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Many people join forex for many reasons. Do you know the main one? Can you guess? Its money. No matter what anyone may say, joining forex for the main aim of making tons of money is a recipe for failure. This element is the biggest reason for the statistics. Only 5% of traders get successful trading forex.
Do you know why? Most traders succumb to greed and do not follow nor respect the process. This aspect is a formula for disappointment! Here is the focus that one should have to be successful. Also, check out the main differences between a successful and unsuccessful trader.
1. Trading Strategies
Successful traders have well-defined trading strategies. This aspect includes a proper trading plan. This way, the trader, is not affected by emotions since they focus totally on the rules of entry and exit into the market.
Unsuccessful traders do not follow any strategy and rely on gut feelings. A trader with no strategy ends up repeating the same mistakes since they have no rules for trading.
2. Focusing on Money
Successful traders focus on the process. This means making sure they master the rules for successful trading. The forex market punishes greedy traders. It doesn’t care how much a person makes on a particular trade since one can lose it in the next, just as quickly. A successful trader knows that sound systems bring in money eventually when executed consistently. This can come after several trades.
Unsuccessful traders focus on making money before learning how to trade. Trading with the hope that they can make a certain amount by a set time may cause greed which leads to a trader losing their capital.
3. Patience
Successful traders understand the need to be patient until the trade closes. If a trade is running, the trader waits until it gets to the set profit levels. Similarly, they get off bad trades soonest and start researching on other potential trading opportunities.
Unsuccessful traders, on the other hand, are in a hurry to take profits as soon as they appear. On losing trades, these traders stay in the bad trades with the hope that the position will reverse in their favour. This causes a risk to reward that is unsustainable. They get small rewards and significant losses.
4. Risk Management
Successful traders know the importance of managing the risk with respect to their account size. This includes lot sizes, and risk to reward ratio. They focus on a few trading opportunities and capitalize on them.
Unsuccessful traders always bet big with no regard to risk. They do not understand that no trade is guaranteed and that the market is unpredictable and volatile. This makes them overtrade without checking high probability trades. The end game is margin calls.
5. Emotions
Successful traders treat winners and losers the same way. This aspect is brought about by discipline in executing the trading plan. They manage emotions by utilizing elements like take-profit, stop loss and trailing stops.
Unsuccessful traders are influenced by market impulses with no strategy. This element leads to overtrading and over averaging. Losses to them carry the emotion of sadness, and they tend to “revenge trade” leading to more losses.
Bottom Line
Becoming a successful trader is all about discipline, having a trading plan, and respecting the trading process. Without this, you risk falling in the 95% unsuccessful traders.
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