This can be summed up in one word…Patience. That’s it. You just have to wait till the stars align before you plunge. This can be a pain, especially if you’re an active trader in a market like this.

Sticking to your system demands that you do not take action until certain conditions have been met. In my case, that may mean when an oscillator shows oversold or overbought conditions, for instance, in addition to other technical signals. I also have to look at the markets to work out the general direction.

The latter part is where the problem really lies…direction; especially when it changes everyday, as it seems to be doing lately. When things are calm, you can usually count on a trade to play out in a certain way once it has been triggered. Either this will happen and you can do that, or that will happen and you can do this.

Now, fundamentals change everyday. The power of economic news has grown seemingly exponentially during this recession. It’s a kind of chaos.

The offshoot of that is that system traders (who, honestly, are the ones that can truly be profitable over the long term) have to show extreme discipline to keep making money.

I still have to try to work out the fundamental direction of the pairs I trade, even if it’s on a much shorter timeframe (for instance, a day instead of a week). I still have to scan the charts to search for my entry signals. I now have to pay much more attention to potential deal-breakers on the calendar.

I have to make sure that I have the wisdom to NOT pull the trigger if there are variables I can’t account for. Most important of all…when I do pull trigger, I can’t compromise on MONEY MANAGEMENT.

I have recently been stopped out of a few trades that later reversed and continued in the direction of the trend. This happened because I could only risk 5% of my account. It hurt when that happened, but I would never consider increasing my risk exposure.

If you can’t enter a trade with a reasonable level of risk (less than 5%…in general) then it isn’t worth it.

IF IT FEELS LIKE GAMBLING, YOU ARE NOT DOING IT RIGHT.

The recession is slowly passing away. The waters should calm down a bit soon. Till then, stay sharp.

Happy Trading.

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