It’s a well known fact in forex, binary options and stock market trading that time is needed to increase profits. Not many people are happy about, but as sad as it sounds, it’s also very true. If you have ever made any investments then you should know that you need more than just one day to get the job done. If you happened to be lucky in the past and you made profits by trading short term, did you ever manage to do it again? If yes, then how many times? Probably very few.
Forex traders who have had success are aware that a 1-minute market can move forward a little, in five minutes it will move further again, and in sixty minutes yet again. Who knows how far the market will go in a day or in a week. Traders who lose more than they gain tend to trade within very short periods of time and that narrows their potential profit automatically.
This means, they limit their profits and gains on purpose and keep going with unlimited losses. It’s no wonder then that so many traders come up with very poor results in short-term trading. They have locked themselves in a hopeless situation and they keep thinking that it’s possible to earn money during one day just by catching downs and ups of the market. This theory does seem rational, because if you trade in one day timeframe and you never leave positions open overnight, you just don’t rely on major changes of the market and news events. This also means narrowing your risks, but it is not correct for two reasons.
Firstly, your risk is under your control. In binary options or forex trading, the only control you have is the control over stop loss points (this is the point where positions close). Of course, there’s always the probability that when the market opens in the morning, it could open with a gap exceeding your stop even though it rarely happens. Even then you can limit your losses, by having stop loss points and wiling to close loss-making trades. Winners don’t stick to losses, losers do.
As soon as you set positions with stop-loss points, you can lose only a fixed amount of money. Since your stop-loss points limit your risk, there’s no matter what time your position opens. The risk to lose is the same and it doesn’t matter whether you by at the all time low or all time high point of the market.
Refusing to set positions overnight means limiting the amount of time that brings growth to your investments. Sometimes, even when the market opens against us, we cans till be in the right direction because the market is to open in favour of all us most times.
More importantly, when you finish with trading at the end of the day, or even worse, at some moment you just made up (say five or ten minute intervals), you radically narrow your potential profit. Keep in mind, the big difference between losers and winners is that losers stick to their losses and winners don’t. Another distinction is that winners keep their winning positions while losers leave the market too early. And losers don’t wait for winning positions – they are happy to make any profit at all, so they leave the market too soon.
It will be impossible to make big money, if you don’t learn how to stick to winning positions. And the longer you stick to them, the larger the potential profit can be. When farmers sow fields, they don’t dig up the plants to see how they are growing, they let them grow and sprout. Traders should learn from this natural process, their success is not much different from successful farming. To cultivate profitable trading, traders too need time.