Beware! The Time Money Trap in Trading
You are probably familiar with the old adage that ‘time equals money’, and while this is very true in many facets of life such as your day job, it has never been further from the truth when it comes to financial markets trading.
Less is more – and more is infinitely less. I have taught thousands of private investors across the globe, and one unifying trait of the newbie is the overwhelming desire for them to simply spend hours on end glued to the screen, watching price action, trading the trade and talking the talk.
This is counter-productive!
The charts and broker platforms are like temptresses with their moving bars and flashing lights which can be compared to the bright neon lights inside a casino – the longer you eagerly stare at it, the more likely you are to become seduced into pulling the trigger and place a trade – perhaps out of boredom.
That trade turns to a loss. A trade out of revenge is then placed and quickly turns to a loss. And finally, just like in a casino where the third loss is often the biggest, the third trade is placed out of anger in a desperate bid to make back the losses plus a little bit extra. Sound familiar? We have all been there!
If you have a strategy and only trade if the rules for this strategy are fulfilled then you will be head and shoulders above 92% of people who trade financial markets.
Even if it means waiting for hours, days or even weeks – most of the battle in trading is the patience and discipline involved and these two core skills have consistently proven themselves to be the hardest to master.
Consider the ‘opportunity’ flow of any given strategy. You are likely to have a disproportionate frequency of wins to losses. You could essentially find that the winning outcomes all come at once in addition to your losses – just like busses in London. But to be in the opportunity flow intra-day you will have to constantly man the charts –unless you have the nous to automate a strategy.
So, it will make sense to choose a time frame which will give you the time and return synergy – where you can receive the optimum amount of reward for the time spent in front of the screen.
I spend no more than ten minutes per day “working” and spend the rest of it enjoying the lifestyle. My trades are set up, and I can then walk away. This is what the daily chart has done for me as I can always be in the opportunity flow from just doing this. This is a far cry away from trading the hourly time frame. I would have to spend hours on end glued to the screen if I was to do that!
I, like you, chose to trade on a forex market to make a good capital return on my money rather than to watch a bunch of moving bars all day. There is a common misconception that intra-day traders on the shorter term time frames make infinitely more percentage return than the end of the day trades. This, however, is an illusion.
Unless you have an automated system trading on your behalf, you have your money traded by someone else, or are following forex signals – you are receiving the best return in % gain (and even in % loss) if you trade the daily timeframe providing you have a strategy which works.
If you do not have a strategy which works, then seek trader training from a mentor who has credentials and results to prove they are the real deal.