Patience will pay (and GBPUSD trade update)

Hope you are going well…

Sometimes I think the name of the game of trading is patience…

You need to be patient on everything: Wait for the market to trigger your order, wait for the right signal, hold your trade for longer, and so on and so forth.

Here are a few examples where patience is playing a critical part on my trading:

EURAUD Analysis

The EURAUD its trading at an important level… Here is my long term chart:

EURAUD Long term charts

As you can see, it’s trading near a LT support level around 1.4326. But it’s been like 3 weeks since the market has been trading around that level.

I’ve been waiting for the EURAUD to break either extreme of the short term range… but it just wont break through that range…

Here what the short term chart looks like:

EURAUD Short term charts

As you can see, there is a pretty clear range, so I’m still waiting for it to break either side of the range (which will trigger either a bullish or bearish condition) and then I will look for trade opportunities in the same direction.

But again.. patience my friends…

GBPUSD Trade Update

Another example where patience has been the name of the game…

I took a long in the GBPUSD two weeks ago, I held it over the past two weekends, over the FOMC meeting last week and I still have no intention to close that trade.

Here is what the ST chart looks like:

GBPUSD Trade

Was I tempted to close my trade?

Of course I was… Last week I had at one point 6 or 7% of return only with this trade… We always get tempted, regardless of the years of experience you may have, that’s human nature… The right question is whether you did it or not? In this case I haven’t…

I’m looking for a 9.5% return in this trade so I think its worth the risk to hold it and see what happens.

But the real reason why I’m holding this trade its because I already have a plan, and I intend to follow it.

I also know that almost every decision that I have made while I’m already in my trade, I can almost guarantee that it will not be in my best interests.

Do you feel in the same way?

By the way, my TP is at the same level from last week and I have moved my SL to get just a few pips on my favor in case it keeps retracing back.

Patience my friends… the name of the game is patience!

Your turn

Have you been trading the EURAUD lately? What do you think about my analysis?

What about the GBPUSD? Did you take this trade? Are you still holding it?

Do you take trading decision while you are in a trade?

Please comment.

Tags: , ,


Raul Lopez

I’ve been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .


  • Arafiena Pius

    Hai Raul, Thanks for your very quick reply,and the information therein. i guess,after all said and done, it explains the difference between the swing and day trader

    • Raul Lopez

      Exactly… that’s the main difference between a swing and a day trader… And I guess you are more like a daytrader?

      • Arafiena Pius

        You got it there, i’m a day trader and still new to forex. Thanks for your confirmation, meanwhile, i will continue to study and practice the long term trade on demo.

  • Arafiena Pius

    I have been going through the discussions between Raul and Ofer with great interest. i seem to agree more with what Ofer is proposing.That is cashing out your profit at the first sign of retracement. and still place buy stop just above the high in case it later decides to continue its upward trend. I would say this is actually playing safe considering the unpredictability of the market.
    Moreso, i believe money and risk management should apply by maximising your profits and minimising and managing your losses.

    • Raul Lopez

      Hey Arafiena,

      Yes, Ofer has a good point!

      My only concern is that if you get out at the first sign of retracement you are going to miss out… because sometimes you dont get second opportunities…

      What he is proposing is easier said than done, I mean it’s very easy to say when the moves has already passed…

      Also, try it on a live account and your emotions will kick in, and that has the potential to have disastrous results on your trading account.

      But hey, that’s just my point of view, I’m not saying it doesnt work… It’s just that I wouldnt feel comfortable doing it…

      Cheers!

      • Ofer

        Hey Raul,
        I invest a lot of hours to fine tune my SR drawing capabilities. I have tried several methods and I am getting better. I actually feel that I become an SR pro. However, there are still market turning points which I cannot explain by SR. So I have downloaded “grid builder” an indicator that builds a grid according to your parameters. I configured it so it will draw lines on round numbers every 50 pips, and guess what… these round numbers can explain most of the turning points of the market.

        I wonder how much importance do you give to those round numbers? Do you think it should be a key factor in trading? Cause right now they seem to be the most reliable SR levels. Maybe not the most accurate but the most reliable in signaling market turning points…

        So what do you think?

        Ofer

        • Raul Lopez

          Hey Ofer,

          I know, drawing S&R requires practice and experience, it’s something that you just need to do over and over and then they’ll come more natural…

          About the round numbers, look, sometimes they work and sometimes they dont…

          Personally, I dont trust in them, why? Because I only trust the levels that the market is actually taking in consideration… That’s the main principle of my methodology: to follow the market.

          Buy hey, again… this is just what works for me, if you find them useful, just use them :)

          Thanks you for your questions/comments offer! As I said before, they add to the conversation…

          Have a great weekend!

