Sometimes the Best Trade is No Trade at All

There are many differences between new traders and professional traders.

But many of them have little to do with their expertise of the markets and more to do with their own actions. As a DailyFX Course instructor, I get many emails from students who have had a bad trade and want to know what they did wrong. As they describe their trade and what they were thinking at the time, I start to hear some hedging in their explanation. This trade was “almost the setup I look for” or that “the trade was only taken because there was nothing else setting up”. The problem is that new traders feel they have to be in a trade all the time to be successful. But in reality it is the other way around. Professional traders do not mind waiting for the quality setups. As a matter of fact, this is one of their edges. They do not trade for the fun or for the excitement, but rather they trade to win. Having the patience to just sit and watch and not trade is an easy thing to describe, but very hard to do. It can be very frustrating watching the market move without being in a trade. This frustration can lead to questionable setups being taken in an attempt to be in on every move. But entering into or exiting from a trade because of impatience is never the right reason for your action. Having the patience and discipline to wait for the quality setup is the mark of a confident trader. They realize that sometimes the best trade is no trade at all.