Michelangelo once said, “genius is infinite patience.”
The best traders understand this truth on many levels.
Markets are dominated by periods of time where there is “nothing to do.” There’s no clarity, just a bunch of noise.
It’s during these times when amateur traders get overly active. They think just because they can make a trade, that they should make a trade. But in reality, there is usually no trade to be made.
Infinite patience becomes key in these scenarios. A trader must have the discipline to sit still and not make a move.
But just because you aren’t making a trade, doesn’t mean you aren’t preparing yourself for when one finally comes along.
Garry Kasparov, one of the greatest chess players in the world, explains this idea:
In chess we have the obligation to move; there is no option to skip a turn if you can’t identify a direction that suits you. One of the great challenges of the game is how to make progress when there are no obvious moves, when action is required, not reaction. The great Polish chess master and wit Tartakower half-joking called this the “nothing to do” phase of the game. In reality, it is here that we find what separates pretenders from contenders.
The obligation to move can be a burden to a player without strategic vision. Unable to form a plan when there isn’t an immediate crisis, he is likely to try to precipitate a crisis himself and usually ends up damaging his own position. We learned from Petrosian that vigilant inaction is a viable strategy in chess, but the art of useful waiting takes consummate skill. What exactly do you do when there is nothing to do?
We call these phases “positional play” because our goal is to impose our position. You must avoid creating weaknesses, find small ways to improve your pieces, and think small — but never stop thinking. One tends to get lazy in quiet positions, which is why positional masters such as Karpov and Petrosian were so deadly. They were always alert and were happy to go long stretches without any real action on the board if it meant gaining a tiny advantage, and then another. Eventually their opponents would find themselves without any good moves at all, as if they were standing on quicksand.
In life there is no such obligation to move. If you can’t find a useful plan, you can watch television, stick with business as usual, and believe that no news is good news. Human beings are brilliantly creative at finding ways to pass time in unconstructive ways. At these times, a true strategist shines by finding the means to make progress, to strengthen his position and prepare for the inevitable conflict. And conflict, we cannot forget, is inevitable.
It’s during times of inaction that you can prepare and build an advantage.
Our portfolio at Macro Ops has been inactive for the past few weeks.
Why?
Because markets have been a mess. False breakouts galore. No trends. Just a lot of noise.
But as we sit, practicing infinite patience, we’re also preparing. Reviewing our strategy. Asking ourselves questions like:
What worked in the last cycle? What didn’t?
Did all our trades follow our process? Were some trades mistakes?
Are there any adjustments we need to make? Do we need to change our position sizing rules?
We utilize “vigilant inaction” and position ourselves for the inevitable opportunities that will eventually come our way.
So ask yourself:
Do you practice infinite patience? Are you prepared?
For more information about infinite patience and its use in investing, please click here.
