Be Patient when Trading

Sitting on your hands will keep you from making trades that are not ripe for picking. When you are in a trade, it will help you stay longer while the full profit potential of the position matures. But it does not sound very proactive, does it? Au contraire, while you are sitting on your hands is the best time to be proactive with those charts!

Traders do not particularly enjoy sitting on their hands. It is akin to going to a casino and not throwing a few dollars into a slot machine. The underlying concept is to be patient and wait for trades that really line up for your personal trading program -- trading method, attitude, and money management.
FOREX provides 28 highly liquid currency pairs and multiple time frames. The trader is never long without an opportunity. Take your time, pick and choose, and then seize the moment! "Wait," as Mr. Goodman would say, "for the high percentage sitting ducks." I would much rather miss a good trade and not win than roll snake-eyes and lose money unnecessarily.

Be an active watcher: you are sitting on your hands, not covering your eyes. Ask questions, form hypotheses, see how the market reacts, draw conclusions, and take notes. You can learn from your in-progress trades without doing anything to alter them. But if you feel you are getting too attached to the trade, move on -- look at other charts for new opportunities.

Tip: Once you have entered a trade, you have for the moment done everything you can do. Now it is time to sit on your hands. Do not watch in-progress trades too carefully; the charts will incite you to make changes or just to do something. The line technique is very useful here; watch the lines form, not the bars.

Take a look at some 1-week currency pair charts right now. As you can see, major trends are common, but they take time to develop. 500-1000 pip trends are not uncommon. But how will you catch one if you take a 50 pip profit? Be proactive; sit on your hands.
By Michael Duane Archer
Michael Duane Archer has been an active futures and FOREX trader for more than 35 years. He has worked in various advisory capacities, notably as a commodity trading advisor, registered SEC investment advisor, and branch manager for Heinold of Hawaii. He currently trades FOREX and futures and is involved in several technical analysis research projects.

Copyrighted 2016. Content published with author's permission.

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