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The Forex market is an ever-changing entity, where each day presents us with different and unique scenarios for trading the market. In other words, no two days are exactly the same. The way the market moves today, will be different from how the market moves tomorrow or 2 days from today. Therefore, we must understand that the Forex market is fluid, and quite dynamic if we want to trade it successfully. Nevertheless, the currency market, as well as most financial markets, are a reflection of people’s ideas and attitudes about what is happening in the market. That is one thing about the market that will never change. It’s governed by the fear and greed of traders around the world.
But the ability to adjust to changing market conditions in the Forex market, is just one out of a few traits that’s required in order to be a successful Forex trader. Over the years, I’ve trained and coached a lot of traders who joined our VIP trading community to master our trading strategy. Many of the traders within our community succeeded. We have the testimonials and private emails to prove it. However, there were also many traders over the years who failed. What I noticed about the successful forex traders, was that there were 8 traits that distinguished them from the losing traders. Therefore, in this article, I am going to talk about those 8 traits and how you can apply them today in the foreign currency market.
If you ever felt like a “Forex god” one minute, and then a trader with the worst luck ever the next minute, then you are NOT staying neutral. Staying neutral, based on my own day trading definition, is when you do not allow a good day of trading or bad day of trading affect you emotionally, thus producing bad habits that make successful trading difficult. For example, when you are not staying neutral, you are allowing each trade decision or each trading day to rule your emotions. This emotional pressure builds on top of itself, making it very difficult to succeed in a volatile market like the Forex market. Professional Forex traders don’t allow the day to day oscillations in their trading accounts faze them. The results of one day of trading, or even a few weeks of trading, are not as important to them as the average over time. Among the professional and profitable Forex traders I know, you will never be able to tell by their appearance if they had a great day or awful day in the market. They know the importance of maintaining their emotions and not over-reacting to good or bad trades. Why? The reason being that extreme emotional reactions disrupts your logic and reasoning, thus making it difficult to remain objective when trading the market. Being overly emotional also affects one’s concentration and focus.
Most successful businesses always begin their business journey with a business plan. A business plan is a formal statement that reveals the goal of the business, as well as the plan or guidelines for reaching that goal. Without it, achieving any type of success with your business will be difficult. It’s the same with Forex trading. Successful forex traders adhere to a set of guidelines that will help them reach their income goal and execute consistently profitable trades. These traders ALWAYS stick to a set of rules or guidelines that will protect them from making foolish decisions on the whim. Remember this saying: “Plan your trade and trade your plan” A successful currency trader’s plan, usually contain rules that define entry, exit, and money management criteria. If you need a reputable trading plan immediately, then I advise that you take a look at this free video report that reveals a 3% per day currency trading plan.
One thing that I always emphasize to my VIP trading members is the importance of maintaining a trading journal. Most of the successful traders I’ve trained, became more proficient with their trading as they chronicled their forex trading journey through writing or documentation. Most traders that keep a journal do not spend time assessing each trade decision and documenting the reasons why a trade was successful or not. They just keep track of their trades with a trading spreadsheet, and think that is all it takes. In order to grow as a currency trader, you have to break apart each trade and identify all the reasons why you had a particular outcome, as well as how you can improve on your mistakes.
Did you follow the criteria for entry and exit?
Did you deviate from any of the guidelines within your trading plan?
Why did you open a trade position at this level?
What could you have done better with this trade?
What did you learn from this trade?
Have you ever heard of the following phrase: “Being a jack of all trades but a master of none.” Well, if you are not careful, you can spend so much time learning a bunch of Forex strategies and techniques, yet never grow towards becoming a profitable forex trader. In order to master the Forex market, you MUST focus on a handful of Forex techniques that work in certain market conditions and perfect those strategies until they become second nature. Successful people are not scattered, they are focused. They stubbornly stick to a few simple tasks that have worked before and focus on those until mastery. It is the same way with every successful forex trader.
If you want to “preserve” your Forex account and not lose all of your money, then you need to execute good money management rules. Good money management will assure that you keep your money intact and that you don’t fall into the trap of emotional trading. Most successful traders commit themselves daily to sticking to a set of money management rules. For instance, one rule is to not risk more than 2% of your trading capital on a single trade. This rule is known as the ‘golden rule of forex trading’. You can trade up to 10% of your account on a single day, but you shouldn’t risk more than 2% on a single trade. This is why it is imperative for you to use a stop loss in your trading strategy. I haven’t met a single successful trader who doesn’t use a stop loss strategy. This is why I stand by stop losses, strictly for money management reasons.
Are you afraid of risk taking? If so, then trading the Forex market or any other financial instrument may not be your “cup of tea”. What makes great traders so great, is that they are extremely comfortable with taking risks. Risk doesn’t scare the successful away. They are not afraid of losing money on a trade. As a matter of fact, if you have some inhibitions about placing a trade because of fear of loss, then you need to get over your fear fast. In this “trading game”, losses are inevitable. You will not be able to avoid it. The successful traders know this, and they include the factor of losses within their trading plan. Therefore, if you expect to be a profitable trader, you must get comfortable with taking risk and being uncertain about a particular trade outcome.
Successful traders ALWAYS blame themselves for executing a trade that results in a loss. They never try to shift the blame on the market, or assume that the reason they are losing is because of how the market is behaving at the moment. Even if price action in the market is horribly erratic, you are the one that pulled the trigger. You executed the trade and you have to accept responsibility for making that bad decision. If you do not learn this, you will always blame your failures on someone or something. The only person that can create success in your life is yourself. So stop blaming others or the markets for your failure.
Lastly, successful traders know when it is time to step away from the platform and stop trading. There can be a number of reasons why a trader stops trading. But over the years, we realized that there are two primary reasons to stop trading. The first reason, is that your trading plan is ineffective with the market’s current price behavior and you are losing more times than normal. This is the perfect time to stop and figure out what’s going on so that you can make adjustments with your trading plan. Markets change, trading volumes vary, and your trading plan may not create that 70+% win rate that it normally does. Change, is almost inevitable when it comes to trading financial markets. Successful traders realize this, and will stop their trading altogether to adapt to present market conditions. The second reason, is when the trader is having a bad day due to emotional reasons or stress and makes bad trading decisions because of it. A trader can have a winning trading plan, but he or she can still fail if external stress factors and emotion is behind every executed trade entry. Most successful traders do not trade in a stressful state. They would “sit out” an entire day and not participate in any trading until they get their emotions and stress under control.
It is common knowledge that many of the most successful people in the world became successful by following the footsteps of other successful people. Many of the traits and characteristics above, are the key traits that the most profitable currency traders in the world used to master this market and generate consistent profits month in and month out. If you want to take your training a bit further, and learn from a team of successful forex traders, then I advise that you learn the same strategy that a single mother now uses to profitably trade the EUR/USD and AUD/USD currency pair.
Melvin Perry has been trading the Forex market since 2010. Like his brother, he attended the University of Illinois in Urbana-Champaign and graduated with a BS in Bioengineering in 2002. Although an active trader, he spends most of his time reading the Bible, studying the markets and providing content for this blog. He also does an average of two training webinars a week with the Slumdog Forex VIP community.