Donít Be Indecisive
When it comes down to it, the role of the trader is to take action. At every stage of the trade, you are require to act, respond and act again in order to ensure you get the best return for your investment. When you’re researching a position, you’re taking action and making decisions that lead to further actions (in actually opening the position). You execute the trade and watch for data from which you can take more actions to increase your chances of a successful outcome, and you constantly review trading performance to see if any additional action is necessary. It’s all about making decisions and choosing different paths for each trade to go down.
Some people are better decision makers than others, and under the pressure of the market environment where each additional second could be another few ticks off the value of a position, difficulties can frequently arise that cost real money. In order to see the best chance of success, it’s important that you realise the need for urgency in decision making, and that you are capable of making the right call when its required.
Indecision costs money
The more indecisive you are, the more money your position is going to potentially lose. Exposure to the markets in any form is a risk – a far greater risk than personally storing the cash under the bed. The longer you’re dithering, the greater the chance that you lose your capital, or at least some of the profits you’ve realised from the transaction. Throughout the trading day you will be posed with problems than need swift resolution, and the quicker you can take action, the better equipped you will be going forward.
Of course, this depends on taking the right action when you need to be decisive, and you may even miss out on a few opportunities or harbour a few regrets as a new trader for on the spot decisions that were made. This is nothing to beat yourself up about – making the call when it’s necessary in a clear, decisive way allows you to learn from your mistakes. Not making the call, or stalling over a decision, can cost you more up front.
The best traders are those that are prepared to make decisions and get them wrong from time to time. You should never underestimate the value of experience, and its as true in forex trading as it is in share dealing or trading CFDs or any aspect of life for that matter – you will learn from your mistakes, and you’ll get better at instinctively making the right decision as time goes on and you go through more trading scenarios.
When faced with a trading dilemma, it’s better to act now than to stall and act in 5 minutes. That could cost you serious money. That’s not to say there isn’t room for doing nothing and leaving a position alone – this is essential. But so long as you actively decide to leave a position untouched, and take more active, authoritative control over your trading account, you will be best placed to grind out a profit over the aggregate of your trades.