Why Patience Is So Important in Trading
FOMO is a very real thing in trading and if you are not careful it can cause a lot of damage to your trading account.
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We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://bit.ly/2HFykNd
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We have a quick question here about the moves we are seeing in the market right now, especially in Gold and Silver today and think this is such a great example of why patience is so important when it comes to trading.
As you all know we’ve had a great run in Silver and Gold recently with both of the two metals gaining considerably over the past few weeks and sessions, with Silver having a few days of back to back gains of between 4 and 6% just as an example.
Now, even though the fundamental certainly support these moves, there was no doubt a big push in the last few sessions that was also driven by FOMO, with traders leveraging up trying to get in on the move they missed.
The problem with this of course is that often it causes the market participants to chase moves at highly stretched positions, and with leverage that becomes a dangerous game. You see, with these type of FOMO moves, the fear of missing out on another move higher is enough to let people jump in at high leverage in the hopes of making a few quick bucks, but today’s price action and yesterday for that matter shows us why this is so dangerous.
From a fundamental point of view you want to be long this market, but if you weren’t long from a better price you seriously need to ask yourself where you think there is value getting back in the move, basically on the balance of probabilities, am I buying into something that has a bigger probability to move further or a higher probability to correct.
There were many traders who felt they missed the move in gold and silver recently and on Friday would still have felt bad that they missed the move, and often that FOMO can let us think that there will never be a pullback or the market will never correct again, it will just go up or down in a straight line.
There are of course reasons for Gold to go down today, we are seeing bond yields pushing higher and almost moving higher in a straight line today which has no doubt been one of the main reasons for this move in Gold prices as bond yields has an inverse correlation to gold.
But, apart from the intraday reasons for the move, the point is that the move or the correction we are seeing right now was overdue, apart from the move in yields, this was something that was overdue anyway.
So, the next time when you are faced with a decision to buy into or sell into parabolic moves in the market just take a step back and do some additional research on whether this is the best time to re-engage the market or whether there is more value to wait for a pullback.
Of course, there are sometimes we don’t get a pullback, and in those cases we miss out on a move, but rather miss out and protect your capital then jump into a move where the risk to reward doesn’t make sense anymore.
So, hope that helps with your question, any others please let us know.
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If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
----
We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://bit.ly/2HFykNd
-----
We have a quick question here about the moves we are seeing in the market right now, especially in Gold and Silver today and think this is such a great example of why patience is so important when it comes to trading.
As you all know we’ve had a great run in Silver and Gold recently with both of the two metals gaining considerably over the past few weeks and sessions, with Silver having a few days of back to back gains of between 4 and 6% just as an example.
Now, even though the fundamental certainly support these moves, there was no doubt a big push in the last few sessions that was also driven by FOMO, with traders leveraging up trying to get in on the move they missed.
The problem with this of course is that often it causes the market participants to chase moves at highly stretched positions, and with leverage that becomes a dangerous game. You see, with these type of FOMO moves, the fear of missing out on another move higher is enough to let people jump in at high leverage in the hopes of making a few quick bucks, but today’s price action and yesterday for that matter shows us why this is so dangerous.
From a fundamental point of view you want to be long this market, but if you weren’t long from a better price you seriously need to ask yourself where you think there is value getting back in the move, basically on the balance of probabilities, am I buying into something that has a bigger probability to move further or a higher probability to correct.
There were many traders who felt they missed the move in gold and silver recently and on Friday would still have felt bad that they missed the move, and often that FOMO can let us think that there will never be a pullback or the market will never correct again, it will just go up or down in a straight line.
There are of course reasons for Gold to go down today, we are seeing bond yields pushing higher and almost moving higher in a straight line today which has no doubt been one of the main reasons for this move in Gold prices as bond yields has an inverse correlation to gold.
But, apart from the intraday reasons for the move, the point is that the move or the correction we are seeing right now was overdue, apart from the move in yields, this was something that was overdue anyway.
So, the next time when you are faced with a decision to buy into or sell into parabolic moves in the market just take a step back and do some additional research on whether this is the best time to re-engage the market or whether there is more value to wait for a pullback.
Of course, there are sometimes we don’t get a pullback, and in those cases we miss out on a move, but rather miss out and protect your capital then jump into a move where the risk to reward doesn’t make sense anymore.
So, hope that helps with your question, any others please let us know.
-----
If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
