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Old 06-02-2018, 05:30 AM
painofhell painofhell is offline
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Default How to Achieve Insane Patience When Trading Forex

If I didnít know any better, I would think Forex traders hate money. Well, at least 95% of them.

The way they overtrade on the lower time frames and make emotional decisions is perplexing. And letís not forget the blown account or three in the first year of business.

But Iím not judging. I was once one of those traders.

I blew through multiple accounts before I finally found my stride.

And I know the 95% of traders who lose consistently donít actually hate money. But if you didnít know any better it would appear that way.

So how can you learn to love cash?

And I donít mean a desire for more money. Everyone wants more money; thatís nothing new. But few have the restraint necessary to make it as a Forex trader.

Iím talking about the kind of love for money that leaves you sitting on the sideline day after day waiting for the right moment to strike.

Itís a protective instinct. Thatís what you need to make it in this business Ė a stronger desire to protect what you have than to make more of it.

If youíre interested in learning how to do that, then this post is for you. Weíll discuss why I love the sideline so much as well as a few ideas to help you stay patient and protect your capital.

Letís begin.

The Sideline Has the Best Seat in the House
trading-sidelineI love being on the sideline. If you follow my trade setups, youíve no doubt seen me mention having a position on the sideline on multiple occasions.

Sure, I enjoy putting on trades and of course booking profit. But what I like even more than that is knowing my capital is safe and sound. Thereís no better feeling especially when Iím laying my head down at night.

Nothing can touch my cash regardless of what happens in the market. Thatís an invaluable position to be in, and itís one I try to maintain as much as possible.

Itís why Iím so selective about where and how I risk my capital.

With this in mind, I have a question for youÖ

What is a trader?

Take a moment to think about what it means to be a trader. Is it someone who trades or is there something more to it?

The truth is anyone can place a trade. Thereís no skill in that.

To me, a trader is a money manager plain and simple. If you arenít able to manage your funds, youíre going to give any profit right back to the market.

So if you want to grow a trading account, you need to know how to place the right trades, but that means knowing when to stay on the sideline.

The two go hand in hand.

How can you achieve a level of patience and vigilance that will take you to the next level?

Here are a few ideasÖ

1. Donít get stuck on one trade idea
one-ideaHow many times has the following happened to you?

You short the EURUSD following a break below support. The momentum is in your favor, and everything seems to be falling into place.

The next morning you wake up to an alert that your stop loss was triggered.

What!? How could that have happened?

The setup was perfect!

You rush to your computer and notice the pair has rallied past its average daily range, so you short it again.

Within the next 10 minutes, you watch the pair slide 20 pips. Time to make back that overnight loss, right?


Later that evening the market has once again stopped you out. This process repeats another two or three times and before you know it youíve lost 20% of your account.

Sound familiar?

I can certainly relate to that scenario. In my early years of trading, I had the hardest time separating my ego from the price action on the chart.

Back then I always thought it was me versus the market. The truth is it was me against my ego.

I was my own worst enemy.

Today, if I lose on a trade, I take a seat on the sideline for the next 24 hours. Thatís my rule.

Even if another setup comes along a few hours later, I have to pass on it.

By staying out of the market following a loss, it keeps my ego in check. The 24 hour period serves as a way for me to collect my thoughts and refocus my efforts.

2. Think long-term
long-roadIíve previously written about the idea that trading Forex is a process, not a project. This is because it has no end date.

You donít wake up and say, okay, I need to know everything there is to know about Forex trading by April 23rd!

It just doesnít work that way.

As you progress through this journey and eventually reach success, youíll find that the line between struggling and consistently winning is blurry at best.

Even once you find your stride and begin to build your account, youíll still be learning.

Youíll also have good months and not so good months.

Thankfully the learning process never ends. Because if it did, things would get boring in a hurry.

With this in mind, you can find comfort in your new favorite seat on the sideline.

Why rush something that has no fixed end date?

In fact, trying to rush this process will only make things worse. The learning curve is much less steep when you slow things down and take it one day at a time.

Thatís the beauty of this Forex journey. There are no deadlines, and trading profits are hardly a scarce commodity.

Everyone wants to find success today. But find solace knowing that youíre a better trader this month than you were last month.

Approach the market with that mindset, and youíll be unstoppable!

3. Learn how to pyramid
pyramid-tradingThis may sound a little odd, but learning how to pyramid into a winning position can help you stay patient.

Allow me to explain with a simple comparison between two traders, Joe and Sue.

Trader Joeís average profit is 1R. So for every 2% of his account he risks, he stands to make a 2% profit.

Not bad, right?

The challenge here is that Joe needs a winning percentage greater than 50% to have any hope of making money.

That may not sound too bad, but Joe comes to realize the market has an odd and often cruel sense of humor.

Itís not whether youíre right or wrong thatís important, itís how much money you make when youíre right and how much you lose when youíre wrong.

George Soros

Trader Sue, on the other hand, isnít concerned with having a high win rate. She knows that winning in this game is all about pyramiding into advantageous positions and cutting losses short.

As such, her average profit is 2.5R. So for every 2% of her account she risks, she stands to make a 5% profit.

Compare that to Joeís average 2% profit, and you can probably see where Iím going with this.

Because Trader Sueís average profit is more than twice that of Trader Joeís, sheís less likely to overtrade. And by not overtrading, sheís less likely to put her capital at risk without good reason.

