Is Doing ‘Nothing’ the Key to Your Trading Success?
Traders often search for that missing ‘ingredient’ that they think will solve all their trading problems and start the dollars rolling into their trading account. Whether it’s some ‘magic’ indicator or some ‘insiders’ views into fundamentals and news reports; there’s no shortage of things that traders think will be that missing ‘key’ to trading success.
As with many things in life, in trading we are often our own worst enemy, and the key to trading success for most people is not adding some indicator or some new trading software, rather it is doing less, being less involved with your trades and essentially just doing ‘nothing’ most of the time. Over-involvement with, over-thinking and over-analysing one’s trades seems to be the most ubiquitous trading mistake that people make, and if you want to make money in the market you’re going to have learn to get out of your own way and let the market do the ‘thinking’ for you.
What’s truly your biggest obstacle to trading success?
Think about all the losing trades you’ve had. Some, I’m sure were normal losses, as every trading strategy will have some losers randomly distributed amongst the winners. I’m not talking about those losers, the losers I’m talking about are the ones that really made you frustrated because you ‘knew’ that you lost due to something you did that was not part of your trading plan or was otherwise an undisciplined action.
Let’s be honest here; how much money have you lost trading due to over-trading or being over-involved with your trades by trying to ‘micromanage’ them?
I’m willing to bet that if you’re really BEING HONEST, the reason you may not be profitable at this point in the year, can be summed up by saying that you are simply doing too much. Traders often search high and low for some ‘magic key’ to trading success; they look everywhere except inwards, at themselves.
The true ‘key’ to trading success, is nothing. Simply doing nothing, most of the time, is the key, and it’s probably not what you’ve been doing.
To be clear, I am talking about doing nothing more than you are doing something, not doing nothing at all. This means, you are out of the market more than you’re in it and you are leaving your trades alone and ignoring them more than you are sitting there watching them and trying to ‘figure out’ what you ‘should do next’.
So, the biggest obstacle to your trading success is the simple fact that you are doing too much; you’re thinking too much and you’re making too many trades and adjustments to your trades in the market.
A trade management experiment…
Here’s your ‘homework’: On the next trade you take, I want you to set it up and then do nothing with it for one week. Set the trade entry, stop loss and target and do not look at the charts again for 7 full days.
If you do this, and actually do it properly (don’t cheat), you will probably be amazed at the outcome. You will either have hit your profit target, got stopped out for a predetermined amount of money you were OK with losing, or the trade might still be open.
The thing all three of these scenarios has in common is that the MOST you can lose is your 1r predetermined risk amount in a 7 day period. Alternatively, the upside is much better at hopefully a 2r profit or greater.
Now, ask yourself this, if left to your own devices, how many trades would you have entered and exited over those 7 days? How much stress and negative emotions would you have experienced? I’m willing to bet the answer to both questions is: A LOT.
Do this experiment and do it right and you will learn something. If you cannot at least be disciplined enough for 7 days to not look at a trade, you probably don’t have what it takes to be a successful trader, so keep that in mind as well.
Get the most out of your trading strategy
If you have a trading strategy that you’ve mastered, like my price action strategies, but you’re constantly interfering with your trades or over-trading, I have news for you….you aren’t really using your trading strategy.
Your trading edge (or strategy) can’t work for you if you don’t let it play out, and that means leaving the market alone after you enter a trade.
Letting your edge play out means doing nothing most of the time. Let the market do the ‘work’ and you go do something else, or nothing. But, interfering with your trades is only going to lead to sabotaging yourself and losing money.
The cost of doing business in the market
One interesting way to help you change how you think about trading so that you are less inclined to mess around with and screw up your trades, is to think about each trade as a potential loss (because it is) and the money you risk on that trade is just the cost of doing business in the market.
In any business, you have to take a risk; you have costs that you need to cover in hopes that you will make more revenue than your costs, resulting in profit. Trading is no different; your costs are losing trades and your revenue is winning trades
You cannot avoid costs in business, and in trading you cannot avoid losses (your costs). Since this is a fact and you accept it (you do, don’t you?), then you should be operating under the assumption that any trade could be a loser, but since you don’t know which ones, you have to just leave them alone for the most part and let the market do its thing.
Over time, you will see that by doing ‘nothing’, or at least a lot less than you are now, you will be much further ahead both in your trading performance, account balance, skill and confidence as a trader.
The best and easiest way to manage your trades
You’ve probably heard me talk about set and forget trading if you’ve been following me for a while already. The truth is, I am reminded on a near weekly basis why simply leaving our trades alone, is the best way to ‘manage’ them.
You are not going to ‘figure out’ where the market is going for sure before it gets there. You are not going to make more money by micro-managing your trades and reading a hundred trading blogs and analysing news data. The only way you will make money in this business is by following proven trading strategies that you’ve mastered, strictly controlling your risk and allowing your trades enough space and time to play out without your interference.
40 Comments Leave a Comment
It appears, trading does not have a formula. It’s about self-motivation and the ability to accept a challenge and concentrate on your trading like your whole life depends on it.
And when you lose (fall), you must rise and do it again until you see success. If you lose on a live account and you tend to shift to a demo account for reason of fear, then you aren’t ready to trade.
It also appears that trading is just some refined form of “gambling”. One must psyche himself or herself up for it. It is not always a win-win situation. In fact, I believe you learn better when you lose sometimes; it teaches you proper risk and money management and helps you develop your own trading strategy.
Interesting insight, however I don’t agree trading is a refined form of gambling, rather I see it as professional speculation combined with risk management.
