This week, we have an article from our team member Urban. The article describes the very important component in Forex Trading – watching a bigger picture. Urban also talks about the trading plan, patience and how to deal with losses. Enjoy the article!
One of the most important thing in Forex Trading is?
Traders often think that discipline is not an important part of forex trading and don’t take it seriously. A lot of traders are impatient and enter into a trade whenever an opportunity arises. This is because of our human nature and our motivation to make a profit as quickly as possible.
It is very helpful to take some time and look at the bigger picture, weekly or even monthly chart instead of focusing too much on lower timeframes H4, H1, or even M15. It is not necessary to watch smaller timeframes and although it is often necessary before we enter a trade, we need to check the bigger picture too.
Everybody should remember that a single trade could resonate in a serious loss if you executed a trade at the wrong time.
It could take a long time for the market correction but is it worth every penny.
Remember there are three trade positions – long, short, and flat. Most of the time, being flat (without any open position) is the best option.
Understanding how important patience is while you start learning to trade will completely change your trading performance in the long run and will also help you to become a consistently profitable trader faster.
A lot of traders fail when they realize that trading forex is not a ”overnight success” and it could take years before you become a consistently profitable trader.
At FTMO, we know how hard it is to find consistently profitable traders and for this reason, we have a Scaling Plan for all our FTMO traders.
Every trader who makes at least 10 percentage points in four consecutive months (i.e., the average of at least 2.5% gain per month), his/her initial capital of the FTMO Account will be increased by 25%.
You don’t need to rush things out trying to enter a trade just because you don’t want to miss the move. There will be another opportunity in the markets, over and over again. Everybody knows the quote ‘less is more” and this is also very true in the forex trading. The market could be very tricky and we often get the wrong trend signal. Discipline or even patience should be the components of the whole picture in your trading plan.
Whenever someone writes a business plan they know how important it is for his business to have a clear plan and here is the same thing, trading should be treated as a business.
You should have a clear perspective and mainly focus to stick to your trading plan.
Most traders know the name Jesse Livermore, the man that ‘TIME’ described as being the ”most fabulous U.S. stock trader”. He is one of the first day traders and was the basis for the main character of Reminiscences of a Stock Operator, the best-selling book by Edwin Lefèvre. Jesse made a fortune with following his own trading rules, amassing more than 100,000,000 USD at the height of his career back in 1929. But here is one thing, Jesse decided to break his own trading rules a couple of times, and every time he did this, he lost everything he made before.
To avoid this similar fate, you just need to stick to your trading plan and follow your trading rules.
Mr Jesse Livermore also says some very important words that every trader should hear: “The big money is made by the sittin’ and the waitin’ — not the thinking. A trader should wait until the best trade opportunity arrives.” While you may not pray to have backache like the legendary investor, you have animal instincts – that inner feeling telling you that you are in the wrong place. This could also be a good tool for trading.
Let me try to explain why patience is so important when you start trading forex. Traders are so self-confident in their trading decisions that they forgot to follow their trading plan and keep their emotions out of the way. To stay away from these mistakes, it is very important to practice patience every day. Once you make a losing trade, try to avoid trading for a day or two and just watch the market. This will help you to have the mindest as a professional forex trader. A lot of new traders decide to trade with no patience and gamble all their money on one trade and most often, this will never have a happy ending.
Professional traders take only high profitable trading positions and this is what differentiates the professional trader from the beginners.
Professional forex traders know through bitter experience over many years that without a strong trading discipline, their trading capital will not be preserved and their chances of trading profitability are much diminished.
Professional forex traders also know the importance of being selective about which trades they execute and to let profitable trades run.
Don’t forget the words: Stay patient and trust your trading journey.