We’ve talked about two different levels of impatience here. For the more major impatience, relating to the overall returns being generated, it’s important to take a step back and re-evaluate your expectations. Some questions that may help:
Are your expectations realistic?
If you are expecting returns in the hundreds of percent a year, is that pace sustainable long term?
What are your long-term financial goals?
Another tool that helps to soothe the ego is the Rule of 72. The Rule of 72 is a quick calculation you can do to estimate how long it will take to double your money given a particular percentage return over time. Simply divide the return you are getting into 72 and voila, that’s how long it will take to double your money.
For example:Assume you earn an even 10% annually, year in, year out. 7 The 7 Deadly Sins Of FOREX (And How To Avoid Them)
72 / 10 = 7.2
So, earning 10% annually will take you 7.2 years to double the initial investment.
Often when I show this tool to a student, they are surprised by the result. They may have thought that 10% annual returns would take forever to double their money, when in fact it only takes 7.2 years of consistency. Play around with the calculation on your own; you may be surprised with the results.
For the more practical challenge of impatience, namely, impatience with a particular trade, confidence is key. How do you gain confidence? Practice, practice, practice, then practice some more. Demo accounts are quite possibly the single greatest addition to retail investing. Why? Because it gives new traders the ability to simulate real-world conditions without the ability to “cheat” by fudging the numbers like the paper trading days of old.
The only really stressful trade should be the first one with real money. Why? Because your profitable demo trading results will now be put to the test with real dollars. Once the system is proven in real-time, there is nothing left to do but follow the rules of the system. New traders typically get nervous because they are unsure of their system, and are hoping for a successful outcome; experienced traders expect a successful outcome, so nervousness doesn’t apply.
8 The 7 Deadly Sins Of FOREX (And How To Avoid Them)