What separates successful Forex traders from the rest of the pack? Why is it that only a mere 5% really make it in Forex trading? How did these traders do it? Although all successful Forex traders have their proven Forex trading strategies and systems to call and manage their Forex trades, they know there is one more important thing to do: focus on improving themselves.
Because the trader is the ultimate resource that can act to create the desired Forex trading results, he or she must make certain this resource is primed and efficient to do its best at Forex trading. As such, successful Forex traders pay great attention to the points listed below which elucidate how they go about their Forex trading.
Treat Trading Like A Business
Top Forex traders know that trading is a serious business and they accord it such importance by taking into account key factors that affect all businesses. From the Forex trading perspective, these factors include: formulating a Forex trading plan; starting out with an suitable trading account size; knowing the various costs of trading; sustaining and growing the Forex trading account; and acquiring the right Forex trading knowledge, skills and equipment.
Keep The Ego In Check
Trading mistakes can arise from emotional responses directly linked to one's ego. A Forex trader that needs to be right will let the ego prevail and inflict ruin to his/her Forex trading account, always trying to command the market which he/she denies cannot be controlled. Being egoistic also means not acknowledging one's trading mistakes and therefore not learning from them. For example, the ego will egg the Forex trader on to hold a losing trade instead of taking the correct action of cutting loss at the appropriate time.
Be Disciplined In Every Trade
The item that directly affects the Forex trading account bottom line is trading discipline. The serious Forex trader follows his/her trading plan precisely, and sticks to it as much as humanly possible (Note: even successful traders make mistakes). Trading discipline includes protecting trading capital and prudently allocating risk per trade; only taking trades that meet risk/reward parameters and set up correctly; staying on the sidelines at all other times and not forcing a trade; cutting losses quickly via pre-determined stop loss levels; letting a good trade ride but protecting a winner from turning into a loser. In essence, being disciplined allows the successful Forex trader to book profits consistently and severely limit losses should any trading period turn out to be a rough ride.
Protect Trading Capital
The serious Forex trader treats his/her trading money very seriously, as it is what enables trading to be done. Additionally, it is also the goal of Forex trading: make winning trades to grow the money. Thus, the successful Forex trader will protect his/her trading capital zealously, ensuring that risk per trade is controlled so that losers only dent the trading account, not chew a hole in it. This assures the Forex trader that his/her trading business can continue, today, tomorrow and into the future.
Don't Marry Your Trades
The serious Forex trader knows that a single trade alone does not determine his/her trading success. He/she is fully aware that any trade could turn out to be a loser and therefore is deliberate in ridding of any emotional attachment to every trade. While staying disciplined requires waiting for the good trade entries, this wait and eventual trade entry do not compel the successful trader to think that he/she must be right in taking that trade. As such, should the market go against the trader and he/she sees prices approaching the stop loss level, the trader fully accepts that losing is a real possiblity and does not rationalize further. Contrast this behavior to a novice trader who will often be tempted to move the stop loss further out so as to let the trade have "more room" -- such a trader feels the need to be right and doesn't know how to walk away from a loser.
Be Realistic, Practical And Persevere
Being realistic is what separates the men from the boys when it comes to Forex trading. The successful Forex trader does not have a get-rich-quick mentality and knows it is hard work; thus he/she treats Forex trading as a business and has the mental fortitude to stay in the trading game for as long as it takes. Perseverance is a crucial asset, reinforced by the necessary trading discipline imposed in the trading plan and the personal belief that it is possible to be successful in Forex trading. At the same time, the serious Forex trader knows he/she is psychologically guided by his upbringing, attitudes and experiences regarding money and success, but is practical by admitting these limitations and working to tear down such self-defeating barriers. Pursuing the right Forex education and learning from other successful traders are good solutions to the problem.
Know Yourself And Let Others Help You
The successful Forex trader is aware of his/her strengths and weaknesses when it comes to trading, and is not shy to ask for help. While knowing there is no shortcut to success, the trader will often pursue education from the best mentors so as to gain the right knowledge and learn the right skills essential to their progress towards successful Forex trading. As part of the trading plan, the serious Forex trader keeps a trading journal and reviews this daily to learn from past mistakes and internalize winning trade executions. The trading journal can also be used by the mentor to help the Forex trader improve his/her trading.
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