Day trading requires simultaneous analysis and decision making which is often completed in split seconds. While trading, day traders process loads of information from their charts and indicators.
While there are various types of patience for successful day trading, our main focus will be on only three types.
The first and most important type of patience is waiting for the market to move in a way you understand. Most day traders start their career with a limited understanding of the markets and only have a few tools to help them identify trends and setups. However limited your knowledge, your willingness to acknowledge your lack of skill will save you from entering trades that you do not know how to manage. Having patience will also keep you from a bad habit called “chasing.” Chasing occurs when day traders enter and exit trades solely based on the direction of the market at that exact moment.
The second type of patience, related to the first, is to wait for your setup. Throughout the trading day you will see numerous opportunities to enter trades. Timing your entry is just as important as recognizing your setups. By having patience you can make sure that you do not get into positions too early and also recognize when your opportunity to enter a trade has already passed. Developing this type of self-control will help you take full advantage of what you do know by practicing how to identify and interpret specific signals from the market.
The third type of patience is to wait for the trade to mature. This is important when you have already entered a position. Even if all the stars align (your indicators are in agreement and the market signals are crystal clear), you are not guaranteed success just for entering the trade. Most trades take time to develop after you have entered and exiting too soon may cause you to take unnecessary losses or leave a substantial amount of money “on the table.” It takes a great deal of self-control to wait for trades to reach predetermined profit targets.