  • Ofer

    Let me propose a different approach and I’ll be happy to hear your opinion:
    As I see it, after such a long rise it’s only natural to expect the market to retrace before (and if at all) it will further rise. I don’t see why not to cash out your profit and place a buy stop just above the high of the long bar. In this way you maximize your profit from the market rise, and you free yourself to find even more small setups while the market retraces. At the same time you still meet your assessment that the market will keep rising, but at least you take some actions in case you are wrong, isn’t it? will be happy to hear your opinion Raul. Also thanks for sharing your EURAUD analysis.

    • Raul Lopez

      Hey Ofer, thank you for your thoughtful comment…

      The reason I dont do that its because I dont take every breakout (most of them are false breakouts), so I dont know if I’m going to get a new signal…

      Now, if I do get a new signal, while I already have opened a trade, I’ll be more than happy to take a new trade (provided that I have nothing at risk on my first trade – which is the case with this trade).

      Makes sense?

      Let me know.

      • Ofer

        Not so much… sorry. You made 6% return, and you’ve risked these 6% for a “belief” of another 3.5%. I fully support your persistence and confidence, however, you are risking these 6% unrelated to any signal, just to your analysis and prediction of a total of 9.5% rise (which is based on SR, yes, but it still a belief that the market will complete the move to the next SR. It doesn’t always). Again, if I were you, I would cash out at the top of the rise and put a buy stop. In this case I don’t need any signal, cause in the first place I rely only on my analysis, my prediction. If I am right, the market will rise to the 9.5% level and I will make 9.5% like you. If I am wrong, I have secured 6% and maybe made additional 1% or 2% along the retrace. But most importantly, I finished this trade with a minimum of 6% return without harming a bit the full potential of 9.5%.
        Maybe I am missing something, but for me it sounds the most rational thing to do.
        This post makes me think about something and let me know what do you think of it: Just like you’ve said all along, one of the biggest secrets for success in fx is to embrace and flow with our fears and emotions, and to make a plan and stick to it. I wonder if there might be a chance that in the process of training ourselves toward that goal we actually act over-confidently, in order to control our emotions, we use it like a counter force. We actually fight our known enemy (fear and emotion) with our other enemy, over-confidence (which we are not yet conscious of, and no one write any articles about it to worn us)…
        It’s like we stick to our plan, not because it is so good, but because we don’t want to give way to our emotions. Maybe our plan should include some check points in which we can take decisions according to the market progress. We cannot expect to have a perfect plan if we cannot adjust it along the way, adjust it within predefined boundaries of cause.

        • Raul Lopez

          Yes, you are missing something very important… The decision looks easy on hindisight… It’s always easy to trade on the left hand side of your charts… should’ve done this or that, etc…

          The challenge comes when you are trading on the right hand side…

          And there is no way of knowing that the market was going to stop at 6% and retrace back… For instance, what if the market just stopped there for a few bars and then it went back straight up and hit the TP order? That was also a possibility…

          Trying to take advantage of every possible swing of the market its just impossible…

          So what’s left for me?

          Stick to my trading plan…

          I know that if is I stick to my plan, I’ll be ok, even if the market retraces back and hits my SL order… I know that if I do this a hundred times, I’ll come ahead of the game on most of them…

          Something I’ve learned in the many years that I have traded is that what I think about the market is useless, the market its going to do what its going to do regardless of what I think…

          Whats your take?

          • Ofer

            I have just proposed something and I still believe it, not arguing here. Generally speaking I think that a good plan should take into account the possibility that the market will not complete the full move we predict. You can just close the order and place a buy stop a few pips above. If the market will resume its up direction after a few bars, your buy stop will catch it there. You see what I mean? you still work according to your plan, but you have just adjusted it on the way, within a predefined boundaries. If you wouldn’t put the buy stop then you betrayed your plan and your analysis and surrendered to your fear, but if you put the buy stop, you’re good.

            I don’t think you should do that each hundred dollars you earn, but you should examine the progress and if you identify a slowdown in trend, get out and buy stop. At most you’ve lost some pips of the spread and additional few pips for a safe zone. BTW I don’t trade the left hand side. I entered this trade following your great signal, and I did just what I said. It’s in demo and it wasn’t according to a plan, but it gave me an insight regarding the plans I will build as a live trader.

            Since than I have wiped out my account of $14K with my hedging experiments, but I say thank you for that important lesson before I go live.

            BTW, following your recommendation I have checked the brokers you’ve mentioned and finally registered with Oanda.

          • Raul Lopez

            Hey Ofer, yeah, no worries, no arguing here… just different point of views… There is no right or wrong…

            Let me tell you, you have a point… The only thing that I’m worried about what you are proposing is that… it could be dangerous to start thinking “Ok, I’m going to take profits here and then re-enter once it breaks through that level…

            Those “slowdowns” as you call them are just part of the game, and I have learned to live with them…

            Now, I’m not saying that the way I handle each trade is the only way to handle, this is just the way I feel comfortable… you know what I’m talking about?

            Anyway… as I said, you have a point, and if you think it will do good for you, go ahead an use it.

            Wow!!! 14K… what kind of hedging experiments? What do you think about what I mentioned on my email about hedging?

