On a major level, traders of all markets and experience levels tend to fall victim to impatience when it comes to expectations of returns. An attitude exists (especially among newcomers) that success is a given, and that it must appear quickly and without much effort. Nothing could be further from the truth. I say especially among newcomers because, as any successful, experienced investor/trader will tell you, investing is a long-term proposition. Success is measured in years, not weeks or months. Because of this tendency to expect the unrealistic, investors tend to easily slide into Deadly Sin #2: Lack of Clear Vision, because the grass is always greener on the other side. The tendency of all investors to become impatient with their system or technique is simply greed rearing its ugly head. Think you’re not the greedy type? Put some money in the market and you’ll soon learn otherwise. We all have a little voice in our head looking for more; some of us just have a voice that speaks louder than the next person’s.
On a minor level, or more accurately, on a practical level, traders often fall victim to impatience whilst in a trade. How many people can relate to the following scenario?
You analyze a particular currency pair. The criteria you’ve established for entering a trade are met. You set your stop loss and your profit target, and you pull the trigger; you’re in. Suddenly, now that you’re actually in the trade, things look different. There’s a level of resistance where there was none a moment before. The entire chart looks like a booby trap, just waiting to gobble up your trade. “If I can just get through this level, or that level…” you tell yourself, cursing your quick mouse-finger. The sweat starts beading on the forehead. You feel a bit queasy, but you’re not sure if it’s from excitement or anxiety. You clear the “spread”, and you’re actually showing a few pips of profit. “I knew it all along,” you say to yourself, and pat yourself on the back.
Suddenly, the market reverses course. You’re in the negative again. Now you’re shouting at the screen, and quite sure that the nausea is anxietyproduced. You reach for the Pepto-Bismol as the sweat starts pouring. This continues for another few minutes (or hours, or days, depending on your timeframe), and each time you feel a little worse about the trade. Finally, unable to take another moment of this excruciating torture, you glimpse a few pips of profit, and take it, closing the trade. At that exact moment (or so it seems), the market explodes, running to your profit target and beyond.
“Son of a...! I KNEW it!”How many of us have experienced this exact scenario? This inability to see the trade through to its conclusion is often caused by a lack of belief in the system or technique being employed. If you believed 100% in the reasons for being in the trade, you wouldn’t be anxious to get out.
6 The 7 Deadly Sins Of FOREX (And How To Avoid Them)