Home / Psychology / The Power Of Patience And Why Traders Lose – Reviewing The Past 2 Weeks

The Power Of Patience And Why Traders Lose – Reviewing The Past 2 Weeks

The last 2 weeks have been particularly interesting and they make for a great case study why and how most traders end up losing money. Over the past 2 weeks, there was little action for us reversal traders. A small win here and there, a few losses when the early reversal turned around again but overall all trades averaged each other out. At the same time, there were lots of great setups building up but the trigger just never really came which tested the patience and nerves of so many amateur traders.

Judging from the emails in my inbox, there were tons of traders who just couldn’t sit on their hands and they wanted to trade so badly. I saw many people taking premature trades, entering way too early and then getting the what they deserved – an obvious loss.

Then, during the US session yesterday (Friday), a few great setups happened simultaneously and I chose the NZD/CHF and the NZD/JPY which had good profit potentials and a very nice reversal structure.  You can see that both trades netted a 6 R-Multiple profit. However, 90% of all the traders still ended up being frustrated. Why? Because they lost so much money on their previous ‘dumb’ trades that even 6R wasn’t enough to recover their losses. Some traders messaged me that they were so frustrated that they didn’t even pull the trigger and missed many of the Friday reversals.

The point of this little article is it to highlight the power of patience and help you understand how so many traders are their worst enemies.

 

Here are the most important lessons that I drew from the past 2 weeks of interacting with our traders and from judging the emails in my inbox:

  • Most people are not selective enough
  • Traders get easily bored after a few (sometimes just 1-2) days without signals
  • They bend their rules or completely abandon them just to get into a trade
  • They cannot cut a loss even though the trade was a bad one to begin with
  • Their unnecessary losses amount to such a large amount that the good trades cannot make up for it
  • Traders get frustrated during those periods and then miss the real good trades
  • They get scared and can’t pull the trigger and then miss the actual entry with all the confirmation
  • This then leads to taking dumb trades because they know they messed up and want to make up for it
  • This is the beginning of the end

I cannot stress the important of patience enough. 4-8 good trades a month is really all you need. Save your bullets for the opportunities where all the things line up – the AAA setups come more often as you think but you have to be prepared and emotionally ready. You cannot burn through all your emotional capital before the opportunity presents itself because then you will not be able to maximize your profits.

It is such a common pattern that the market first shows you plenty of fake signals and signals that don’t work out and that’s totally fine. Not all trades and 80% of all the trades you take will average each other out but the remaining few will be the ones that account for almost all of your account growth and you have to be ready.

 

example

 

Quick trade review

Left NZD/CHF

Price moved into a major resistance. It put in a triple top and the highs failed to break higher. We can even see how the high slowly started to turn and started to make lower highs. There was also an RSI divergence. Price then broke very strongly below the 20 SMA and it even came back to retest the 20 SMA as a second signal.

This was as textbook as it gets from the standpoint of a market top structure.

 

Right NZD/JPY

The transition here on the 1H is another great example of how reading market structure can help us understand what is going on inside price. Price went from making higher highs to making lower highs. The red area is a strong resistance area which adds context and confluence to the setup. Price retested the 20 SMA multiple times but always kept pushing into the 82.9 area while making lower lows – classic transition structure.

As the highs got lower, the odds for a successful short reversal kept increasing and seeing the weakness on the other NZD pairs, this made for a great opportunity as well.

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6 comments

  1. Rolf, its just crazy n mindblowing u can patiencely eyed these setups, and decide to pick these among many others…it just dont make my sense…im really out of words, u r a pro man!

    • Hello Antoni,

      as I said in the article, I took other trades over the past 2 weeks, but they canceled each other out. Some small winner, some losers but it shows that being patient and managing risk important so that you are then able to max out profits when the good trades come.

      Rolf

      • Thank you Mr. Rolf. I learn lot from this article . I got good entry in NSDJPY usding 4h chart breaking of 20 SMA & pin bar confirmation. If I am correct AUDCHF also show same structure Like NZDCHF. Thank you

  2. Hi guys,
    i spend the last 3 days reading EVERY article on TRADECIETY and i just wanted to give you guys credit for having some of the best trading content out there. I really like to read about trading psychology and setups for the new week. Additionally your journeys impress and inspire me.

    Keep it up,

    Niko

    • Hallo Niko
      das freut mich zu hoeren und in 3 Tagen alles zu lesen ist echt gut 🙂

      In 2017 werden wir einige Neuheiten praesentieren hier auf Tradeciety.

      Gruesse
      Rolf

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