3 Vitally Important Points To Consider On Your Way To Becoming A Successful Forex Trader

Various people frequently question why some Forex traders trade successfully and some don’t. They moan and say, “Oh, they have all the luck. That must be the reason.” True enough, luck can be a factor in some trader’s success or failure in the Forex market to some small degree and over a short period of time.

As some ‘experts’ will state, trading the Forex market is akin to gambling. They both involve a great deal of risk and uncertainty. Unlike gambling, success or failure in the currencies market does not only depend on luck. It has a lot to do with two things: education and more importantly, attitude.

There is no question that education has a great deal to do with the success or failure of a Forex trader. Education transforms Forex trading into much more than just a guessing game. Analyzing trends, corrections and breakouts can assist the trader in making well-informed decisions; therefore increase the odds of trading successfully.

A really important contributor to the success of a Forex trader that is repeatedly overlooked is the improper attitude that many traders display while trading. Very often, Forex traders are victims of their own behavior. This leads to making wrong decisions, frustration and a great loss of money and energy.

What are these attitudes and how should they be dealt with?

1. Impatience

Sadly, a lot of traders begin trading and investing in the currency market because they believe that they could get rich overnight as result of a small number trades. This is awfully far from the truth. In fact, successful portfolios are built over time.

If the trader does not realize this, than the trader may become discouraged and decide to assume more risk in order to make the huge gains that he or she had dreamed about. This is a definite road to disaster.

2. Refusal to being ‘wrong’

There is an indisputable fact for all Forex traders. We will be ‘wrong’ many times. Once we decide to become Forex traders than we must accept this truth and realize that being ‘wrong’ does not necessarily mean losing money in the long run. All we have to do is accept our inevitable losses and keep them to a minimum.

Trading Forex will not work out if one desires perfection or has the need to be right at all times. As traders, we have to remember that losses are inevitable. It is the overall, long term strategy that will produce profits over time.

3. Discipline is not optional.

Not all Forex traders can discipline themselves to continuously follow their Forex trading system through times of losses. In my opinion, the major reason for this behavior is because most people either do not take the time to properly develop a Forex trading system, or, they do not bother to back test it.

In order for one to follow his or her trading system, one must know without a doubt that the system is profitable and will produce gains over time. The key here is: knowing. Once a trader knows that his system might produce some losses at some point in time but that it is without a doubt profitable, than following it becomes easy.

As you can clearly see, trading Forex successfully is not all a matter of being lucky. Becoming a successful Forex trader is a profession that requires some investment of effort, education and time. Not all people naturally have all of the character traits that are required to succeed in this profession; however, all of the necessary character traits that are necessary are learn-able.

5 Secret Characteristics of Successful Forex Traders

Ever wonder what makes a successful forex trader tick? What separates the winning traders from the average trader? Research shows that every successful trader possesses these 5 specific characteristics:

1) Be disciplined
2) Persevere
3) Treat trading as a business, not a hobby
4) Be Unemotional
5) Set Goals

Read, understand, and emulate them to help you become a more profitable trader.

1) Be Disciplined

Anybody can get lucky and make money in the forex market; however, only the disciplined can make money consistently over time. Being disciplined is by far the most important factor that determines your success. Every professional trader knows that the trading method or strategy does not determine your success. It’s how you follow through on the strategy that matters.

Your trading strategy is your compass and will tell you where to go and how to get there. Do not get lost. Don’t make trades because you “like” a specific currency, or because you “think” that there will be strong run-up in a specific currency. When you start making arbitrary decisions like these, you will get lost and start losing money.

Following your system is always your best option. You must have the discipline to follow your strategy even through a string of losses.

2) Persevere

Everybody fails. But not everybody knows how to come back from a failure. Many successful forex traders today began their trading careers by losing their entire bankroll. Millions of people are lured to forex by the promises of easy money, and unfortunately most of us that attempt it lose a great deal of money. So is losing money a pre-requisite for forex success? Of course not.

The majority of people that lose money will never become successful. They become depressed, discouraged, and give up trading immediately. On the other extreme, some people who lose their first 10,000 dollars will borrow another 10,000 dollars and lose it in the exact same way.

Beginners will lose money; that is a fact. But failing to learn from your failures will be your greatest mistake.

Take the opportunity to learn from your mistakes. Did you trade based on emotion? Were you trading based on a tip? Does your strategy fit the current market trends? Did you risk too much money on one trade? Did you misread the charts? Were you impatient? These are the questions you must ask yourself when you fail. But the most important question is this:

Why did I fail?

If you can answer this and learn from it, you will no doubt be on your way to becoming a successful forex trader.

3) Treat trading as a business, not a hobby

Let’s face it, we can’t all quit our day jobs and start trading currency full time. Not yet anyways. Professional forex traders are better traders than most people for the simple reason that they spend at least 40 hours a week either trading forex or researching the forex market.

Trading forex is a business for the pros. If they lose money trading, they will lose their jobs. That’s pretty good motivation to be good at what you do. The same attitude should be adopted even if trading is not your full time job. Treat it as a business and not just a hobby. A hobby is something you do for fun in your spare time. A business is a venture to make money.

I trade forex to make money, not have fun. I have lots of other activities that I can do for fun. I enjoy running, traveling, and watching TV, none of which will make me any money. In fact, most hobbies will cost you money. Trading should not cost you any money, it should make you money.

