Not a secret! Forex Trading Key: Patience (2)
In the first section, we have discussed a little about the need for patience in forex trading. You have read how to wait for the time and right and choose the right moment. The goal is of course to find the maximum profit opportunity.
So it turns out patience is not enough just intended and spoken through verbal, but also must be implemented. Now, in this second part (last), we will discuss some things related to patience.
Come on, continue …
Let the Market Move
Actually this is clear. You can’t possibly set where the price must move. It is impossible for the market to be subject to the desires of retail traders like you. So your choice is simply to let the market move according to its own will.
Try now to imagine another scenario like this:
The market has fulfilled the conditions you want (of course according to the trading plan ). You then open a position, for example buy. Then according to the trading plan you place stop-loss (SL) and take-profit (TP).Next, what you do should be waiting for whether the TP or SL is hit.
Some time later it turns out the price moves up. Your smile expands because at the trading terminal you see a transaction making a profit. But before the price reaches TP, the market reverses its direction until the transaction that was profitable turns into a loss . At that point, imagine that you were hit by panic. Worried that the loss will be too large, you then close the transaction and experience a small loss.
Underline this: You cut-loss even before the price touches SL. Often what happens later is as soon as you cut-loss , the price then rebounds and even reaches your TP.
Or, it could be that you close the transaction even though the profits are still relatively small (not yet reached TP). The motive is the same: fear of loss.
Maybe you are currently smiling, because maybe the scenario above often happens to you. J
It’s true that in trading there is a principle, “Cut your losses short, let your profits run.” But in the above case, the application of the principle is wrong. Why? Because in the above case, the cut-loss done is premature.Cut-loss is done solely because of fear and is not supported by objective analysis.
Supposedly, just let the market move anywhere and do not close your transaction just because you are worried that profits will turn into losses.
You know, but isn’t that easy? Who wants to lose, even though it should be profitable?
Correct. For this reason I feel you need to pay attention to the last points below.
Stick to the Plan
The above has been told that many traders fled the market prematurely.Even though what you should do is not open or close a transaction before there is an objective argument for that. Where can you get the objective argument? Of course from the trading system that you use.
Return to the “premature exit” case above. It is not impossible to close the position before the SL or TP is reached. How come What is not allowed is to close the position (whether it’s cut-loss or taking profit ) just because of emotional factors: fear. Unreasonable fear, because there is no analytical argument involved.
That is the need for you to discipline the trading plan , as I often mention in almost all articles I write. Also keep in mind that every trading strategy that you run must have passed a series of fit and proper tests before you get involved in the market. Trust in your system and trading plan and run with discipline.
But realize that the discipline of running a trading plan does not mean you have to say, “Anyway, if you do n’t get SL and TP, I won’t close my position.”
That’s not discipline but it’s rigid. The flexibility is actually important in trading. There are times when the market does not agree with your analysis and that’s when you can look for clues to get out of the market as soon as possible. Note: look for instructions. From where? It was alluded to right ? From the trading system. Thus, all your decisions will be more objective.
So, obviously right ? Now you can see that in forex trading , psychology plays a key role. Patience is one of the main capital of a trader. Patience is key in the discipline of running a trading plan. But being disciplined cannot make you a rigid trader. You have to avoid it.
In essence, every decision to buy, sell, cut-loss , or take profit must be based on analysis and trading plan , not just presumption. To be able to see these things objectively, you must have enough patience.
Man Shobaro, Zhofiro . Who is patient, will be lucky.
Read More : Not a secret! Forex Trading Key: Patience (1)