Every day, we talk about one thing in our Explosive Options chat room: patience. There is nothing more important than patience for options trading success. The difference between patience and panic is quite costly (to your wealth and your mind).
Technical analysis helps build patience
Learning to be patient comes from experience and the ability to see the big picture. When I first started trading options, I suffered my share of losses because I could not wait for the desired move to occur. This was due to my lack of knowledge and trying to guess entry and exit points. My turning point occurred once I added technical analysis tools. I was finally able to be patient and avoid jumping out of a trade too soon.
That patience recently paid off in a Splunk trade. The option went down sharply after we bought it, but we watched the technicals and waited. As a result, it was a nearly 200% winner.
Looking at the big picture can be rewarded
As the Splunk example clearly shows, trading is a game of risk. You can mentally remove or lessen that risk by stepping away from a situation you are uncertain about. That instinct is an important survival trait. But being able to take calculated risks leads to potential rewards if you can stay in a trade and walk the wobbly path to get there.
Apple is another great example. Traders and investors who were patient through the 1990’s have been handsomely rewarded with twenty years of a sharply rising stock price. Did you have doubts about the iPod? iPhone? iPad? In Steve Jobs or Tim Cook? There were plenty of naysayers along the way, but this company paid back its loyal and patient shareholders with incredible wealth.
Of course, Apple is not the only company that has made investors rich beyond belief. Are Bitcoin and other cryptocurrencies next? Some investors are making money hand over fist. They have ignored the doubters, been patient, managed their trades and are posting robust gains. Good for them for taking the risk and waiting for a payoff.
Perhaps this signals another boom like Apple stock. But the only way we’ll know is by being patient.
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