How patience can help you in trading?

Usually, when there is a trading setup available in chart people will immediately want to enter a trading position.

This kind of reaction is fear of missing out trade.

When a trading setup appeared just a precondition before taking a good trade. There are still plenty of steps need to do and checking about this trading setup is having a good chance of winning or bad chance of winning.

Since non of us can guarantee what going to happen in future so the best we can do is aim for the opportunity with the highest chance to win. Or will you aim for the bad opportunity? (I think no one will go for this option when come to investment and trading)

Our goal is very clear in investment, make money.

Therefore, take action to increase the odd of winning instead of follow trading setup blindly.

Why people using fundamental analysis, technical analysis, sentimental analysis, etc...?

By doing analysis we can increase our confidence as well as reduce the risk.

Below I will use moving averages crossover and stochastic to show you the example Patience vs FOMO.

Chart 1

From above chart, can you see the difference between the entry timing for 1 and 2?

For above scenario 1, one of the most widely used trading setup is 2 moving averages crossover. When the crossover occurred, many people that follow the signal blindly will go in directly or because of fear of missing out trade.

However, when you cross check with Stochastic it tells you that currently the price is overbought. How will this interpretation help you?

Moving averages show you the trend changed from down to up while Stochastic informs you that price might going down due to overbought.
Would it be better if you wait for everything to favour you before enter a trade?

Here is the difference between the patience and impatience people.

If you don't pay attention enough about this little detail, after you bought in at 1. 

What happened to the price movement?

The price not really going up just some sort of moving sideway.

On the other hand if you wait for the Stochastic to tell you the price is oversold and potentially turn up while the overall picture of the price is still up based on moving averages. When you enter at 2, the market start to move up nicely within a short period of time and get to avoid paper losses in this scenario compare to scenario 1.

Scenario 1 and 2 different by:

Price: 4.26% 

By taking position at 2, you will gain extra 4.26% compared to 1.

You want 1 or 2? 

Make you choice.

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