Top 4 things Successful Forex Traders Do
Your personality type and success as a trader are intertwined. However, in the context of teamwork, we’ve heard discussions of how people who have completely opposite personalities can become successful.
Donald Trump is extroverted while Bill Gates, on the other hand, is an introvert. They are all successful because they build a network of people around them. By doing so, they are able to plug holes that exist in their personality profiles.
Let’s take the example of a visionary thinker. He sees the end product but does not care or know how that product will get built. However, the ”how” personality is a detailed thinker. They think how to put together details to come up with the product. Thus visionary thinkers will hire them as a complementary of their ”personality holes”.
Now, you might be wondering what are the top 4 things that successful Forex traders do. Although it is not easy to implement those things in our trading journey, they can be learned, practiced and integrated into our trading routines until they become a habit.
But the problem with trading or investing in the Forex market is that it is a solitary activity.
What you don’t have in your personality cannot be complemented by another person. That is why becoming a successful trader is one of the most difficult things to master (if you do not have the right training and coaching).
To actually become a successful Forex trader, you will eventually need to change certain aspects of your personality. This is not the easiest thing to do.
This is because you are literally changing how you were made and trying to acquire new traits which you previously didn’t have. And am not talking about simple behavioral changes like remembering to brush your teeth twice a day and so on. I’m talking about altering your personality and mindset.
In essence, it means that if you do not have the necessary trait to become a successful trader, you will most likely fail.
Am I saying that trading can’t be learned? Absolutely not. Nothing is impossible. If behaviors can be changed, then certain aspects of your personality can be changed in favor of your trading career.
With respect to this, I will be listing down Top 4 things Successful Forex Traders Do
Top 4 things Successful Forex Traders Do
1 They are religiously disciplined
10% of traders are successful because they have sickening discipline and are willing to stick to it over a large series of trades. Here, I’m talking of the kind of discipline that many people can’t stick to.
Once you are in the Forex market, you are faced with a vast array of never-ending temptations which can do financial and mental damage to you.
The reason why many people fail is because they can’t stick to every aspect of their trading edge, especially after they have won or lost a recent trade.
What kind of discipline are we talking about here? The kind that makes you stick to your price action trading strategy as taught here…. the kind that keeps you from checking your trades a hundred times a day and throughout the night.
In short, if you have the discipline to fight all the temptations that the market has presented to you, you will eventually make money from it over time.
2 They understand risk/reward and position sizing
When I teach my students why they should be learning to trade the daily chart first, the most frequent question I get from them is whether that would be possible for a small trading account, say $500.
The successful Forex trader is someone who has mastered and abode by the principles of risk, reward and position sizing.
Whether you start with a small or big account, these principles of trading must apply to your routine in order to preserve your trading capital longer.
Position sizing helps with adjusting the volume that you trade based on the size of your account. We have said several times that we cannot risk more than we are willing to lose.
However, what happens is that traders mostly get carried away by the outcome of their previous trades. If it was a win, they give in to the temptation of increasing their position. If it was a loss, these traders still get tempted to increase their position sizing in revenge.
Now, one of the top 4 things that successful Forex traders do is to make sure that they are sticking to the original trading plan and not getting carried away by their emotions.
It’s one of the hardest lessons to master. But if you can actually grasp and stick to it, you will see results over time.
3 They understand the game of probabilities
When I started trading 7 years ago, I was obsessed with how many trades I could win. I used to believe that to become a successful trader, one needed to win at least 7 out of 10 trades. The win rate had to be at least 70%.
Surprisingly, this came up when a portfolio management company approached me asking if I could help manage their client funds.
When I said yes, the next question they asked me was my average win rate over the last 3 months. My response was brief. I said 40-50%. They could not figure out how 40% could turn into profits for their clients.
Well, to cut long story short, they gave me the chance and it worked out.
The point is, if you stick to your trading edge, you will build your account over a series of trades. The issue is that you may not know when exactly your winners will come.
Remember, each trade outcome is independent of the other. You could flip a coin 10 times and on the 11th time, you get a head for the first time. But if you keep flipping the coin many times over and over again while putting odds in your favor, you will eventually get good results.
Likewise, trading is a game of probabilities. Once you get this into your mentality, the rest will work for you.
4) Successful Forex Traders sometimes don’t trade
I know you are wondering how these Forex traders are able to make their money if they can’t trade on a regular basis.
But you see, I’d rather go play golf outside rather than risk my money in a market that does not meet my criteria. There is no point risking what I have made when uncertainty in that trade is like 50%. Although we should never anticipate the outcome of a trade, it is generally an acceptable rule of thumb if we can enter trades that meet our set criteria and our gut feelings are telling us to take that opportunity.
You don’t have to be in the market always. If there is nothing to trade, preserve your capital.
These are the top 4 things Successful Forex Traders Do. You can consider them the ”holy grail” or pillars of trading that every successful trader must stick to. But most importantly, essential training is what traders need in order to learn and practice the 4 things discussed above. I hope this lesson gave you some insights into how successful Forex traders make their money.