Livermore said that the reason why he was able to make money was because he was "sitting on his back" well, he could sit and wait for profits to grow when he was profitable, and he could rest and wait for opportunities to arise when the market did not have opportunities. Most traders are just the opposite of him, they have become the majority of losses, they run as soon as they have profits, chase after they rise, and hold on to losses when they have losses. The short-term mentality of "creating" opportunities and trading a few more times when there is no opportunity leads to losses for most people.
Warren Buffett's annualized rate of return is not unattainable, and he is known as a master, not because of his windfall profits, but because of his stability and compound interest. Some traders can occasionally make 100% or even 200% of a year, only to return the full amount to the market later. Warren Buffett famously put forward three principles of investment: first, don't lose money, second, don't lose money, and third, remember the first two.
Whether our stock market is a bull market, a bear market or a volatile market, every year there is at least a wave of market with a long duration and large upside, as long as you wait patiently, wait for the opportunity to buy, and decisively exit at the end of the market, you are the winner. Everyone knows the principle of "cheetah predation", cheetahs are such ferocious animals, sometimes in order to catch a prey, hungry and patiently ambush for several days, waiting for the safest and most certain opportunity, but also specifically pick the "old, weak, sick and disabled" as the target to attack, because this has a higher success rate. In stock trading, we should learn the patience of cheetahs and not jump around like clever antelopes and end up becoming the prey of cheetahs.
However, sometimes the truth is good, but in the actual process, "wait patiently until the market gives you the opportunity to enter the market calmly" This is not easy to do, as an investor, you can think about how you feel during the decline and when the market lacks opportunities, many times you may be tired of waiting, can no longer wait and see, and then see an opportunity that feels similar, and want to pounce, but this quality is often not high, or even terrible choice, but because your desire to trade is so strong, you will find a valid reason to deceive yourself for this transaction. Or, it's hard for you to keep on the sidelines when your position is close to your target, and the ups and downs drive you crazy – you want to hit the target right now! You're like a football fan, tormented by a scorching round of match, and you close a trade prematurely just to take the tension away.
Maybe you made a decision too hastily – you want to jump in when you see a flurry of quotes. You don't spend enough time managing risk properly, and then you overreact to a market volatility and end up chasing it. All of these are signals that impatience is taking on the surface of your day-to-day trading life. That's where you need to take action.
First of all, when you treat impatience as a matter of discipline, you can't force yourself to be more patient. Because, patience is a by-product of the work process. When you have a firm grasp of the process – whether it's building a business, executing a trade, or correcting a mental gambling problem – you automatically become patient. As long as there are no underlying flaws that change your perspective on the process, impatience is no longer an issue.
This is so important because when someone tells you to "be patient", they are advising you to slow down and take your time. This is not what you should do, what you should do is move forward as fast as possible while maintaining the process required for success. Imagine if an assembly line moves too fast, and the final product will have missing or damaged parts. On the other hand, you also don't want the process to be too slow, as the pipeline needs to meet quotas.
When impatience breaks down your decision-making process, the solution is not to simply "slow down", but to train yourself to consciously consider the areas that are often missed when you are impatient. For some of you, this is unrealistic. There's too much room for autonomy in your decision-making. But where impatience arises, it can still point to a hole or weakness in your strategy. For example, you may not be entirely clear why your actions are right or incorrect, which leads to impatience.
Ask yourself: Why do you feel the need to move faster, what pushes or forces you to do so, and if it's just a purely competitive motive, maybe you're not impatient. Maybe it's just the criticism you hear from people who aren't as positive as you.
Another possible reason is that you want to be able to acquire a certain skill or ability instantly. On the surface, you may be very committed to the learning process, but deep down, you wish you didn't have to go through all the highs and lows that come with it.
Sometimes, traders want to succeed and make a lot of money so much that they don't think about persistence as well as building a solid foundation of skills. But think about it, do you want to make a splash and make a big profit, and then face the high risk of profit-taking? Or do you prefer to go the low-risk route and establish a long-term stable advantage in the market? Sometimes, traders race for financial security without realizing that security also comes from the process of creating and maintaining an advantage in the market.
In the end, successful operations on the stock market are not based on the current situation, what you see now, the obvious or the accidental, unpredictable unexpected events. The analysis of various conditions and phenomena must take into account their intrinsic and potential advantages, disadvantages and outcomes. In the market, the same is true. We can only get what we deserve when the time comes. If our trading philosophy is to "outperform" the market and try to "scrape" everywhere, or if we think that the market is a "big piece of fat" and "easy" to get to the mouth, then we will end up losing our money and health in the market.
But if you stick to the plan and stay vigilant, things will most likely turn in your favor – and that's the only trick to success. Therefore, you need to make as many decisions as possible in your trading plan and improve it effectively. For example, how you want to open a position, where to open a position, how to exit the position, the trading position you take risk on each trade, and where to set the stop loss level are all decisions that can be made in advance. If you are about to open a position, but you are still thinking about whether to enter the market after the formation of a key reversal candlestick, or to enter the market at the position of breaking through the highest price of the previous candle, whether to open a position in batches or all at once, there is not much psychological discipline left for you to manage trading. Deciding on your trading mechanics in advance can protect your limited inventory of mental discipline.
At the end of the day, traders need to monitor themselves, be mindful, and self-monitor to improve self-control. The more you are mindful, monitoring yourself and your performance, the stronger your psyche will be.