What does patience in trading mean?
There are two kinds. Patience to enter is waiting until every condition of your setup is met, at your level, after the candle closes, instead of buying because price is moving. Patience to exit is holding a working trade until it reaches the stop, the target or the trailing rule your plan set, instead of closing it because a small profit feels safe.
Both are hard for the same reason: doing nothing feels like losing. A move without you looks like missed money, and an open profit looks like money about to vanish. Trading psychology calls the first FOMO; the second is part of the disposition effect explained in when to sell a stock.
- Trading setup
- A written set of conditions, such as the trend, the level, the trigger candle, the stop, the target and the size, that must all be true before you take a trade.
Why does impatience cost money?
A trade taken before the setup is complete is not a smaller version of your setup; it is a different trade, one you have never tested. With no tested edge, its expected result is roughly minus the cost of trading it. Hypothetical: your setup averages +0.2R per trade over 100 logged trades, and you take two planned trades a day. Add three forced trades a day at about −0.1R each, the spread and slippage, and the day drops from +0.4R to +0.1R. On a bad day, the forced trades are also the ones taken angry.
Costs are only part of it. In their study of 66,465 US households at a large discount broker from 1991 to 1996, Brad Barber and Terrance Odean found that the households that traded most earned 11.4% a year while the market returned 17.9%, and they linked the heavy trading to overconfidence (Journal of Finance, 2000). Trading more did not mean earning more.
Entering early vs waiting for the setup: a worked example (hypothetical)
Hypothetical plan for XYZ: buy a pullback to support at $50.00 once a reversal candle closes there, with a stop at $49.00 and a target at $52.00. The risk is $1.00 a share and the target is +2R; with $100 of risk per trade, that is 100 shares.
An impatient trader buys at $50.80 on the way down, before the pullback is over, because the stock “might not come back”. The stop and target stay where the chart put them, so the risk is $1.80 a share, 55 shares for the same $100, and the target pays $1.20, only +0.67R. If the setup reaches its target 40% of the time, the planned trade has an expectancy of 0.4 × 2 − 0.6 × 1 = +0.20R. The early entry, with the same outcomes, has 0.4 × 0.67 − 0.6 × 1 = −0.33R. Over 50 trades that is +10R against −16.7R, from the entry price alone.
Waiting has a cost too: sometimes price never pulls back and the move leaves without you. That cost is already inside the +0.20R, because the expectancy counts only the trades the rules allow. Chasing the moves you missed is how the −0.33R trades get in.
Why do traders cut winners early, and what does it cost?
The second leak is closing winners before the plan says. It feels prudent, and it is expensive. Take the same plan, with its +2R target and a 40% hit rate. A trader who closes every winner at +1R “to be safe” turns +0.2R per trade into 0.4 × 1 − 0.6 × 1 = −0.2R. The drawing below shows 50 simulated trades with the same sequence of wins and losses: following the plan ends at +10R, taking +1R on every winner ends at −10R.
Real exits are less tidy, because some trades reach +1R and then turn back to the stop. That is what partial exits and trailing stops are for: scaling out at +1R and keeping a runner, or a trailing stop that locks in part of the gain, are exits written before the trade. What costs money is the exit decided in the moment. Investors show the same habit: in Terrance Odean’s 1998 study of 10,000 brokerage accounts, the winning stocks investors sold went on to beat the losing stocks they kept by 3.4 percentage points over the following year (Journal of Finance).
How to be patient in trading: make waiting mechanical
Willpower runs out by mid-session; rules do not. The aim is to make waiting the default and the impatient action the one that takes effort:
- Write the setup as a checklist like the one at the top, and trade only when every box is ticked.
- Prepare a short watchlist before the session, the few stocks near your levels, and ignore everything else that is moving.
- Set TradingView alerts at those levels, so the chart calls you when price arrives instead of you watching it get there; it also eases trading anxiety.
- Cap your trades per day, for example at two. When the cap is reached the session is over, however good the next chart looks.
- Place the stop and the target, or the trailing rule, as orders when you enter, so the exit does not depend on your mood an hour later.
- Judge the day on rule-following, not on its P&L: a day with no trade because nothing met the plan is a good day.
- A tool that signals only after a full setup has completed, such as our own invite-only UpTickFlow indicator, is one way to enforce the wait; the checklist does the same job without one.
- Watchlist
- A short list of stocks prepared before the session, usually those near a level you trade, so you watch only what could meet your setup.
How to practise patience: a 30-trade experiment
Patience improves with feedback, not intentions. For your next 30 trades, on a paper trading account or at a very small size, add two columns to your trading journal: “all boxes ticked?” and “exit as planned?”. Also log every setup you skipped because a box was missing, and what price did afterwards.
At the end, compare the average R of the trades that followed the checklist with those that did not, and count the skipped setups that would have worked against those that would have failed. If early entries and early exits explain a large share of your losses, you have found the cheapest fix there is. Then change one rule at a time, and give it another 30 trades.