Forex trading is totally different from any other profession that you might think about as a way to make money. And that difference is the major cause of why most new traders fail.
In any other profession going to work means you leave home, drive to the business, punch in the time clock and get to work. You need to show up every day and you are expected to DO something because that's what you get paid for. Maybe you're working on a particular project that needs researching or cross referencing. Maybe you're making lots of phone calls to get information or you're meeting with people to discuss the situation or you're manufacturing, building or creating something. You're undoubtedly doing something that's productive and at the end of the day you have results to show for the time that you put into the job.
If you're a forex trader, it's different. We have a trader friend named Paulos who once expressed it perfectly. He said, "We're not paid to trade, we're paid to WAIT." So we're really getting paid to do nothing until we see our set up and then act on that, when and if it happens.
One of the great ways to get derailed in your journey to become a profitable forex trader is letting this feeling of having to be active get the better of you. You'll find yourself getting swept up into forums and chat rooms, taking a lot of webinars and reading about other people's winning strategies. While some of this may be useful when you are first starting out learning how to trade forex, it soon becomes a diversion to the real job of waiting for a trade to set up. Why do so many people get sucked into this diversion? Because it's so against the grain of what we think we're supposed to do when we "work". We are indoctrinated to think of working as "doing something".
A profitable forex trader will spend 90% or more of his or her time NOT doing anything but looking at the charts and 10% or less actively trading. There aren't many other jobs that are like that. Except for fishermen and duck hunters.
Duck hunters go out in the wild, hunker down in their giant rubber galoshes and sit in what's called a "blind" where they wait, sometimes for hours. They don't do anything else but wait. Sometimes they use duck calls to lure the birds closer. We're kind of like that. We go into our office, sit down and start looking at the charts. We sit patiently in front of our computers hour after hour just like those duck hunters and wait for our perfect set up before we go in with a loaded shotgun. Sometimes we even use our own kind of duck calls, trying to lure one of the currency pairs into setting up perfectly for us. "Come on EURO, move up just a little more and we'll take you! or "Get on down GJ, come to Momma, just a little closer!" These are probably not quite as effective as the duck calls, but at least they give us the illusion that we're doing something. It's all about waiting for that ideal set up that meets all the requirements of our trade plan.
Of course, even as a duck hunter, there are activities you do to support your hunting. You clean and oil your shotgun, you replenish your ammunition, you repaint your decoy and you ready your boots and clothing for the next time you go out. In the same way, a forex trader has things to do to support their trading. They allocate time each day to practice and hone their strategy on the Forex Tester, they keep their trade log up to date and they analyze past trades to see what they're doing right and what they could have done better.
But on those days when the hours slowly pass by with nothing setting up for us, it gets harder to pass on those trades that don't quite meet our criterion for the "right trade". As the waiting gets longer and longer, those trigger fingers of ours get itchy to "go to work". This is when we're most at danger for forcing a trade to conform to our trade rules. When we're feeling the anxiety that "not acting" produces, we are almost under the influence of a force that makes us act impulsively. These are the kind of trades that we look back on the next day and say, "Yikes, what were we thinking about when we took that trade? It didn't meet our trade plan at all".
Is it hard to walk away from a trading session without taking a trade? You betcha!!! It's taken us years to be able to walk away from a trading session with nothing to show, but it's a lot easier than taking a painful loss. There's nothing worse than when it's time to record our trade in the Trade Log* and we have to face the music and write up: "Stupid impulsive trade", "Didn't meet our trade rules", "Forced it because we were impatient". (*Yes, we do record every single trade we take in our Forex Smart Tools Trade Log. Remember that we're first and foremost forex traders and we built these tools for our own personal use because there wasn't – and still isn't – anything like them out there.)
Would we rather be leaving the house for work every morning and going to a job where we have a boss that we have to answer to? No way! We'd much rather get paid to "wait"!
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