Dear Nial, irfan says:: “one line, just one line, outstanding article, fabulous nial…………:-) thanks for writing this, god bless you, please keeping writing this sort of outstanding articles…………:-)” – This words is just the words I would like to write to you myself! Thank you!
unique article ever, thanks for your post..
Great article Nial..As always.
I will try this trade test.
hey nial, one line, just one line, outstanding article, fabulous nial…………:-) thanks for writing this, god bless you, please keeping writing this sort of outstanding articles…………:-)
You are right Guru…….
I had problems trading for a while and I took a big brake. Not to do nothing, but to work on my inner trader. Trading psychology, not to be confused with market psychology, but learning to work with my inner emotions. Even with set and forget strategies, one still needs to work on their own trading emotions.
Trading is just like golf. With golf, people love going to the driving range and showing off their skills. With trading, those are chat rooms, etc. But a great golfer spends far more time on the putting green, where very few spend their time. Putting is an integral part of the game, just like personal trading psychology is a big part of trading. Yes, I know, personal psychology is important in golf too, but this is my story. Ha ha.
Seriously though, I can’t stress enough, the importance of working with your inner emotions. It makes a significant positive difference with trading results.
As golfer and trader, I completely agree with you, Alexander!
And as Nial said, often in life we are our own worst ennemy … because of our emotions.
I’m an accountant by profession and when you were talking about costs in any business, you just linked it so perfectly with forex and the costs are just so inevitable in any business.
Thanks a lot Prof.
Great article…thanks, Nial!
I have a victim of .dis mistakes before. but now that have read dis article. Not anymore.
more grease to your elbow thanks a million
thank coach,that is good article.
Is totally rite, best manage is not to manage. Amazing thing is End up my account growing easier and stressful than ever. I get a lot from reading here. The articles is kinda reminder in my self awareness during trading days.
You are right. On 5th August, I saw a signal to short positions in the GBPUSD daily chart. so I put a sell limit at 1.5600 SL 1.5700 TP at 1.5480. But when I saw the next day when the New York markets closed, I became doubtful because there is a possibility the price will rise and hit the SL. So I changed the TP becomes 1.5570 to secure my position. the next day I see, GBP dive sharply to touch my initial TP. So I only get 30 points from 120 points supposed. your article about “Set & forget strategy” is very true. like you said, doing too much; thinking too much and making too many adjustments can damage the trading. Thank you so much Nial…
Perfect comment for me to read, My first live trade on the eurjpy sell 0.1 @ 136.100, eight hours later exit the trade @ 135.644. Was worried about carry the trade over the weekend , and also the EMA crossing over. Will let my next trade play out as planned.
Thanks heaps for the article
Thank you Nial..exactly what i need to read. Its like you talking to me.. I am stunned at your intelligence as regards trading. You are good. Thank you thank you. Interference has been my issue.I cant wait to start the experiment.. You made a lot of sense..I will read this article everyday of the 7 days..Thank you.
Makes perfect sense to me! Thank you
Nial, were you watching me trade this past week? You are definitely talking to me. I feel like I could kick myself for the crap I did when I dabbled with well setup trades because I got itchy fingers.
Been using the awesome techniques you teach but I am to blame 100%.
Great point Nial’s, it make a lot of sense. (Discipline & Patience!!)
I agree, simplify the trading and quit looking for the holy grail.
I’ll give it a try.
Vancouver, BC Canada
Make sense.Let mother nature take it own course huh!Ok I’ll take your advise.Thanks
I agree with what you said but I still believe if you can check on your trade say once or twice a day without interfering with it is still okay.
Great article, lets go to play out our strategies.
Great Article Nial. Since i started trading only on the Daily Chart and applying the set and forget strat, have been more relaxed and gain more confidence as a result of consistent positive result. Thumbs up man
Hello Nial,good day.
One thing have noticed about your articles is your consistence in honesty.Really if one should abide by your rules,he/she will reap in the market for a long period of time.you have dealt with most of the key obstacles experienced in Forex trading,and you are highly encouraging, keep up the good work.
Thanks my greatest mentor for reminding us.
Very helpful advice. Now, the challenge is to actually allow it to help me in my trading. lol
You have hit the nail on the head with this piece of information. You have ascertained several time that the forex market is designed to trick, test and trap us.The best approach that minimise emotional roller coster is SET and FORGET Method of Trading. Keep the good job going Nial…..
Thank you for all your advice and support. Well chosen images, spot-on
Thanks again Nail this is one of the best article I will take your advice thanks again and again
O.k i’ll hold my hands up you have me cornered fair n square , it was me who messed with my trades, BUT coincidentally for the last couple of trades I have been brave enough to do as you have said and blow me down I have come out on top. It really is a confidence thing and I have taken action to clear all indicators of my screen and now just have candles on them to “light my way”
Anyway great lesson again . invaluable as usual.
Thanks a lot Nial,
This really helps, its kinda real and casual approach to business. Similar to what one does with his shop, farm or any othet source of income. Invest and wait…after all things do take time, and in the end.. its patience that pays off really well.
Thanks a tonnes.
Have a nice time.
Thank you Nial.
Trading doing nothing = Investing!?
You are absolutely righ bro…..for 2 weeks I lost a lot because I ignore your advise to do set and forget strategy…I’ve proved on my demo account all my position hit my TP. This is because I do what you’ve advised to me to set and forget my position….
Now I realize that what you’ve advised absolutely right…
And thank’s for remind us for this mistake……