The back story: Warren Buffett once said that the stock market is a device “for transferring money from the impatient to the patient,” and traders need to think about that at times when they are getting restless while sitting at their computers.
How the market reminded me: Thursday – nearing the end of what was a nicely profitable day of swing trading — I almost made what would have been a high-risk dip buy for a red-to-green move by Home Depot (HD).
Earlier in my trading career, I would have done it. Home Depot had dropped quite a bit yesterday, and my hope was for a bounce-back out of oversold.
Patient traders don’t rely on hope. What I did instead was close out the chart of that trade, so that it wasn’t even available for me to look at. I put the stock on my watch list for today; it’s up pre-market, but I am looking for a hammer candle for a gap-recovery-and-go, and won’t trade HD until/unless I see it.
The moral of the story: I didn’t make any money overnight – and that can be frustrating for traders – but I didn’t lose any either, nor did I mess up a good day. And I’ve got money ready to trade it again today.
Many traders struggle with patience. The successful ones don’t.
Davis Martin is the head trader at DaiyProfitMachine.com. He trades SPY Calls and Puts and swing trades mid-large cap stocks and stock options. He has no shares, options or orders in HD stock – and has not traded the stock before — though he is watching it today as described in this commentary.