- This article, written by Phil Elrod is taken from the FX Trader Magazine (OCT/DEC 2012 issue).
We barely passed English Literature in college, so quoting (almost) Shakespeare is really stretching our credibility, but the temptation was just too great. Whether or not to trade is a constant and important question confronting all Forex traders.
Forex markets today are as nervous as we have ever seen them. The situation in Europe seems to be a never ending roller coaster ride. The western world’s growing mountain of debt (and we must include Japan as well), combined with central banks rampage of printing of money, hangs over Forex markets like the sword of Damocles.
Toss in the fact that BOTS (robot trading systems) are so active and you have a situation that seriously challenges those of us who love to trade Forex. Although trading Forex is not easy, it is truly a lot of fun - and can be profitable for those that have a good trading method/system and a good work ethic.
Based on our many years of learning to be a trader (and that process is still an ongoing endeavor) and talking with traders from all over the world, we are convinced that far too many of them concentrate on learning when to trade - and spend far too little time learning when not to trade. It is further our contention that knowing when not to trade is at least as important, and possibly the more important, of the two.
Our general trading rule is quite simple: “If we see a potentially profitable trade that fits our trading parameters, we trade – if not, we do no trade".
We agree that trading is being in the market – however, being in the market at the right time is more important than always being in the market. Being in the market at the wrong time can produce losses – and losses are bad!