A Forex Trader's Worst Nightmare: Lack Of Patience
Trading accounts are blown out everyday because of basic human warning signs being overlooked. If traders would only listen to their natural instincts they would more often than not keep themselves out of trouble. The only real principles a profitable trader should rely on are the simple ones.
In today's electronic markets traders are finding it more and more difficult to remain patient. Tempted by the possibility of trading so many different instruments and so many different markets retail traders often find themselves jumping from market to market. This results in a lack of patience for quality set ups. We want things right now and if they aren't exactly what we want we will try and make them what we want. Any successful trader will tell you this sort of behavior can be very dangerous for your trading account. The ability to exercise patience will save a trader time and time again. So how exactly can a trader be ruined by a lack of patience?
Getting In Too Early
Retail traders aren't confident in their ability to read price action in the market which in turn causes them to be uncomfortable waiting for all of their system signals. This lack of confidence leads them to jump into the market too early. They see price approaching their planned entry level but at the last moment think it isn't going to happen so they make a rash decision to enter anyway. Inevitably what ends up happening is the market behaves as it should and a minor retracement occurs to exactly the level the trader was waiting for but now instead of profiting from the move they are taking heat on the trade because they didn't have confidence in their ability to read the market and they weren't patient enough to confirm their bias using the proper protocol. If they manage to ride out the heat and the trade works out they lose profits and if they get stopped out they curse the system even though they themselves didn't follow it. This series plays itself out time and time again in the markets.
Getting In Too Late
The flip side of jumping in too early is getting in too late. Typical amongst traders who have just experienced a draw down in their account, not pulling the trigger can have disastrous results. Patience doesn't mean waiting for all the stars to align and then pulling the trigger. It simply means waiting to see your set ups and then entering the trade and your predetermined level. That is how a patient trader operates and if you follow that principle it will help you achieve great results inside the markets.
Holding On Too Long
Patience can also work against traders who tend to hold on too long. Just like individuals who wait for all the right entry signals to be lined up just perfect, traders who hold trades trying to squeeze extra profits are usually left disappointed and frustrated. Being patient means waiting for your target and then intelligently exiting at that level. Don't let a trade that is profitable work against you because you were trying to squeeze a few more dollars out of it. Take profits and wait for the next set up.
Having patience and knowing how to operate patiently inside the markets will increase your potential earning power as a trader. Work on following your rules and allowing the market to come to you before committing any capital. If you have a solid strategy and a well though out plan the profits will soon follow.
Article Source: FxTradingStock.com
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Looking to find the best forex trading resources, then visit www.pillartrading.com to find the best advice on forex strategies for you.
by: Jeff Niles
Total views: 28
Word Count: 609
Date: Thu, 16 Sep 2010
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