What does it mean to be a successful Forex trader?
Every tale about a successful Forex trader includes steady profits. We can safely say that a majority of traders consider profits to be the yardstick to measure success. You’re either too fond of trading or you dislike it, there are no two ways about this. The burning question here is, how do you be successful in something you’re not passionate about? Visit multibank group
If you’re getting into reading solely to earn money, it is better to pick another career.
Let’s talk about a few trades that a successful Forex trader should have:
- There’s no losing
You can’t carry out forex trades without incurring losses. However, there is a remarkable difference in the trades that a beginning trader may lose and the ways in which forex traders lose. For most traders who are getting started in the currency market, losses are devastating. It tells you that perhaps some of your actions weren’t right and hence your trade failed. A good and seasoned forex trader knows that loss is not always a bad thing.
Do not think of it as something horrendous that the market did to you. The Forex market is not conscious of the trades you have opened or the location of your stop-loss order.
Contrary to how you may feel, the market’s neutral. If you are on the losing side, it’s time to see what you could do better.
The successful Forex trader is able to understand that loss is nothing more than the market’s feedback, telling you that your trade setup is not appropriate.
When you incur a loss next, consider it constructive feedback. Assess the scenario and see where there’s room for improvement. While you do this, remember that even an A+ setup may not always yield results.
- Use of price action
Every successful Forex trader would work with price action in their own ways as part of their trading strategy.
A trade could be using raw price action or just working it to recognize the main levels in the market, the role of price action cannot be undermined in any strategy.
It is so because price action reflects the market’s sentiment and tells us what the other traders may be up to. It is extremely useful to be aware of where buy and sell orders are located in the market, so you could be a great Forex trader. Any trading strategy can be boosted when possible points of entry and profit targets are clear. You could come up with a strategy on the basis of indicators but you need to also get the hang of price action. It would help you come up with a good foundation that you could use for creating better strategies.
- Having an edge
The internet is full of people laying emphasis on developing and defining an edge–that’s not something great! It always makes several traders wonder what is a trading edge and how does one develop it?
An edge includes all those things about your trading style which would increase your chances of winning. It’s a mix of your trading time frame, the price action strategies you work with, the main levels you’ve recognized, your risk-to-reward ratio as well as many other factors such as your pre and post-trading routine. How do you respond to losses and victories? All of these things add up to form your trading edge.
Don’t worry about being at the top of all the factors that could affect your trade. Focus on mastering a certain set of elements and then move on to others to further define your edge. More than being a natural progression, it’s a preferred learning method.
- Don’t try too hard
You’d think that you need to try as hard as you can. Well, that’s not always true.
For various other aspects of life, it might work well but in the forex market, it may not always work. If you’re trying too hard, read the signs because something is certainly off.
Please don’t confuse trying hard with studying hard–they are two very different things and every amateur trader must study the forex market as hard as possible.
For example, you could never run out of the things you could learn when you spend time picking up the workings of different forex pairs or the way you can draw key levels. The more you learn, the better it is. But if you try to force a trading strategy to work, it may turn out to be detrimental leading to emotional trading. In a similar way, you could end up losing money because of subpar setups, if you’re spending too much time looking for trading opportunities.
- Keep risks in your thoughts
Many times, the best improvements require simple and small changes.
The notion of looking at things on the lines of capital risked also applies to Forex trading. Though it is a fairly simple concept, it could have a solid impact on your trading journey. You are highly unlikely to find a successful Forex trader who would tell you that they don’t calculate the risk they take before entering a position.
You might believe it to be rather obvious but the truth is, a large number of traders do not actually care about the risk they’re taking.
Take some time out and revisit your last trade. Were you able to clearly lay out the exact dollar amount you risked? Did you emphasize more on the number of pips and the percentage of your account at risk?
Given that Forex position size calculators are so conveniently available and easy to access, one barely ever takes into account how much money you’re actually risking. Though convenient, it leads to a massive oversight because when you spell out your risk on a trade as a percentage, there is nothing for the emotional side of your mind. When it is out there as a percentage, you are defining the risk but not in fact coming to terms with it.
Final thoughts
Remember that there is no secret sauce to successful Forex trading. You can earn profits consistently but you must define your risk clearly, avoid emotional trading and learn to accept that loss is part of copytrader.
