The question is more complex than it appears because mistakes often happen in pairs and flocks. The traditional culprits are under-capitalization, poor analysis, poor risk management, or even not following a solid strategy. While all of these seem eligible, we think the answer may depend on one thing: a lack of patience.
Patience is more important than anything else in trading
Many of you will say that the number one mistake in forex trading is incorrectly calculating your trading volume. This is a traditional answer given by most Forex analysts and experts.
This is a significant problem that many individual traders fall into, but even this problem can be entirely attributed to a lack of patience. Ultimately, think about what causes improper sizing: the “get-rich-quick” mentality. Simply put, it is a lack of patience.
No trading system
If you don’t have a trading system, or at least you have an unreliable one, maybe the reason is your lack of patience. After all, you should have spent more time developing a system to place your trades on it. You only spend time learning technical analysis or something else you will build your trading system on. Even if you did, you didn’t test it, did you?
The real trading system is being tested, and you should be able to understand what the expectations are. If you don’t do all this, you are simply trying to run before walking. A lack of patience will cost you money.
Breaking the rules
Let’s say you did everything right, and you have a trading system that is expected to bring you profits in the long run. But you sit in front of the trading plan in the morning and realize there are very few strong trading setups.
Unfortunately, many of you will be trading anyway due to a lack of patience. This will cause you to make bad choices and lose money, as the market will be somewhat directionless or at least out of line with your strength. Remember, sometimes, we are paid to sit down and do nothing while waiting for proper preparation.
Revenge trading is another embodiment of impatience. The reason is that you suffered a loss and are now nervously trying to make up for that money. Unfortunately, we have all been through this situation. You set up a trade that you thought was right, but some random event scared the market out of it. It’s hard not to take this personally, and indeed, the first thing you’ll think of is your money back.
But, by doing some revenge trading, you are more likely to lose money in addition to the original loss. By not waiting for the other proper setup, you are showing a lack of patience, which may be dead when it comes to forex trading. Remember, when you lose money, it’s over. But if it happens more than once, you will have little money to keep going.
Not doing a research
While the basics of trading never change, you will need to consider a lot of nuances. For example, you recently traded the futures markets using market data. This is something I have yet to do before because I come from the world of forex trading, so the true size of the market is something out of reach. Although anyone can make money in the futures markets without market data, it helps quite a lot.
Even after years of trading, there is always something new to learn. In fact, this is one of the great things about this business: it never stops teaching you if you are willing to learn. If you are not, then trading is not for you.
Not checking with yourself
The big mistake I used to make all the time was not checking in with myself. What I mean by this is to monitor my state of mind while trading. Quite frankly, some days could be better trading days. If your money is at risk and you find yourself in a very unstable or restless state, you need to stay away from the markets because they will find a way to stir up your tensions.
Nothing is worse than having some external issue causing you to worry or feel uncomfortable while trading, eliminating several days of winnings in a short time. I’ve been through this, and it’s one of the worst things you can do.
Why do we do that? Because you could be more patient. You don’t understand that there is always another day, assuming you keep your working capital intact.
The main lesson
We know this will sound cliche, but trading is really a marathon, not a sprint. In fact, I would say that one of the most important parts of trading is how many lessons you will carry on in your daily life outside of trading if you let it.
Learning to be patient is undoubtedly one of the main lessons we learn from the market daily. Patience is beneficial in dealing with almost any bug that a trader faces. Ultimately, you can usually find the solution if you just sit on the sidelines and simply watch things calmly and rationally. However, it can be challenging to do or see in the heat of the trading session.