It might not seem like fishing and forex trading have that much in common. A fisherman sits on the riverbank with a rod in hand, likely grazing on home made sandwich while a trader sits in front of their screens, coffee in hand, too focused to think about eating. However, there are a great deal of lessons that Forex traders can learn from fishing and from fisherman, especially from the successful ones. Read on to see just what these lessons are why we believe forex trading like fishing.
As any great fisherman will tell you, having the right equipment and being properly prepared is just as important as finding the right stretch of river or section of the lake. Fisherman spend an enormous amount of time selecting the right gear from rods and tackle to the right waders and boots. Fisherman understand that in order to have the best chance of capitalising on finding a good area to fish, they need to have the right equipment and be properly prepared in order to bring in the big hauls.
In the same way Forex traders need to make sure they take as much time as possible preparing for their trading and this doesn’t just mean working on their strategies. It is really important to make sure that you have your trading area set up correctly with the right number of screens you need and all of your resources open and ready to use.
So, if there is a particular news wire you use for breaking financial news, you need to make sure this is on and you can hear/see the updates. Your forex trading platform needs to be open and all of your charts need to be set up correctly and ready to trade so that you don’t miss any opportunities.
The traditional stereotype of a fisherman sitting on the riverbank for hours on end might seem boring but there is a great lesson that Forex traders can learn from this image: patience. Fisherman understand that the largest amount of their time will be spent waiting. Unless you’re standing in a flood of salmon fishing upstream it is unlikely that you will find yourself surrounded by fish at all times and so for the most part, fisherman spend their time with their lines in the water waiting for fish to come along, ready to capitalise when they do.
For Forex traders, patience is equally as important. Unless you are a scalper on the lower time frames, the majority of your time is going to be spent waiting and monitoring charts waiting for a setup to occur. It is incredibly important that you develop the discipline to be able to demonstrate this patience. Many new traders are able to identify profitable strategies, but most end up sabotaging their results because they don’t have the discipline to stick to their strategies. Learning to be patient can be the difference between being a winning trader and a losing trader.
Reading the water
Professional fisherman or even high calibre recreational fisherman have a great ability to “read the water” and identify the best areas to fish. While new fisherman will simply take their gear out and fish the nearest available piece of water, great fisherman know that finding the right bit of water is as important as having the right equipment.
For Forex traders, “reading the water” is equally as important. Traders need to be able to correctly identify different market conditions and learn which conditions suit their strategy best. Operating a strategy in the wrong conditions will lead to negative results while learning to wait and operate your strategy in the most conducive conditions will help amplify your results. For example, trying to trade a breakout strategy while the market is ranging, will not work. Similarly, trying to trade a mean reversion strategy while he market is trending will also not work. So, it is really important that traders spend time developing the ability to read the market and identify the correct conditions for trading.
So there you have it; why is forex trading like fishing? Whether you are knee deep in a misty, morning river waiting your first catch of the day or patiently waiting for the RSI to flag oversold on the 15 minute charts, you might find that the attributes that will lead to your ultimate success are quite similar!