In this episode of Truth About FX, Walter talks about the reason why winning trades take time while losing trades are faster at hitting the stop loss. According to Walter, it generally depends on your trading style and psychology. He also shares some useful points to get yourself away from over-analyzing and taking profits too early.

Download (Duration: 8:35 / 9.82 MB)

In This Episode:

00:39 – winners test patience

01:50 – rounding around

03:15 – getting blasted

05:28 – exercises to try

07:37 – trick yourself

08:00 – cognizant

Tweetables:

Why did you take the trade? [Click To Tweet].

Remind yourself that you need to stick to your rules.  [Click To Tweet].

Move to breakeven or pull the plug on a bad loser. [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. This is a question from one of your students. This person asked: why do you think winners take awhile to reach the target while losers are quicker to reach the stop loss?

This person has a win rate of about 70% on all markets but they said they tend to observe that “Winners test my patience more than losers giving me a chance to analyze before I close”.

What do you say to that?

Walter: That is a great observation. I agree. Just this week, I had two losing trades and I woke up and one of them had gone 73% on the way of my stop and so I dumped it immediately when I woke up.

I sleep during the New York market. I live in Asia and I see the Asian market or I see them open, anyway, until they close, basically. I see the London open and then I pretty much go to sleep. If I stay up until 11 0’clock where I’ll see midday, basically, in Europe.

I do not see the New York open and when I wake up, it is basically before the New York close. I miss most of New York so what happened during New York this week was it took one of my trades all the way, 73% on the way of my stop, so I dumped it.

Then the next one, it just totally stopped me out, like overnight. That is typical. When you think about it, what is probably going on here with this trader is you are probably a reversal trader.

You probably take trades where you see the market rounding around and you think it’s made a high and it’s going to start falling or it’s made a low and it’s going to keep going up. That is probably the style of your trading.

If you think about it, it makes sense because if you think the market made a top and you are selling it and you are wrong, it’s going to continue on and it keep going higher. Then, what it’s doing is it is just resting there and it is going to blow through your stop loss.

Whereas, if it is turning around and it takes a lot for a market that is going in one direction to turn around. That moment has to shift, slow down, and then turn around and accelerate in the other direction.

Usually, if you are wrong, you’ll know straight away.