How Long Should You Wait for a Trade?
Recently I was looking through binary options forums, and I ran across a question I think would be good to answer. The trader had complained that he felt like he was waiting forever for a trade to show up. After that, he announces that he has only won three trades out of his past twelve—a terrible ratio. He then adds that he recognizes that some market conditions are unfriendly toward trading, but again iterates his impatience. “How long do you wait for a trade, 15 minutes, 30 minutes, an hour?”
Thankfully the top response to his question was one that I agree with. The answer was, “As long as it takes.”
When you are trading binary options, it is helpful (actually, essential) to stop thinking in terms of set periods of time. I think a lot of us tend to function this way in part because so many of us have worked jobs which pay by the hour. Even “salaried” positions nowadays often pay this way. But trading is not a pay-by-the-hour kind of job. It is a job that pays according to how solid your trades are—not how often they come up.
I see several distinct problems with this question.
- First off, the trader is not nearly concerned enough with that win-loss ratio. Three out of twelve? That is only a quarter of his trades. He is losing three quarters of them—which should terrify him. Thankfully he was demo testing, so maybe that is the reason it didn’t, but frankly he should not have gotten that far to begin with using such a poor system. He should use these 5 steps to learn a trading system. There really is no reason to demo unless you have something worth demo testing. Also consider that you do not actually get 100% payout on your winning trades. You only get maybe 75%. That just makes that ratio that much worse. You cannot break even with even 50% win ratio. You need to be doing better than that to break even, and even better to profit.
- Secondly, he seems to be referring to amazing short periods of time. If you actually are expecting an astonishingly good trade to show up every fifteen minutes, or even every hour, you are delusional. If it was really that easy and that regular, most of us would have no problem getting rich enough trading to quit our 9-5 jobs. Can you quit your day job?
It can be done, but not with that mindset.
When you learn the art of being patient as a trader, you cannot be thinking about just the next fifteen minutes, or just the next hour. You have to acknowledge that winning, really winning, is going to take years of effort. You do need to focus on the present, but you cannot expect to get rich overnight. This trader has the “get rich quick” mindset. He actually believes the path to wealth can be measured in short little intervals. Even if there is a good reason to strive for success as quickly as possible, nothing justifies rushing, because rushing always leads to the same destination: bankruptcy. You have to treat this like a business and take your time.
Don’t let your impatience spoil your trades – use this as a guideline to develop your trading discipline.