In this episode of Truth About FX, Walter answers probably one of the most common “worries” of almost all traders: what if you don’t get enough trades. According to him, adding a few more into your system is always better than changing your rules. You will also find out which of the two types of traders are you and how your psychology is based on it.
Download (Duration: 04:51 / 5.8 MB)
In This Episode:
00:54 – not enough trades
02:01 – expand your horizon
03:25 – natural tendency
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. Somebody wrote in and asked, “What if I don’t get enough trades?”
Walter: Right, this is a great question. I think it’s pretty common and basically what he did was totally logical and we all kind of do this when we get into trading. We say, “Alright, I need to make x dollars per week, per month.” He worked it all out and he basically figured out he needed about 3 to 5 trades per week.
Then, when he went to his backtesting he was like, “Oh, I’m not getting enough trades here. I’m getting 1 or 2 a week and I need like 3, 4 or 5 a week. This is not going to work,” and so a whole lot of things came out.
What I would suggest here is you have a couple of different ways to go here. Number one is, I don’t think you want to force it. There’s two types of traders. Traders who wait in the bushes for an opportunity then they pounce. And then, there are those traders that just kind of throw everything at the wall and then they kind of see what sticks.
I am the kind of trader… I’m a hunter so I sit in the bushes and wait for the prey to come and then I pounce on it. He is kind of the same way with this trader and so he is like saying, “I’m not just getting enough opportunities.”
He can do a couple of things. He can add more trading systems. He could add more markets and both of those will probably work. What he doesn’t want to do is change his rules. It’s really tempting to change your rules when you run into this issue of not getting enough trades and so that is what I would suggest.
Traders who feel like they’re missing out, they’re not having enough trades that you probably should just expand your horizons. It can usually be just add another 10 markets. How many people trade the EUR/SGD? Not very many.
Most people trade the EUR/JPY or the EUR/USD but they don’t trade the EUR/SGD. They don’t trade the AUD/CAD or whatever. There are a lot of pairs out there that offer opportunities and so that is what I would do.
If you already backtest the system, you can add a few more pairs. Make sure that your system works on those pairs and then just add them to your arsenal. That’s kind of my recommendation.
There are other traders who don’t have these problem and they have actually the opposite problem where they are always kind of in the market. And so, what happens with these traders is they have the opposite problem and they feel like, “Oh no, I don’t want to take the next trade because I’ve had 7 losing trades in a row”.
They’re always in the market and they just feel like the market is not going to give them anything today or this week or this month so they don’t want to take the next trade. It’s a little bit different and they have completely different issues to deal with.
But, if you’re like the type of trader where you kind of wait and wait for the perfect setup, then really what you need to do here if you are feeling you are not going to reach your goals as a trader, you just need to add more markets and then later on, you can add more systems too.
Either of those should probably add more opportunities, more trades to run to your stats faster when you are building up your accounts. That’s what I would recommend.
Hugh: Cool! I think the natural tendency here also is to go down to lower time frames, right?
Walter: Yeah, absolutely.
Hugh: And that kind of messes things up most of time, right?
Walter: Exactly. It’s a different thing. It’s totally a different thing. I talked about it before. It activates the different areas of your brain. It’s totally a different thing. It’s like the difference between — how should I say it — riding a tricycle and getting in on a rocket.
If you’re riding a tricycle, you see what’s ahead. You go, “Okay, there’s a tree up there, there’s a dog — or whatever — there’s something in the path and I can plan my way around it.” But, when you’re in a rocket, you are strap in and you’re going like there’s no way around it.
That’s kind of the difference when you’re trading the M5 chart and the H4 chart, it really is. I totally agree with that. I am totally with you on that one. Absolutely.
Hugh: Okay, awesome. Thanks, Walter.
Walter: Thank you.