Although the best investors and traders understand the importance of patience, it is one of the most difficult skills to learn as an investor and trader. So much of trading is psychological, making patience a great virtue for investors. Exhibiting patience when entering a trade and having patience while a trade develops are integral parts to successful trading and investing.
How to develop patience?
It is all about training. There is no magic neither a secret tip. Given this, here is something that might help you with this training.
First of all, turn off your news provider as a guidance for trading. Yes, you should be informed about what is happening in the world, but don't waste time tuning in to the financial media to see if anything happened today that warrants a change in your portfolio. This is only past analysis, because they will try to explain what happened, since nobody can predict the market.
Secondly, you need give the position time to develop. Most of time the markets will not follow your way just because you've went long or short. As the relation between risk and reward, patience is becoming a rare commodity in investment and will be rewarded as such.
Also, even if you trade with a short-term focus, you must have a long-term performance benchmark. A short time frame to evaluate an investment performance is too noisy - your differential will appear in the long run. Therefore, it seems much more appropriate to make a judgment about our investments over a year period rather than by a day or weekly.
Another great thing is to start an investment journal to write down why you did the trade, the risks you took and, yes, any emotions or concerns when you was sending the order. You will see that as you do it every day, you will have more rational decisions when you’re not sure what to do about a certain investment. Learning when not to trade will be the first sign that you have now the wisdom of patience.