Waiting until the market comes to you. What does this phrase mean and what trading plan can we build, to execute FX trading strategies based on the concept?

May 6 • Forex Trading Articles, Market Commentaries • 1452 Views • Comments Off on Waiting until the market comes to you. What does this phrase mean and what trading plan can we build, to execute FX trading strategies based on the concept?

If you regularly peruse the most popular FX trading forums, or read books and articles on the subject of FX trading, you might constantly stumble across the phrase; “wait until the market comes to you.” It’s an evocative phrase, conjuring up ideas of: virtuous patience, laying in the long grass primed in hunt mode, setting traps, slowing down, kicking back and just waiting for those pips and profits to be banked.

The phrase and concept actually has hidden depth and pathos. Firstly; for those amongst us who fully adapt to and adopt the phenomenon as part of our trading method, it can immediately put to rest any thoughts and associated bad habits of: chasing the market, overtrading and trying to force trades through the market, that don’t actually match the parameters placed in your trading plan. Secondly; adopting the concept can slow the overall trading process down and help to concentrate traders’ minds regarding their technique, for example; where to place market orders, such as stops and take profit limit orders.

Traders who let the market come to them, will also be encouraged to carefully concentrate on their price action analysis skills and they’ll ensure they’re constantly on top of breaking and calendar news events. Ironically, simply by adopting the complete process of “waiting for the market to come to you”, you’ll be adhering to many of the long-standing trading advice and rules, which experienced and successful traders will constantly attempt to reinforce.

Examples of waiting for the market to come to you could involve placing market orders at certain critical levels, based on your projections and predictions of certain scheduled calendar events. For example, you might consider placing a market entry order close to the first level of resistance, shortly before the result of a high impact event is broadcast, as you anticipate news which will create bullish sentiment for the FX pair you’re trading. As price reaches your entry order, you’re in the trade as the market moves to you and your order, thereafter, you may look to close out the order manually, or through code applied on your MetaTrader platform and you might have set a take profit limit order to facilitate this strategy.

Concentrating on the phenomenon of the market coming towards your predictions and where you place your orders, is an extremely powerful psychological tool. Many experienced and by association profitable traders, will often refer to the “three Ms of trading”; mind, money-management and method. And getting your mental and psychological approach right and in tune with market movement, is absolutely essential to your personal growth and profitability, as a trader.

If you develop such a strategy, you’ll begin to observe and analyse the markets in an entirely different manner. You’ll begin to slow the complete process down, both physically and mentally. You’ll be less inclined to make knee jerk, impetuous decisions. Instead, you’re more likely to closely analyse: the fundamentals, the upcoming economic calendar events, the current and preceding price action patterns, where handles and round numbers are situated on your charts, etc. before making your decisions regarding where to either place any market orders, or where you’ve made a mental decision, on where to enter or close manually. Slowing the complete trading process down, whilst analysing each and every trading decision, will indirectly result in a calmer approach to your trading. Such peace of mind and clarity of thought, should (in theory) cause more judicious and forensic trading decisions.

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