7 Things Successful Forex Traders Have In Common
Updated: May 10, 2020
Becoming a successful Forex trader takes commitment and hard work. Almost everyone has a different path to success. But this has got me thinking – what do successful traders have in common? After giving this some consideration, I thought I’d write an article describing the common characteristics that I’ve seen throughout my trading Career. Read on below to discover 7 things successful Forex traders have in common.
1/ They ave A Personal Definition Of Success
All successful traders I know have a clear idea of what success means to them. Specifically, they recognize that comparing themselves to others is unlikely to help them reach personal goals.
Do you know what success means to you? If you’re new to Forex, perhaps being profitable on a demo account constitutes success? If you’re more experienced, it could be that making $500 per month from your trading is a reasonable goal. The point is – what determines success in your trading will be unique to you. It’s your task to find out what that is.
2/ They Use The Correct Strategy
All successful (and professional) traders I know use 20% fundamental and 80% Technical analysis. They appreciate that the market is incredibly sensitive to real world events. As such, they dedicate themselves fully to absorbing as much news as possible – with a particular focus on economic data releases from central banks.
Many of the traders I know have shown great persistence when trying to find the correct strategy. I have personal experience of this too. When I first started to learn how to trade, I tried various bots and forms of technical analysis. None of these methods produced the results I was looking for.
It’s only when I discovered how professional traders make trading decisions did I realize what I should be looking for.
3/ They Manage Their Time Effectively
The best traders are the ones who recognize their time restraints and manage them accordingly. By doing this, those traders then know what kind of trader they should be. For example, those who trade alongside their current job are often long-term traders. They don’t have the time to react to price volatility over short time-frames.
However, those who trade full-time are often intra-day traders, as they have the ability to monitor price movements over much shorter time-frames.
Are you trading in line with your available time? Take a look at your typical day and adjust your approach if necessary.
4/ They Reach Out For Support
One common trait all successful traders have is their willingness to reach out for support. This isn’t a weakness – it’s a strength. Traders who are open to constantly learning and talking to others are almost always more successful than those who don’t.
Again, this is something I’ve experienced first-hand. Only by asking questions did I discover the potential of fundamental and technical analysis. If I didn’t reach out to others, I would have never discovered the methodology.
5/ They Employ Risk Management
Every single trader I know that has become successful has a risk management strategy in place. This is a strategy which is designed to limit a trader’s exposure to the market. It means they mitigate potential losses should the market move against their open position.
Practical parts of risk management strategy include the use of stop loss and take profit levels. It can also include general rules, such as how much capital you are allowed to trade every month – or what level of leverage you are allowed to use.
Having steps in place to protect your capital really is the first step in becoming a professional trader. If you don’t have a risk management strategy in place, I strongly suggest you read about it. I might publish a post about it.
6/ They Have Mental Resilience
Making a bad trade can be extremely difficult to get over. But the best traders develop an ability to move on as quickly as possible.
The truth is that losing is just part and parcel of being a Forex trader. What matters is how you react to a bad trade. It’s much better to stay calm, step away from the situation and analyze the reasons as to why you lost pips.
Chasing losing trades is never a good idea. For me, it’s one of the most common reasons why those new to Forex end up losing large amounts of capital.
But how do you build mental resilience? It’s a difficult question to answer – but you have to become accustomed to the feeling of disappointment. Being mindful of your thoughts and physical sensations after a bad trade is a great way to build mental toughness.
This takes practice, but just being aware of your natural reactions is a great way to stay centered in times of stress.
7/ They Can Switch Off
It’s easy to become obsessive when you trade for living. Traders who are successful recognize that this isn’t a healthy mindset. Constantly thinking about trading can lead to mental fatigue, which increases the chances of bad decisions being made further down the line.
Personally, I try to implement a healthy lifestyle when I’m away from my trading station. I spend time with friends and family, exercise and get a sufficient amount of rest. I confess, when the market moves against an open position, maintaining this routine can be difficult. But it’s important to try and stay disciplined in these circumstances.
Ask yourself, what routines do you have in place to ensure you’re in the best state of mind to trade like a professional? If you don’t have any, now’s the time to create some.
What do you think successful traders have in common? Share your thoughts with me in the comments below and I’ll do my best to reply to you. Please also feel free to share this article with your trading friends.