Patience in Forex Trading
“Patience in Forex Trading is a virtue.” But although even the best traders and investors understand how important patience is, very few have mastered the skill. Patience in trading is a disciplined art and must be practiced intensively before it becomes automatic. Whether it’s with stocks, commodities or Forex, holding back from a knee-jerk reaction to trading is difficult to do. Logic takes a back seat to our emotions and we end up making a quick, often non-judicious, decision. Reigning in our need for quick results is an acquired talent.
Here’s what usually happens: As a trader, you’ve done your due diligence, sought out the best Forex broker and opened an account. Intellectually, you choose the direction in which the currency pair will move, (based on a gut feeling?) and wait. The price starts to move in the opposite direction and you start to panic. You place an order below your planned entry point in a rush to make sure you don’t miss the trade. You’ve now diminished some of your potential profit. More importantly, you have broken the rules that caused you to enter the trade in the first place.
Letting your emotions take over your decisions can be very dangerous in the long run. Emotions can be seen as the trader’s worst enemies; they often lead to misjudgment and loss. Learning how to stand back, take time to analyze the situation and then move forward is always the prudent thing to do. Setting yourself rules and keeping to them is a way of holding the emotional side of trading at bay.
Patience in Forex Trading Opportunities
When it comes to trading, keep in mind that there are always many trading opportunities in the market; the difficulty is not so much in finding trading opportunities, but making sure the opportunities fit your trading rules. Since 80% of all Forex trades end in a loss, the chances losing your money far outweigh those of coming out ahead.
Learning to use financial graphs and Forex indicators can be beneficial in training yourself in trading patience. Taking the time to read the graphs properly and interpret the indicators provides you with an emotional brake and offers a short interval between the time you make your decision to move and actually placing the trade.
Patience in trading is also needed after you have placed the trade. If the price moves in the direction anticipated, you must then choose whether to sell and take a small profit or wait till the price moves even higher. Small profit vs. large profit or possible loss. If you wait too long, the price could start to move in the wrong direction and you will lose. If you act too hastily and sell, you haven’t given yourself the chance for the price to move back up.
Again, this is where your set of trading rules comes into play. If you decided beforehand that your will be satisfied with a small profit, then you will move to sell once the price moves even slightly in the anticipated direction. If you have decided to sit out the trade till it reaches the highest price, then you can stay firm in your trade and wait it out. If it keeps going up and you sell, you have profited; if it turns around, you can lose all your money.
If you follow your own goals and strategies, then you will have more patience in trading than if you set yourself up without any guidelines. Practicing patience in trading reduces your stress, removes unexpected surprises and makes Forex trading a lot more fun.
Patience in Forex Trading