One of the more common problems I see with traders at all levels is impatience. It can be an insidious problem and is fueled by both fear and greed. Traders are afraid that they will miss a good one if they don't have a position going at all times and that means that our greedy side may miss out on a good move.

Those emotions may lead to forcing a trade. In other words making an entry that is not ideal. The entry may be too far from an exit in the event the trader is mistaken on desired direction or it may fail to incorporate an adequate reward to risk ratio. Impatience can lead to jumping the gun as in the case of trying to catch a falling knife. That situation arises when a trader is trying to predict a bottom on a falling stock before the stock, itself, has signalled a turn. Sometimes a trader gets lucky and does catch a bottom, but more often, it seems, he catches the painful point of the knife as the trend continues down taking the newly acquired stock along with it.

The only way I know to avoid impatience is to set rules for ourselves. Unless the rules are followed and the specific criteria met, we don't enter a trade. That should be part of every trader's approach. In both "Smart Investors Money Machine" and "Trade Your Way to Wealth" I emphasize the importance of creating an following a plan that is unique to the individual trader. It is one significant way in which we can give ourselves an edge and without an edge we are not likely to do very well in the market.

As a child, I remember my mother teasing me with the old saying: "Patience is a virtue, possess it if you can. Sometimes found in women, but never found in men." Now please don't jump on me for being sexist, but I have to say there is at least a modicum of truth to that old saw. In seminars and coaching sessions, I have seen that women seem to be better at exercising patience and following rules of trading. Many (not all) men, on the other hand, seem to have more difficulty waiting for the really good entry. So, too, do they seem to have more trouble remaining in a position that is going in their direction and tend to pull the plug prematurely thereby failing to let profits run.

I think it is important for all of us to remember that we don't have to have a trade in place at all times and just because we turn on the computer does not mean that we have to make a trade. The point of trading is to try to make money, not to constantly play the game. There are many times when we may not find a great entry or a satisfactory reward to risk ratio. Those times require the exercise of patience if we are to do well in the long run. I want an edge, not constant action. If it is action we desire, there is plenty of that at the tables in Vegas, but there the edge is always with the house.

Good Trading!
Bill Kraft

Our Success Trading service delivers quality trading ideas for the elite investor that has the financial wherewithal and market nimbleness to profit on small moves in a stock's price. Become a member and you will be provided with email and/or PDA alerts intended to provide you with the opportunity to make many, many profitable trades.

Here is a play from the Success Trading Group:

NSTAR (NST)
Our Success Trading Group members experienced a slow week as we watched the markets closely. We currently like NSTAR (Ticker: NST), Verizon (Ticker: VZ) and FPL Group (Tcker: FPL) at thier current prices for a new trade position.

Have a great weekend and we'll trade next week.
Success Trading Group Team

Our Option Trading Service is for conservative traders that understand leverage principles and enjoy the challenge of options trading. We focus on powerful option trading strategies that place volatility and momentum in your favor. And we pride ourselves on always minimizing our losses!

The Option Trader service utilizes standard trading in Puts and Calls as well as strategies using Leaps, Straddles, Credit Spreads, Calendar Spreads, and Naked Puts. But no matter how sophisticated a strategy may be, we ALWAYS know our downside potential on every trade.

Here's a look at a trade Bill is currently working on:

Boyd Gaming Corp. (BYD)
Option Trader closed a synthetic long position on BYD this past week for a 15% gain before commission in less than 3 weeks. The synthetic long is created using options and sets up a risk graph that is essentially the same as that of the stock, itself except entry is much less expensive than buying the stock.

Good Trading!
Bill Kraft
Editor of $10 Trader, Option Trader and Trend Trader

"Trade Your Way to Wealth" by Bill Kraft is an Amazon.com best seller!
"Smart Investors Money Machine" is Bill Kraft's most recent publication.
"Trading for Keeps: Making Money with Low Risk Option Trades" a trading DVD by Bill Kraft