Trading has been a challenging endeavor, to say the least. Sometimes it comes easy, and the profits fly out of nowhere. And some other times, it feels nearly impossible to make a profit. It is a very emotional game, and many fail because of emotional difficulties, not technical ones.
Emotions Can Cause Mistakes
Emotion can result in mistakes. For instance, traders might take a few losses in the morning and feel like they need to get their money ASAP. With that, they would rush into placing a new trade without paying proper attention to the markets and what they are trying to tell. There are days the markets are too choppy to get a handle on and are best left alone.
Sadly, the emotional pressure to recover the losses can end up in errant trading decisions that will cause them to lose more money, be more upset, and make another mistake. And people can avoid this vicious cycle by practicing more patience.
The Perfect Time to Step Away
Traders knowing when to step away from the markets is one of the most important things they can learn. The markets are not always the best place to be, and they are not always going to be in the best shape.
And even if they are trading on a proper time frame, it’s important to determine if the markets might be too volatile or too slow to place a good trade. Practice to go exercise, read, relax, or anything to put away the mind off of the markets for a while, as they set up for better trading opportunities.
One more thing of knowing when to step away is when traders reached their goal for the day. One of the biggest mistakes they can commit is to continue trading when there’s no need to go further anymore. Once they have accomplished their goals for the day, it’s time to move along.
Above all, the forex market tends to have more active times than others. With that, let’s say if there are momentum-based traders, they have no business during a slow Asian session ahead of the nonfarm payroll. The said days are extraordinarily quiet, and they should leave that time alone and have patience.
Taking the Long View, Get Paid to Wait
Jesse Livermore, one of the world’s best traders, said that “we get paid to wait.”
And this is because sometimes traders are between two major levels. And they need to know which way the market is going to break. There is a planned trade, and between now and then, there is nothing to do. If traders know a specific price they want buying at, they have no business jumping into the market before that happens. If they do that, it is a surefire way to lose money. And in will negate all types of work they’ve put into the trade ahead of time.
The market has some specific places where it makes significant decisions. If people are not trading these levels, they are only guessing where the next move is instead of looking at the probabilities of trading. Without enough patience to wait for these areas, they are more than likely to lose some money in the market.