If you approach you trading as a business, your outlook changes completely. Losing money is not acceptable in a business because if you do it long enough, you will be out of a business. You will take every possible step to stop losing money.

A business will not grow by itself. You must devote time to learn how to become a profitable business. Use your spare time to do some research into the market, read some good books, and attend training seminars. Stop wasting your time on things that cost you money, and start investing your time to learn how to trade properly, which will lead you down the road of financial freedom.

“I’ve always believed that if you put in the work, the results will come. I don’t do things half-heartedly. Because I know if I do, then I can expect half-hearted results.” – Michael Jordan

4) Be Unemotional

If you have ever played poker, you will know the high of going “all in”. Your heart is racing like there’s no tomorrow, and you are hoping and praying that the cards will go your way. It’s the thrill of knowing you can double your money in a few moments and also knowing it can all disappear if things don’t go your way.

This type of excitement should not exist in any form in your trading. If you are a thrill seeker, go skydiving. If you are a gambler, go to a casino. If you are afraid to lose money, open a savings account.

Successful forex traders do not let their emotions interfere with their trading. Too often, we let fear, greed, or pride get in the way.

Fear

Fear will prevent you from making the right trades and make you lose out on immense opportunities. Fear stems from lack of knowledge and proper education. You are afraid because you can’t see that a trade is the right trade since you don’t know what the right trade looks like. Once you acquire the knowledge and training, you can begin to trust your decisions because they are based on facts and not emotion.

Greed

Greed is another emotion we must overcome to be successful. Many beginners experience “beginners luck”, and come out on top on their first few trades. Then they start believing that they should have traded with more money so their profits will be larger. So on the next trade, they trade with a large sum of money and they lose it all. Logic will dictate that they should trade with a smaller amount the next time around since they have less capital now. Unfortunately, humans are not logical creatures. Our greed takes over, and we start believing that if we put in more money, we will make up for the lost amount, and come out on top. Sadly, this cycle can only continue until you are completely out of money. The worst thing that can happen to a beginner trader is to have a successful first trade.

Pride

Pride will take you nowhere fast in forex trading. Pride will prevent you from learning. When you feel like you have nothing left to learn, that is when you will start losing money. Pride is the toughest stumbling block to overcome for some because it is an ingrained part of their personality. However, we can all learn from the hugely successful forex traders who still need to research and read to maintain their success.

You can still be happy when trades go your way, and sad when they don’t. However these emotions should not play any part when making your decision for the next trade. Your decisions must be based on logic and facts, not emotions.

5) Set Goals

Every trader needs goals to keep them on track. It doesn’t really matter what your goals are, but it’s important to write them down. If you don’t write down your goals, you will never know if you have achieved them or not.

Everybody has a different goal when they begin to trade forex. Some people just want to make a few extra bucks on the side trading; some people want to make enough so they can quit their day job. Some people are tired of the 10% average return from the stock market and want to put their money to work for them in forex.

Write these goals down and look at them often so you will know if you are on track to meet your goals or not.

Summary

The best way to be successful at trading is to emulate patterns of successful forex traders. Read, re-read and understand these 5 characteristics and apply them to your forex trading career. You will find that you will become more successful when you possess these 5 characteristics.

Getting Started In Forex – Real Forex Traders Don’t Use Stop Loss

Introduction

There’s a big claim by some “famous” Forex traders recently that’s been stirring up more than a little controversy in the Forex forums. They’ve said that “Real traders don’t use stop loss orders”, and garnered a lot of attention from beginner Forex traders in particular. Today, if you’re just getting started in Forex, should you abandon stop loss orders altogether? By the end of this article, you’ll know the truth behind these big claims, and the lessons you can learn to make yourself a better trader.

Do Real Forex Traders Use Stop Loss Orders?

So do “Real traders” use stop loss orders? I know quite a few of them that do. Now, some of them might place them into the market as standing orders, and some of them might use a “mental stop”. Regardless of how they do it, all of the top Forex traders I know have a “get out” point, and so should you. I believe that whoever said that “Real traders don’t use stop loss orders” meant to say that they tend not to place a standing order like most beginner Forex traders would.

Forex traders that trade large positions tend to be very secretive about their stop points, because they don’t want to allow market makers or brokers to hunt their stops. That said, they have junior traders monitoring their positions around the clock who are always ready to get them out of the trade once the stop is hit. That doesn’t mean that anyone getting started in Forex should do the same thing, because the difference between beginner Forex traders and expert Forex traders in terms of experience and discipline is huge.

Don’t Try This At Home If You’re Learning To Trade Forex!

Just because expert Forex traders don’t place a standing stop loss order with their broker doesn’t mean that you shouldn’t as well. When you’re just getting started in Forex, you won’t have the time to operate a mental stop. It’s also a very dangerous practice when you’re learning to trade Forex, because even the slightest hesitation can put you in a world of trouble. The dangers of stop hunting at this stage is far less than the risk of emotional trading mistakes.

When you’re getting started in Forex, you need to have a lot of structure to assist you in learning to trade Forex with discipline. It’s essential to trade with a proven, profitable Forex trading system, and to place all of your stop and limit orders into the market. By creating an environment that fosters trading discipline and emotional self control, you’ll be able to learn how to trade Forex safely and profitably in the years to come.