“The big money is made by sitting, not thinking. Men who can both be right and sit tight are uncommon.” - Jesse Livermore

I was asked yesterday what my opinion is in regards to this quote, hence why I decided to write this today.

Having read this quote hundreds of times, it speaks volumes to me about the importance of patience. Without having mastered your ability to be patient, it will be unbelievably difficult to make big money in the market.

It is very common to be right in or about the market. However, it is uncommon to be right and to be patient. We observe many people making great market calls and providing great trading ideas, but what we don't see is how that person handles the daily urge to feel as if they have to do something. Every trader feels the need to react. If the stock moves a penny in the wrong direction, the trader is overcome with doubt and starts second-guessing themselves. This is the same person enters late and leaves early, because their own emotion prevents them from making the decisions that they want to so freely make. I know in part that these feelings and actions are derived from lack of experience, and the cure for a lack of patience is best prescribed through personal successes and failures.

As an example, for those of you who were here last year and watched as I documented the best year of my trading career, you'll probably remember how I did it and why it was possible. To be blunt, it was an easy market. All it did was go up. I identified the trend and I took full advantage of it. I was fully invested, I picked good stocks, and I rode them until the trend changed. As the market trend continued, I rode positions for months at times, adding to my winners and cutting losers. I was patient, and I wrote about the topic of patience many times, and typically the response to many questions I received was to "be patient." In fact, I read a comment yesterday from a long time reader who said "Jeff, you are a master of holding through the pullbacks." I have learned to be patient, and I know that there are big gains out there for those that can wait for them.

Now days, since the market lacks an intermediate trend, my time frames have been reduced, and it is much harder to be patient. There are fewer trends to ride, but those trends are where you'll find me. The market has been choppy, which in turn eliminates a lot of the free money opportunities that were handed out last year. They still exist, obviously, but they are harder to come by. I have been patient as I can be in this type of market, which is all the more difficult. It is this type of a market where I work my tail off to get gains that were made lazily last year. The reason: the absolute worst stretch in my entire career came within a period that is just as volatile as we see today. However, the trend back then didn't last as long as it has this year.

I remember that stretch, and made sure I would never get beaten again like I did back then. Anyway, back to the point...

Being right is easy, but sitting still is incredibly difficult. It took me half of my trading career to understand this. Much of my successful trading has boiled down to patience. In the end, the patient trader acquires the most wealth, even though we are surrounded by a culture that promotes active and short term trading and trading strategies. Your broker doesn't want you to sit still, they want you to keep trading and keep sending in commissions. 

The reason we typically doubt and lack patience revolves around time. At times, moves will take longer than we anticipated that they will do. Like I said earlier, it is easy to doubt yourself when you are young at this game, but if you have a conviction, and that conviction has not proven wrong yet, this is where you must learn to be patient. Like I have always said, there is a difference between being patient with a trade that has not failed, and one that has. It is our own individual responsibility to know the difference.

In reality, this quote summarizes what I have tried to teach here over the last 2 years. Identifying trends, observing time frames, understanding the market pulse, and being patient with your approach. You'll find that trading is not as much about thinking, it is a game in which the objective is to master your emotions. Not many people can say that they have done this, but some have obviously done better than others. If you can make progress with your patience, you are that much closer to what Livermore calls "Big Money." When you are able to overcome your emotional battles, you have an edge on what not to do in order to lose money. "And when you know what not to do in order not to lose money, you begin to learn what to do in order to win."- Jesse Livermore