Man has the market been wild this morning as oil prices slipped. To me, this price action can be dangerous… and today, I want to show you the importance of patience when the market is so volatile.

As I searched for potential momentum trades during the pre-market, I only found 12 stocks that were up more than 10% ahead of the opening bell, out of 250+ names that came up on my filter.

 

Source: © Scanz Technologies Inc.

 

With so many news headlines hitting the wire, I think it’s important for me to practice patience because I want to make sure that my thesis and setups remain intact. Additionally, I want to see what the overall market does.

So what do I do when stocks are moving around all over the place or selling off?

 

Why I Believe Patience Is Vital For Trading Success

 

In this wacky market environment, I think it’s important for me to practice my patience… if that means sitting on my hands or stepping away for a few minutes to collect my thoughts, I may do that.

You see, when the opening bell rings, it’s very easy to get caught up in the action and try to put on trades, for me. However, if you think about it, there are 6 hours and 30 minutes in a trading day (excluding pre-market and post-market hours). A lot can happen in that time.

The last thing I want to do is throw on bets on my patterns, only for them to go against me… then watch the stock move in my favor. I want to wait for the market to establish a direction, so I typically keep my eyes on the SPDR S&P 500 ETF (SPY), QQQ, IWM, and DOW.

If there’s a clear direction, I may look to place trades.

 

Patience Can Help Me Reduce Mistakes

 

As usual, most Mondays I look to reduce any mistakes by staying on the sidelines at the open and wait until I get into any trades. So I let the market establish a pattern for a few hours… then I conduct my mid-day scans.

It’s pretty much the same idea as my pre-market scans.

 

Source: © Scanz Technologies Inc.

 

If you look at the screenshot of the scanner I used in the pre-market today… I looked for stocks with at least $200K in dollar volume. In other words, at least $200K worth of shares must have exchanged hands before 9:30 AM ET.

Now, on days like today, I want to wait until around noon to conduct my next scan. However, with this mid-day scan, I look for stocks with at least $2M in dollar volume. That means on the day, there needs to be at least $2M worth of shares traded on a specific stock to come up on my filter.

Thereafter, I’ll sort by percentage gainers on the day.

After I’ve sorted and filtered for potential stocks I may want to trade… I look at the patterns and if I see my bread-and-butter setups, I’ll come up with a game plan and go from there.

By remaining patient, I’m able to have a higher conviction on my trade ideas if my patterns stick.