In a market such as the Forex market, where it is much easier to lose money than it is to make it, you sometimes have to accept that not losing any money can be just as good as making some. Nevertheless, many traders – especially newbies – get impatient and start taking stupid risks just because they are tired of sitting on their hands waiting for the perfect trade opportunity. But if you can find the patience to wait it out, you will find the forex market to be a far more rewarding place.
An impatient trader is a trader with a problem – one that is hurting their trading performance. Once you recognise that you have this problem, you can begin to work on it and change your trading strategies for the better.
There is a need for patience at all stages of a typical forex trade. There’s no doubt about it, trading can give you a buzz, but when you are making decisions emotionally, you’re not trading – you’re gambling. This can be especially acute when you have a few profitable trades in a row, as it can lead you to jump into the next trade without thinking. Needless to say, you should always think first before you trade – and think hard. It’s better to miss out on a few trade opportunities by taking your time to analyse it than to mess up your strategy with under-researched trades.
Another benefit of a patient approach is that it allows you to sit back and wait until the time is right for you to make a trade. Of course, you should spend as much time as possible analysing the market and adjusting your trading plans accordingly, but you need to wait wait until the market is working for your particular strategy before making any investments.
Let profits run
A common strategy among newbie traders is to take profits as soon as they have them, and let losses run in the hope that a trade idea will be proved right. In most cases, this is the wrong approach, as it means that you have to be right a lot more times than you are wrong to make any profit at all. Instead, you should cut losses short and refuse to take profits until you have hit your profit target for that trade. That way, you can still make money even if you are wrong more often than you are right.
Don’t trade when you are desperate for a win
If you have sustained a number of losses in a row, the natural urge is to get right back on the horse and try to win back some of your losses. As with anything trading-related, the minute you let your emotions influence your trading is the minute your trading plan goes out the window.
In cases such as these, it is far better to get away from the screen and analyse where you made the mistakes that led to these losses. Did you deviate from your trading plan? Or do you need to adjust your strategic approach? In either case, you need to take some time out to work out where you went wrong, and come back relaxed and in a clear frame of mind, ready to start trading in the right way again.
Once you recognise the value of patience, and the mentality that you have to adopt, you will start to see your trading performance slowly but surely improve. Rather than seeking out big profits immediately, use your time to build your skills, gain experience, and wait for the best opportunities. While this might mean you don’t make much money to begin with, you won’t lose much either, and you will be much better positioned to make profits in the long run.