It’s safe to say that spiders are one of the least favorite creatures. In fact there are thousands of people who have an outright fear of them, a specific phobia called arachnophobia.
Personally, I don’t love or hate spiders. I’m fairly neutral toward them. Although being a person who loves all living things, I do try to save them when I find them indoors.
Love them or hate them, when it comes to showing the qualities necessary to become a great Forex trader, spiders have no equal.
The comparison between spiders and Forex traders does sound odd, I admit. But by the time you finish reading this post, I’m sure you will agree that their qualities and way of life is perfectly adapted for many of the challenges we face as traders.
So as odd as it may sound, studying how spiders have adapted to survive just might teach you a thing or two about what it takes to successfully trade the Forex market.
The Patience of a Spider
Did you know that most sedentary spiders that spin webs to catch prey can go months without eating?
That’s right, months!
This means that they will sit for days, weeks or even months just waiting for their next meal to come along. During this time, they wait patiently in order to conserve energy for when it really matters.
I don’t know about you, but as someone who loves to eat that sounds like a terrible way to live.
But to the spider it’s just life, and they have evolved to be able to survive through long periods without food. It’s truly a remarkable feat when you think about it.
Like the spider, you need to evolve in a way which allows you to remain content while waiting for the next favorable trade setup to materialize. This is easier said than done, but it too is required if you intend to survive in the world of Forex.
As Bill Lipschutz once said, “if most traders would learn how to sit on their hands 50% of the time, they would make a lot more money.”
Truer words have never been spoken. When it comes to trading the Forex market, less is always more.
To be clear, this does not mean that you have to wait for months for an opportunity to come along. That said, having to wait several days for a favorable setup to materialize is fairly common. This is especially true for those who are trading the higher time frames.
Persistence of a Spider
Have you ever walked directly into a spider web?
Sure you have. It’s safe to say we have all experienced that feeling of walking right into a web that we didn’t see.
This unpleasant experience leads to something that is quite remarkable, yet seldom appreciated.
Instead of throwing in the towel and giving up after seeing its hard work be destroyed in an instant, the spider recreates the exact same web. In some cases it will create an even larger web than before. Remember, this is survival for the spider.
Forex traders need to view their trading experience in a similar manner. There will be times when it feels like the entire market is against you as it tears your trading plan apart and chips away at your account balance.
But just like the spider, you need to persevere in the face of misfortune. Taking time away from the market after a loss or a series of losses is always a good idea, but you should never walk away entirely.
The only thing that separates the successful traders from those who fail is that the successful never gave up. Always remember that it’s impossible to fail if you never give up.
Take When the Taking Is Good
One of my favorite trading quotes comes from Jack Schwager, author of Market Wizards. That quote is as follows…
“If you don’t stay with your winners, you are not going to be able to pay for the losers.”
Having traded financial markets since 2002, I can tell you that staying with your winners is how you become consistently profitable. It doesn’t matter if you trade equities, commodities, Forex or any other financial market, the idea is always the same.
In fact if you really want to make considerable gains as a trader, you can take it one step further by adding to those winning positions as they begin to move in your favor. This is a technique called pyramiding, and it has been extremely effective for me as well as several of my members who have started to practice the same technique.
Ironically, spiders do the exact same thing. The only difference is that instead of trading, they are attempting to survive during times when food is not abundant.
Remember how I mentioned that some spiders can go months without eating? You may be wondering how exactly they are able to do this.
Aside from having evolved for thousands of years to survive during hard times, they take full advantage of food when it’s available. In other words, they make sure to fill up when they can because they don’t know when their next meal might come along.
Just like the spider, when something favorable comes along, in our case a favorable trade setup, it’s important to take full advantage of it.
To be clear, this does not involve risking more than your trading plan calls for.
Instead, you need to be aware of the bigger picture surrounding each trade setup. It just might be something you can stay with for quite some time and possibly add to if the market begins to move in your favor.
And as Jack Schwager reminds us, we need to stick with our winners in order to pay for our losers.
Spin Your Own Web
Another similarity between spiders and Forex traders is the idea that these web-spinning spiders do not chase their food. Instead they spin a web and then wait patiently for an insect to land in it.
As mentioned previously, this waiting could be days, weeks or even months. But regardless of how long it takes, these spiders never chase their food around the forest floor.
Why is that, you ask?
Because they know that if they choose a strategic location and build a quality web, an insect will eventually land on it. It has worked this way for thousands of years and continues to work today.
As a Forex trader, your trading plan becomes your web. You need to develop trading strategies that give you an edge in the market and then craft a trading plan that allows you to “catch” favorable trade setups.
There is never a need to chase a trade around the market just as the spider does not chase its dinner around the forest floor. Instead, you wait patiently for a favorable setup to fall perfectly into your plan. Only then do you consider putting capital at risk.
If that trade setup does not materialize, you move on. You don’t chase and you certainly don’t risk any capital until all of the criteria in your plan has been satisfied by the market.
Conserve Your Energy for When It Matters
How many times do you check your charts each day? Is it 10, 20, maybe 50 times a day?
