Forex Trading Articles

PATIENT TRADERS ARE WINNING TRADERS

Forexmentor Team
© 2007, Currex Investment Services Inc.

Apr 21, 2007

Trading requires patience and discipline. Many times, the key to patience lies in monitoring what psychologists call "self-talk." Whether we are conscious of it or not, we often have a dialog with ourselves. For instance when you are driving, you may unconsciously tell yourself, "I'm going to slow down, watch out for traffic and make a left turn." In addition to running through instructions on how to accomplish the turn, you may also have a soothing dialog that keeps you calm and alert, such as, "I can do this easily. I've made a left turn safely many times. I just need to calmly wait for an opening." The same sort of dialog happens while you are trading. You may think, "I’m going to buy the Euro at 1.3500, wait for it to hit 1.3550 and sell." When you are impatient, you tend to engage in an unproductive dialog: "I bought at 1.3500 and I absolutely need it to move to 1.3600. When is it going to move? It should at least be at 1.3520 by now. What's going on? Maybe I'm wrong. Maybe I should sell." You cannot force the market to move according to your expectations. You must be patient, but when you are feeling pressure to perform, your self-talk becomes unproductive. The little voice inside you starts making unrealistic demands and you start to believe that you absolutely must see a price change. Unfortunately, you can only go where the market takes you, you must follow its lead.

The best way to remain calm and patient is to monitor your self-talk and change it when it becomes demanding and impatient. When you are feeling frustrated or impatient, rather than getting upset – relax and get into a patient state of mind. Start thinking calming, optimistic thoughts, "I’m going to go where the market takes me. There is nothing to get worked up about. I'm just going to calm down and accept whatever happens.”

Winning traders show patience. They wait for ideal market conditions before entering a trade. And when they enter a trade, they follow their trading plan, even if it means patiently waiting for the right time to exit. But many traders are impatient. They impulsively jump into trades and they sell at the first sign of danger. Why can't they wait? Some traders are in a hurry and they want to make money now. But profitable trading takes time and patience.

How can you learn to become more patient? First, it's necessary to admit that you are impatient. It's hard to admit our limitations, but the first step in solving any problem is admitting that you have one. Second, as you monitor trades, practice looking at events objectively. See yourself as an objective observer would see you, and then, think about how you might act more patiently. Third, realize that your impatience may be a signal that you need protection from the potentially harmful consequences of a trade. Can you afford to lose capital on a series of trades? It's necessary to consider the consequences of your actions and decide if you can deal with them. If you know you can handle the potential negative consequences easily, you will feel calmer, and will be able to control your impulses. Fourth, examine the situations that preceded your impatient behavior and avoid them in the future. Identify the times when you were the most impatient. Were you risking too much? Were you tired? The best way to control your impatience is to avoid those specific situations where you are likely to act on impulse. Fifth, examine your self-talk, which is the dialog you use to talk to yourself as you trade. People who are impatient want rewards now, rather than later. Their thoughts reflect this obsession and they act on impulse. They think, "It's either now or never", or “My hard work must pay off now.” If you find yourself having such thoughts, replace them with supportive beliefs that can help you trade patiently. Remind yourself that you can wait. "Time is on my side. The market moves in its own rhythm, and I can move fast or slow depending on its pace. A person is able to create wealth slowly through trading." Don't think that you absolutely must make profits immediately. You may not make profits immediately, and you don't need to. But if you build up your skills and gain valuable trading experience, you'll eventually make the profits you want. It's just a matter of patience.

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