something, maybe it is flawed.  Maybe we do not really need A + B+ C THIS TIME.  Maybe A will tell us what B and C are going to do BEFORE we get B and C.  We say to ourselves “A is setting up just like it did on the last trade and B and C soon followed, so I know it will do the same thing this time as well.  I will get in before B and C and get ahead of the game.  I will make more money.  I will outsmart the market.”  Wrong!  We impatiently pull the trigger only to find that A by itself rarely ever produces B and C.  If it does we have fooled ourselves into believing that we KNOW what the market is going to do next. We stake our analysis on a low probability prediction instead of a high probability opportunity.

There is an A + B + C then D BUT no trade.

Here we question our entire analysis because we fear that this time the trade may not work.  This most oftentimes happens after a string of losses using the same edge.  We again listen to our wonderful know-it-all ego who whispers in our ear and says, “maybe you should wait a little longer before you get in.  You need more confirmation.  This did not work the last two times so are you willing to lose again?  What if you lose three times in a row?”  We then decide to wait and by the time the charts have confirmed our original analysis the trade has already moved 10% in our anticipated direction. We either are frustrated and walk away, laughing if off or we pull the trigger just as the move has come to an end.  The latter, of course, being the dumb, emotional thing to do.  Our ego, unfortunately, wins again.  And our trading account suffers the third straight loss-the very thing we were trying to avoid in the first place!

Trading is difficult enough as it is.  Why do we make it even more so?  When we have done our analysis and the opportunity arises, when A + B + C  triggers D, what are we waiting for?   Anything can happen in the market but nothing will happen with any consistency as long as we make trading decisions based on anything other than A + B + C.  To do so would be to practice impatience and exhibit a lack of self-trust.  Neither of which equals D.