If you are like most traders I have worked with over the years, that number is probably somewhere between 20 and 50 times a day. That is a lot of wasted time and energy.
If you are using a stop loss (I hope this is the case), there is no need to check your charts more than a handful of times each day. Even if you trade the 4 hour charts, there are only six new periods in each session, and at least two of those periods take place while you are asleep.
This means that the most you should ever check your charts while trading the higher time frames is 4 times a day, maybe 5 or 6 if it is a day with a large amount of event risk. But even 6 times a day is a far cry from the 20 to 50 times a day that most Forex traders take a peek at their charts.
Why does it matter, you ask?
Aside from wasting valuable time and energy, checking on your trades too often inadvertently allows emotions to creep in, also called emotional fatigue. This causes you to question a trade setup that might otherwise be valid as well as convince yourself that an unfavorable setup is indeed worth taking.
This emotional fatigue never bodes well for your trading, regardless of how you spin it (pun intended).
Going back to our comparison of traders and spiders, do these spiders that spin webs run around all day waiting for an insect to land on it?
Of course not.
They know that if they are strategic in their approach, an opportunity will eventually come along. So instead of expending their energy chasing, they wait patiently for the next favorable opportunity to come to them.
Having the patience to wait for days or even a week for a favorable trade setup to come along is critical to your success as a Forex trader. Having the same patience that spider’s exhibit can go a long way to developing the kind of discipline necessary to make it in this industry.
All it takes is one or two profitable trades per month to make considerable gains as a trader. This is especially true if you develop your skills around pyramiding, a technique that can drastically improve your average R-multiple if performed correctly.
Persistence is the name of the game as a Forex trader. Many believe that the super successful traders have some special strategy or skill that allows them to do what they do.
While traders such as Bill Lipschutz are certainly seasoned professionals in their industry that command respect, they only got to where they are because they never gave up.
What do you think? Can your Forex trading benefit from studying the qualities of spiders?
Leave your comment or question below. I look forward to hearing from you.
Very nice article Justin.
It reminds me of a saying I heard before :
“If you didn’t see it coming, it is not a trade”.
Thanks, I’m glad you enjoyed it.
Absolutely! Only taking the most obvious setups is what successful trading is all about.
This blog post is highly encouraging and a morale booster.
As a newbie sometimes I feel very lonely and let down when trades go against my trade plan and also when I don’t find a setup for a longer period – after reading your post I realize that this is very normal which gives a comfort feeling!
This blog raises a question: After waiting for long suddenly when we find several trade set ups at the same time can we take them all? How many at the max do you advice?
Pleased that you enjoyed it and that it helped to boost morale.
Losses and long waits are a natural part of the game.
The last question depends on several factors. Is there any heavy-hitting news scheduled for one or more of the currencies in question? Are any of those currency pairs correlated? If so, you may not want to take all of them. I tend to limit myself to one or two positions at a time, but 90% of the time that I’m active in the market I only have one position on.
You are very welcome. I’m glad to hear that it helped. 🙂
Thank you. I completely agree. Even Leonardo Fibonacci, the Italian who discovered the Fibonacci sequence, first observed the pattern in snail shells and flowering plants.
The same can be said for the Elliott Wave Principle. Its pattern can be seen in shells, waves, even the universe itself.
I cannot tell you how much I needed this today. Coming off of a losing trade. (Well it didn’t drop as low as expected by price action.) I am now waiting for my next trade set up while trying to learn as much from my mistakes as possible. Thanks!
Good to hear. Glad I could help.
Are there any books that you recommend I read? Or any other materials that can help me? I assume from this point it is practice that I mostly need but I am not a seasoned trader so I know there is much to learn.
Spiders aren’t insects. Insects have six legs, three body segments and (real or rudimentary) wings. Spiders have eight legs, two body segments and no wings.
take the message out and forget all your unnecessary biology lecture. This is Forex not biology class
Yap, I checked it . Spider is an arthropod.
Wooow, you have open up my mind about the spider. Thank you boss.
Justin, this analogy hits home. On several occasions I have placed pending orders and terminated them prematurely. Only to come back or wake up, to find the market has literally shot up/down an appetising number of pips in the direction I initially analysed and chosen. Gladly though, I have learnt not to chase a trade, thanks to some whips of punishment incurred on my account before. Patience does pay, but being patient can be difficult.
I am a newbie and this is a tone of advise on trading and its psychology summed up in a beautiful phenomenal way, thank you, be blessed and safe trading!
Thanks a lot for the great article which we compare to the crocodile as a great hunter also.
AMAZING LESSON,Thanks Justin.
I love this analogy. Thanks Justin, this was any eye opener. I’m beginning to think that I will be a profitable trader, because I have really learned patience, since I started DPA. It must be the rules and the higher TF’s. I really hope that other members are reading all my advice from the members. Maybe I am asking questions that someone else wanted to know. Thanks to all who have helped me, I have had very good advice and it is so appreciated it.
Thanks justin, have never been disappointed for once, for been took my time to read every of your articles because its worth reading….my trading journey is improving everyday because of your analysis …you are bless to this generation …thank you