Her ability to maximize profits means she can stay on the sideline longer. She knows that it only takes one quality setup each month to make a considerable amount of money.

If you knew you could extract an average 5% profit on each favorable position, would you feel pressured to trade more frequently?

I bet not.

The Risk of Losing Will Cloud Your Judgment
risk-of-losingIím just going to go ahead and say it Ė when youíre in a trade, your judgment is compromised.

There are no two ways about it.

It doesnít matter if youíve been trading for five months or five years. Having capital at risk during a trade will, in some way, influence your decisions.

Why am I telling you this?

Iím telling you because there is an opportunity cost associated with trading. You are never just risking the money on that one trade; youíre risking money you could be making elsewhere.

Youíre also compromising the neutral state of mind necessary to find quality setups.

For instance, letís assume youíve decided to short the EURUSD. The setup materialized after a retest of new resistance, and for all intents and purposes, the initial idea to sell was a good one.

Unfortunately, the Euro had other plans.

The trade has gone sour, but the market hasnít triggered your stop loss just yet so you decide to ride it out.

Hours later you spot a perfect bullish pin bar on the AUDUSD daily time frame. Itís sitting on a confluence of support and is pointing in the direction of the overall trend.

Just like the EURUSD trade before it, this one looks promising.

Now, hereís where your mind can play tricks on youÖ

The fact that you have an open position thatís in the red is going to influence your decision in one of two ways:

Youíll hesitate and miss a profitable trade for fear of having a second losing position
Youíll pull the trigger prematurely because you want to make back what you might lose on your EURUSD short
As long as that EURUSD position is open, itís going to influence your decisions in some way. You probably wonít even be aware of it, but itís there in the background tugging on your emotions.

So what does all of this have to do with learning to love cash?

Simply put, as long as youíre on the sideline with no open positions, your mind is free of distractions. Youíre able to see favorable opportunities as they materialize and dismiss those that could get you in trouble.

In essence, you have no exposure and can, therefore, see the market for what it is rather than what youíd like it to be.

To make money in this business, you have to put on trades. But not just any trades.

Finding the right ones is the hard part. Not because theyíre overly difficult to spot, but because they donít come along every day.

The moment you go from being 100% in cash to having capital at risk is the moment you sacrifice the clarity of your judgment.

So be sure to make each trade count.

An Expensive Place to Look for Excitement
CasinoI took this one from Jack Schwager, author of the Market Wizards series of books.

There is a huge contrast between how most people envision trading and the reality of the career.

Think about the last movie you watched where trading was involved in some way. Perhaps it was either the new or old version of Wall Street or something similar.

They always make it look exciting, right? I mean, who can blame them? After all, it is a movie.

In some cases, that excitement you see may be justified. If theyíre showing a scene from an old school pit on one of the exchanges, that environment was certainly not dull.

Guys screaming left and right, pushing, pullingÖyou get the idea.

But the environment for todayís retail trader is a far cry from the action in those pits.

In fact, itís pretty boring.

As Schwager says, the market is an expensive place to look for excitement. And anyone who has been in this business for a while can relate to that notion.

When I first started trading equities way back in 2002, I admit, I was looking for the excitement more than anything else.

As an 18-year-old, I had no desire to learn the process. Nor did I have the patience to do so.

I just wanted the action, and of course, the money that I thought would follow. I think most new Forex traders can relate to that.

When youíre out of the market, you feel as though you arenít in the game. Thereís this overwhelming feeling of not making progress as if youíre missing out on the action.

So how do most traders cope with this uneasy feeling?

They rush to get back in a position as soon as theyíre out of the last one. It doesnít matter what the market is doing at the time. They need that rush again, so they jump right back into the mix.

But hereís the dealÖ

If your trading isnít boring, youíre doing something wrong.

Quality trade setups on the higher time frames donít come along very often. You may only get a handful of opportunities each month, and thatís okay.

Once you know how to make a profit of 6% or more on a favorable setup, youíll no longer need that constant excitement in your life.

In fact, youíll no longer see the market as a place for excitement at all.

Start trading for the sheer opportunity and leave the desire for action at the door. Always focus on the process, not the profits.

Do that, and youíll begin to see the market in a whole new light.
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Old 19-02-2018, 04:10 AM
mhammede mhammede is offline

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thanks for this articles
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Old 08-03-2018, 08:25 AM
EleganteR EleganteR is offline

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When you’re out of the market, you feel as though you aren’t in the game. There’s this overwhelming feeling of not making progress as if you’re missing out on the action. It is too real in Market such as Stock and CFDS
I trader singapore dollar
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Old 11-03-2018, 05:44 PM
Hart29 Hart29 is offline

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Excellent! Like the phrase “protective instinct”, the desire to protect what you have in order to get more of what you have! Like a general of an Army who would wait for the right moment to strike rather than send soldiers left, right and centre and suffer casualties. And one lost opportune moment should not lead to junk your strategy and enter the next seemingly opportune moment, which you may know deep within, is not really opportune.
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Old 16-03-2018, 03:52 AM
hollyM hollyM is offline

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Patience is exactly what many traders lack. For me the good thing was that I'd taken into account one of the trading plan points, which was actually named "patience". So I can't really open and close a deal before I throroughly think it through, at least for 10-15 min.
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