10 Tips To Stay Patient As A Forex Trader
“Patience is a virtue.”
This quote applies to life in general as well as the financial markets. Humans find it very easy to give in to instant gratification, but as Forex traders this can leave our accounts bleeding to the death.
Gaining and practising patience is an edge in itself and will give you a significant advantage over your fellow traders. But why is it so important, and how can you maintain it while trading? Read on to find out…
- Why is this characteristic essential to trading success?
- 10 Tips to stay patient.
- Causes of impatience.
- When shouldn’t you be patient as a Forex trader?
Why is this characteristic essential to trading success?
We all know that a snap decision usually leads to a horrible result. How often have you seen a currency pair skyrocketing upwards without you, and you simply can’t resist the temptation to buy? It’s no surprise that more often than not, the market will reverse on you straight away because there wasn’t much rational thinking taking place.
Instead of following your strategy, you were impatient and couldn’t help but think of the profits that could be made. New traders will usually fall victim to this type of thinking (even I did) without realizing that you cannot be an impatient Forex trader and make money consistently.
Here are some reasons why patience is vital:
- Traders require patience to follow the rules of their system because an edge will NEVER catch ALL the big moves. You cannot let FOMO get the best of you.
- All trades need enough time to play out and reach the maximum profit potential, this means a lot of waiting on your behalf. LET WINNERS RUN!
- Patience is required for effective risk management. Without this you may rush to make large profits, and risk too much on your positions, eventually blowing your account.
- You need to be patient to avoid overtrading. Otherwise, you could be left with too many trades on your plate and a massive headache.
I learnt early on in my trading journey that the need for instant gratification will never aid profitability. Usually, any action made due to impatience leads to regret and frustration down the line. But thankfully impatience can be fixed.
10 Tips to stay patient
Let me start by saying that your ability to wait in everyday life filters through into your trading and visa versa, therefore practising patience through whatever means will aid you in developing this characteristic. Let’s look at some ways.
1. Say no when you want something
If you are aware that a particular action or behaviour does not contribute towards your growth, start saying no to it. This process allows you to realize when something is counterproductive to your goals, just as impatience does not help your account balance in the long run.
A great way to practice this is with food. Everyone knows that eating 2 slices of cake every day is not good for their health, so next time you find yourself craving something sweet, say NO!
2. Develop routines
Ultimately, patience is just the discipline to wait for something. When you build a structure in your life, remaining focused and disciplined becomes second nature.
Start planning your time and activities. You will find many of the challenges of Forex trading become far easier.
3. Never focus on the money
Thinking about the money is normal for anybody new to trading, but this is one of the biggest causes of failure in the markets. Obviously, this naturally leads to impatience because every possible trade looks like a winner, even when the probabilities do not favour a position.
That’s not all, the desire to make large profits will also lead to horrendous money management. So, if you find yourself thinking about dollar bills, STOP! And think of your system instead.
4. Keep your trading plan on hand
I will always promote writing out all the details of your approach, so you can be guided by it no matter what psychological challenges the market is throwing at you.
Trust me, it is very difficult to act in an impatient way when all of your system entry and risk management rules are in front of you.
5. Think long term
As long as you have a significant edge over the market and execute it objectively, you will make money. Remind yourself that the money will come to you eventually and the waiting process becomes bearable.
6. Step away from the charts
There is such a thing as too much chart time. If you ever feel agitated or frustrated while trading, then it is probably time to step away from the charts.
You will find that many of the irrational and impatient trading decisions you make are because you are not in the correct state of mind. Leaving the market alone gives you a chance to reboot.
7. Stay accountable
Trading is a solo sport, it’s you vs the market, but you can still work together with other traders and remain accountable to one another. Humans find it difficult to act against there own best interest when there is an external force to criticize them.
8. Keep healthy
Countless research shows that humans perform better when they are healthier. Keeping your body and mind in tip-top shape is best for your trading, but how does health impact patience?
It’s self-explanatory that you will be far more impatient if you sleep for 3 hours every night vs 8 hours. Furthermore, a trader that keeps fit is far more likely to remain disciplined vs a trader who never exercises and eats McDonald’s twice a day. Even more reason to prioritize your health.
9. Breath and meditate
Staying in the present moment is a skill in itself. By using simple breathing and meditation exercises, you can remain calm and in the present. The ability to wait becomes second nature if you are in this state.
10. Remember the consequences
Last but certainly not least, you must remember the consequences of impatience in your trading. By keeping all the bad outcomes in mind, you will find it easy to stop the behaviour.
How can you be aware of this? The simplest way is by keeping a trading journal listing all your trades, the reasons behind them, the environmental factors at play, and your emotions at the time.
Triggers to feel impatient
Next up we have the most common causes for impatience in trading:
- A drawdown – During a losing streak, it is common to feel the need to place trades to make up for losses.
- FOMO – It is never easy to watch the market make a big move without you. Often this causes irrational trades that are not in line with system rules.
- Watching other traders profit – When you look at how much money others are making, it is difficult to remain patient.
- Slow markets – When the Forex market is slow, and there aren’t many trading opportunities, it is normal to feel the need to trade.
The most critical tool in managing these reasons and not falling victim is – 1. Be aware of the feeling. 2. Work on ways to manage it.
When shouldn't you be patient as a Forex trader?
Wait what? How can I go on about patience and then have a heading like this? Because there are certain situations in which it is best to be impatient. Hear me out…
- Cutting losses – If the market is moving against you and your reason for entry is no longer valid, CLOSE THE TRADE! Hope is not your friend in the Forex market.
- Pulling the trigger – If your system rules are met and an entry signal prints, PLACE THE TRADE! Do not hesitate or doubt your system, otherwise you will break the risk to reward ratio of your edge.
- Exiting – If your exit criteria tells you its time to be out, CLOSE THE TRADE! Never let greed control your thinking.
There is a common thread among these examples. You should ONLY be impatient if your RULES are telling you to do something, don’t even blink before listening to them.
Patience comes more naturally to some, but it doesn’t have to drag on your results if you follow these tips and strive to improve.
NB – Remember to stay patient during entry, management, and exit.
Until next time