An issue that I personally had when I began trading was what to do when a trade did not present itself on the charts. After all, I wanted to be a trader and here I was…at my computer and ready to trade!
So…where are the trades!!
Last week during our LIVE webinar this same issue came up. Essentially the trader had done the Strong/Weak Analysis and then mentioned, “but when I pair up the currencies and look at the charts I don’t find a trade according to my strategy…frustrating…what should I do?”
No doubt about it, when you are ready to trade but find no trades it can be very frustrating. But we simply cannot take a trade because we want to trade. That is one of the most illogical reasons to enter a trade that there is.
Think about it this way…
Let’s say we are driving a long distance and getting extremely bored and frustrated because we are not there yet. And we know that up ahead someplace we have to make a left turn to get to our destination. Would it make any sense at all just to make that left turn right now out of boredom and frustration? Of course not. The same is true in trading. It makes no sense to enter a trade until the set up is there.
We must guard against boredom and frustration as it can lead to taking trades that made no sense earlier in the trading session when we were not bored. But, human nature being what it is, the more bored and frustrated we become, the better that low probability trade begins to look. So we take the trade out of boredom and when it moves against us, we become even more frustrated.
It is important to develop patience and discipline as a trader so we can wait for our set up to take place. (We must also be ready to accept the fact that our set up may NOT take place.) We must have a firm understanding of our trading strategy and not get into a trade until our “set up” takes place.
As an old trading axiom says, let the trade come to you.
For example, let’s say I want to buy a currency pair if it closes above 1.5153. If it is now trading at 1.5100 I will not enter the trade now because it looks like it will trade up to that level. Nobody knows what may or may not happen going forward on the chart. So, based on my trading plan, I would not consider an entry until it closed above 1.5153. That is letting the trade come to us. We will not enter a trade until it meets our criteria.
Bottom Line: No matter how bored or frustrated we become, that is never an excuse for entering a trade. Based on our trading style we may have to wait hours or days or longer for our trade set up to present itself. Until that time, we resist the temptation to enter a trade and always remember that cash is a position.