            Oanda is a good one…

            Thank you for your thorough comments!

            Have a good one!

          • Said

            Hi Ofer, i was interested in reading the comments on Raul Article and read your discussion.

            If you allow my opinion, i see that you have great potential to become a good trader but you should still stay patient ad somehow practice till you have your plan (not a plan or the plans: as if you talk about a plan, this means ”indirectly” you are ready to lose money to check it if right :)).

            your next step should be not thinking about revanche or gaining your money back but working on a single well defined, detailled plan, write it and practice it on demo for at least 3-6 months or even 9 months and see how your plan works in reality, if your plan works as you predicted and gives you steady profit and trading becomes clear and easy task for you, you will know that then after growing your demo account as much as you want.

            when you reach that step and you trade very good on demo, pay attention to follow your plan when trading with real money. (you will experience excitement and forget about my comment and also your plan)

            telling that Raul should take some profit at that pick makes of you instantly a good trader but doesn’t guarantee that you will do a better trade next time on your own.

            If i were him, I would take profits right away as i know that i shouldn’t go against the river law and that no body can rule the waves moreover i shouldn’t fall in love with a trade.

            good luck boy.

          • Ofer

            Hey Said,
            Thanks for your care and your optimistic view about me (:

            Let’s make a long story short, we are here to trade, to buy low and sell high. But we are humans and uncertainty makes us afraid, so what do we do? We rationalize things.

            We use SR and trend lines to tell us when it’s low to buy and high to sell, and we use a plan that helps us to rationalize our trade (BTW, I think that using all other indicators is a simple expression of fear). The plan should force us to SL and to TP according to a trade plan we built in an emotionless moment.

            However, if we examine this emotionless moment we see that it belongs to the past, that it based on some things that humans cannot do and these things are a. predictions and b. think about everything, cover it all. That’s why we need to adjust the plan according to the unfolding reality.

            Why do we praise the SL? cause SL makes us feel brave, and brave is the enemy of fear, but rationally thinking, a SL is an adjustment, we adjust our trade to reality. SL is also like an early proof that we were wrong so it’s easy for us to accept it.

            Why do we afraid of early TP? cause early TP is not brave, it’s even has a connotation of fear (take the money and go), it requires us to adjust, to do something that reminds us our fear, and we afraid of fear, so we don’t do that, we stick to the plan, although its against the basic rules of make profit and run away from loss. Early TP is also done while we feel we are right, the market went at the direction we thought, so it’s hard to go against ourselves. But we also should be able to accept the fact that we were right in the direction, but we still don’t know if we are right with the amplitude, with the distance it will go. I think that most of the times we will be only partially right, and maybe you and Raul can confirm that based on your experience.

            As a trader I will make a plan to rationalize my fear, but I hope I will never let myself get into a “planned loss” even if its temporary loss, and we don’t really know if it’s really temporary, do we?

            SL is the only place I am willing to loose. Not happily but willingly, like an inevitable side effect of trading. Other than that every plan I’ll make will include a paragraph of potential exits along the profit path. These exits will be expressed in prices or in a rational descriptions of certain market behaviors. These exits will also include a profit continuation element like a buy stop above the market and below my planned TP.

            Plan adjustments should be part of any plan.

            We need to overcome fear, but not less important, we need to overcome the fear of fear.

            I think I have said enough about this subject (: so I will leave it alone now.

            Have a great day Said and Raul

          • Raul Lopez

            Hey Ofer, thank you for your contributions… they certainly add to this blog :)

            Cheers,

          • Ofer

            Nice piece!
            There is no way Im going to waste 6-9 months in demo, and there is no point at that. A demo is emotionless, and a plan of 6-9 months can be crashed down like any other plan. I might sound like a reckless person, but believe it’s far from that. Im just a rookie that still has the joy of free thinking before getting all the scars, and hopefully I will maintain this thinking while bleeding…

  • Himanshu Dutta

    NoN hUman behaviour is required in the markets, that you have !!
    excellent , this is the execution that make differences in the set of trades and overall profits are generated !! like mark douglas said !

    • Raul Lopez

      As Mark Douglas said…

      Thank you as always for your comments!

      Cheers,

  • tp

    Hi Raul,

    The GBPUSD trade sounds like a good plan. I was trading off the H4 chart and couldn’t find meaningful retracement to join the trend move. How did you decide where to join the GBPUSD after it broke the SF channel?

    EURAUD looks interesting. I actually have pending orders to get long EURUSD and AUDUSD! :)

    • Raul Lopez

      I took the GBPUSD trade once it broke a short term range on the 30min chart…

      I’m still waiting on the EURAUD and I agree with you on the AUDUSD as long as it keeps trading above 0.9377 I’ll be looking for long opportunities.

      Good luck!

      • akinola

        i will l star the AUDUSD.
        at any level advice.
        more over i have no clude how to start. please help me through the first stage.
        thanks