In recent days, I have been thinking deeply about what I can do to improve my trading. I’m a simple soul, so I like rules or mnemonics that are easy to remember and understand. Thus, I present to you what I hope to be my watchword when it comes to trading: PATE
It is pronounced as two syllables (as in the spreadable comestible) and it stands for Patience, Always Trade Extremes.
The “patience” is obvious. That is, be patient enough to wait for true opportunities. And what opportunities, pray tell, do I mean? Well, EXTREME opportunities. When something is stretched so high (as in my “sure-fire” XLE trade last week) or so low (as with XRT and TSLA this morning) that the risk/reward ratio is terribly appealing. And it’s not just price extremes. It also applies to slam-dunk, killer price patterns (like EFA and EMB).
I’m going to try to burn this into my head and actually live it. Let’s see if it helps! Maybe it’ll help you, too.
