The Importance of Patience in Forex Trading Success

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There are number of important factors that go into making you a Forex trading success. Some of these factors include such things as a reliable Forex trading system, adequate working capital, etc.

While all of the factors mentioned above are important, I find that the importance of patience cannot be overemphasized. Why is that, you ask? If I had immediately answered that off the top of my head I would simply look at the facts. The facts show that all successful Forex traders have the patience to do what is necessary when it is necessary. Patience is a necessary part of the all important “trading discipline”.

One of the first concepts it is important for beginning Forex traders to wrap their heads around is that successful Forex trading is more like a marathon than a sprint. Regardless of the timeframe that you trade in, having a long-term outlook can help you be more successful.

So let’s look at an example of how patience may come into play in your everyday Forex trading.

When you first open your live trading account — This is a critical time for beginning Forex traders. Often times the anticipation of placing your very first trade can get the best of you. The last thing you want to do is to jump the gun and place a trade that your trading system does not dictate. In this scenario you simply have to have the patience or make yourself have the patience to wait until your trading system tells you to take action.

When your first few trades are losing trades — If your first few trades are losers, please keep in mind that this is not the end of the world by any stretch of the imagination. This simply means that your trading system did not trade profitably in that particular set of market conditions. For some, there’ll be an overwhelming desire to “do something” so that they can get their account back up to the amount of their original deposit. If you happen to feel this way don’t beat yourself up about it. It is very common amongst beginning traders. This is a time when you need to have faith in your trading system and understand that a good trading system will recover and move to higher equity.

When you are in a big drawdown — Being a larger drawdown is one of the toughest situations that the trader can face. More experienced traders realize that drawdowns are a natural part of trading. Beginning traders get more nervous and their lack of experience has yet to teach them what to expect. Don’t get me wrong, when I’m in a large drawdown I don’t jump up and down because I think drawdowns are a great thing. I do, however, understand that my trading system will recover from the drawdown and eventually move on to new equity highs. Having patience will allow you to ride out these inevitable pullbacks in your account equity. Not having patience can cause you to stop trading your successful Forex trading system and throw in the towel just before your equity would have skyrocketed.

As you can see, patience is of paramount importance in successful trading. As you gain experience in your trading you will also gain confidence and as a result of that you will be more patient as well. Simply keep in mind that successful trading is more like a marathon than a sprint and understand that you are in the Forex market for long-term success.

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How A Forex Trading System Can Help You Be A Better Forex Trader

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First let’s start off with the definition of a Forex trading system.  A trading system may also be referred to as a “trading method” or a “trading strategy”. The simplest way to put it would be to say that a Forex system is a set of rules to be followed in order to effectively trade Forex.

Forex trading systems usually come in the form of a cause and effect statement. Basically the system works in an, “if — then” manner.  Here’s an example below:

If the EURUSD reaches a price higher than the highest price yesterday, then buy the EURUSD today.

Trading system developers may start off with a simple idea such as the “if-then” statement above.  They will then run tests on the idea using historical Forex data. Their objective is to see how the idea would have performed in the past.  If it performs well the next step is to refine the system through further testing.

A Forex trading system may also be referred to as a “mechanical trading system”.  It’s called mechanical because it performs its duties in a machine-like fashion and gives the trader Forex signals. It does this without fear or emotion and that’s one of the key advantages to using trading systems. Forex trading systems have become popular with both individual traders as well as large financial institutions because of their “mechanical” nature.

With a trading system you essentially have a roadmap to follow as you journey toward successful Forex trading.  A good trading system eliminates guesswork and thusly uncertainty. The fact that Forex trading system has been shown to be profitable through testing gives traders a tremendous amount of confidence.  It is confidence which allows the successful trader to push aside any potentially limiting negative emotions to trade Forex profitably.

A good Forex trading system will provide you with the following information:

What to trade — Your system will tell you which currency pair to trade be it the EURUSD, GBPUSD, EURJPY, etc.

When to get in — A good system will tell you at which price or time to enter a trade

When to get out — Your trading system will tell you when to exit a trade

How much to risk — Never enter a trade without knowing how much capital you have at risk.  A good Forex trading system will have it’s risk defined ahead of time.

When to do nothing — In trading doing nothing is actually doing something.  Being selective and keeping out of potentially bad trades is as important as making profitable trades. Being impatient has been the downfall of many a trader. To profit consistently you must wait for the right opportunities.

As you can see a good Forex trading system can help you be a more profitable, organized, and confident trader. As you may already suspect, however, not all trading systems are created equal.  If you do decide to buy or lease a commercially available trading system make certain that you investigate it thoroughly. Test it using a Forex demo account before using any real money to trade the system.

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The Seven Habits Of Highly Effective Forex Traders

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Successful Forex traders all have a number of common characteristics. There are certain ways that profitable traders begin their trading and things that they do on a consistent that set them apart from other traders.

1 – Successful Forex traders realize that trading is more like a marathon than a sprint. They know there is no holy grail of trading and have no interest in “here-today, gone tomorrow” get-rich-quick schemes.

2 – Profitable traders all start with adequate working capital. They realize that their trading account balance will have it’s ups and downs as the market fluctuates. They also realize that you can’t win the trading game without having sufficient capital to stay in the trading game.

3 – They have a plan. The most successful businesses have been built on a solid foundation of planning. Just as the average person would never consider building a house without a plan, no trader should attempt to build a trading business without adequate planning

4 – They have discipline. The best traders all have a trading plan and the discipline to stick to their trading plan and trading system. Without proper trading discipline nothing else really matters. Discipline also ties in closely with adequate working capital. Successful traders do not trade with money they cannot afford to lose. They realize that trading with money you cannot afford to lose places too much pressure on their trading for them to be successful in the long run

5 – They have realistic expectations. Successful Forex trading involves realistic expectations. Unrealistic expectations can paralyze a trader and keep him/her from moving forward and profiting using the perfectly good trading system that they already have. This often happens because beginning traders often find themselves “shopping around” for a better trading system than the on they already have. If they are already using a Forex trading system with 70% winning trades they find themselves looking for a system with 95% winning trades.

6 – They all have a profitable trading system. This is often called a Forex system with a positive mathematical expectation. This simply means that the system is expected to end up with a net profit over time. Creating or buying a profitable trading system is a skill in and of itself. There are a great number of commercially available Forex trading systems and Forex robots to choose from. They are definitely not all created equal. Make certain that you know how to properly evaluate a trading system should you decide to buy one.

7 – They are patient. Much like Rome, no large trading fortune was built in a day. A successful trader must be patient and realize that over time his/her trading system will prevail. Profitable traders also realize that there will be periods when their trading system simply does not trigger a trade. Those with experience realize that this is normal and that they are far better off having their trading system be more selective. They are content with being on the sidelines waiting for only the best market conditions to trigger their Forex trading signals.

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