One of the keys to successful trading is eliminating any feeling of ‘needing’ to be in a trade. Traders often become fixated on believing if they miss ‘this trade’ there won’t be another one like it for a long time, their lack of experience and time in the market is the main culprit behind these feelings. This is not the proper way to think if you want to trade successfully. The fact is, there is always another trade, and most of the time there’s a better one right around the corner.
In what is perhaps an ironic ‘twist’ in the path to trading success, you almost have to not care if you are in a trade or not. Eliminating any ‘pressure’ or need to trade or make money is a good first step toward developing the proper trading mindset.
One of the most important facts of trading that I always remind myself and that helps me remain patient, is that the market will be there tomorrow. Starting today, I want you to remind yourself every day that “The Market Will Be There Tomorrow”. Write it out and hang it on the wall in your trading room if you need to: “The Market Will Be There Tomorrow” is now your trading motto.
Here are some common trading situations in which simply reminding yourself that “the market will be there tomorrow”, will help you stay patient and in a mindset that’s conducive to successful trading…
Getting too cocky / over-confident
So you just had a big winner? Feeling good about yourself? Feeling like you ‘own’ the market and that it’s now only a matter of time before you’re raking in the cash with ease?
You’re in danger. Extreme danger.
Getting cocky after a winning trade or after a few winners is usually what happens to most traders right before they have their biggest losers. It’s at this time, after a big winner / nice trade that you really need to stop and remind yourself that the market will be there tomorrow. Close up your computer, take a break for a couple days, take the rest of the week off, you need some time to let the cockiness subside, or else you will lose all the winnings you just made and probably more.
The market isn’t going anywhere, opportunities will be there when you come back. For now, enjoy your winning trade and step away from your trading screen for a few days.
Exiting a trade too soon
How many times have you entered a good trade and then as soon as it doesn’t do exactly what you would like it to, you close it early, only to see it play out in your favor a few days later? This is a mistake many traders make and it’s born out of feeling pressure again. You feel pressure to exit the trade because you fear it will continue to not do ‘what you expect’ and may turn into a loser.
Exiting a trade too soon is an emotion-based action and simply makes no sense in most cases. Assuming you’re entering on a strong price action signal and you’re not just over-trading, and you’ve set your stop loss properly and managed your risk properly, you have no logical reason to close a trade early in most cases. You need to give trades time to play out, give your trading edge (strategy) time to work for you, otherwise you’re voluntarily lowering the probability of your trading edge making you money over the long-run.
To help you stop exiting trades too early, remember that the market will be there tomorrow. You don’t know what the market will do tomorrow, and just because it’s against you by 25 pips, doesn’t mean it won’t reverse and move significantly back in your favor tomorrow.
Always base your trading decisions on two main principles:
1) You never know for sure what price will do tomorrow.
2) What is the price action on the chart actually doing vs. what do you ‘think’ it ‘might’ do?
If there’s no obvious price action based reason to close your trade early, then you need to leave it open and let the trade play out, otherwise you’ll never make any money! Don’t worry about what you think might happen, worry only about what’s really happening. A slight retrace against your position isn’t enough of a reason to exit a trade early. There are times it makes sense to exit early, like when the price dynamics are clearly changing or you get an obvious price action signal against your initial position, but these instances are usually the exception to the ‘rule’. Most of the time, it pays off over the long-run to ‘set and forget’ your trades and to help you do this, remember that the market will indeed be there tomorrow.
If you’re dealing with a period of major family stress or perhaps some life-changing family event, like the birth of a child or a death in the family etc., by all means, don’t trade during these times. When important things like this are happening, you need to remember that you’re not going to be in the proper trading mindset and so you won’t be able to make good trading decisions.
Just remember, the market will be there tomorrow, so take time away from the market when you need to and don’t make financial decisions when more important things are happening.
Jumping into a bad trade / over-trading
This one is obvious. If you’re sitting at your trading screen and you’ve analyzed all your favorite markets but you still don’t see any obvious trades ‘jumping out’ at you, it’s at THIS time you really need to say to yourself, “The market will be there tomorrow”.
Similarly, you don’t need to sit there watching the market all day. It’s not going anywhere. If there’s nothing happening and no obvious trades are setting up, close down your charts and come back tomorrow. Even if you’re in a trade, after you’ve checked in on it for the day, there’s no point in sitting there for 4 to 5 hours at a time just watching it. If you do this, you’ll probably end up making a stupid trading mistake like exiting before the trade has a chance to move or entering another trade / over-trading for no reason. The market will be there tomorrow, so you don’t need to sit there and obsess over your trade all night. Go to bed!
Simply reminding yourself that the market will be there tomorrow will help you remain patient, but it probably won’t be enough.
In order to get into that trading mindset that I discussed in the introduction of this lesson, you’ve got to have ‘distractions’. Your goal should be to reach a point where you literally ‘don’t care’ if you lose or win on any one trade, because you know that trading success is measured over the long-run, not by any one trade.
Having a steady job / source of income will help remove any pressure you might feel to trade or make money from trading right now. This, ironically, will likely have the ultimate effect of making you more money faster because you will feel less ‘need to trade’ and emotion in your trading, and as a result you’ll be more in-tune with the market and will have a much higher chance at trading from a mindset that’s conducive to profitable trading. Also, having hobbies that get you away from your computer like golf, working out, etc., will help.
Trading higher time frames will also help keep you patient. The daily chart time frame and 4 hour time frame will go far in helping you remain relaxed and patient with your trades. Especially when trading the daily charts in an end-of-day manner, you can simply check the markets once a day shortly after the New York close and either set up a trade or walk away and come back tomorrow if nothing formed. After all, the market isn’t going anywhere, it will be there tomorrow and every day after that. So, you need to use this fact to your advantage and chill out a little about your trading, relax, and start using time to your advantage rather than constantly feeling like you’re fighting it.