How Forex Traders Become Rich (And How You Can Too)

The Winning Traits of a Forex Trader

In the world of Forex trading, the most successful traits a trader may have has nothing to do about who gets to play the good or bad guy. Rather, it’s all about the traits that increase your tendencies to make wise – or unwise – moves.

Trading more and more often opens you up to little details that every move makes, and how you see the graph. At the end of the day, the candle sticks are pressure to move up or down, and the way your mind will adjust to make profit from these will take time and skill which can be developed quicker than you think.

We guarantee you that you will fail (it is inevitable and happens to all of us), but failure is what creates success. Nothing is achieved without its opposite, so use failure as a way to learn.

Cut Your Losses Early

Traders hear this very sage advice all this time, but most ignore it – to their everlasting regret. Hope is a powerful motivator. And it’s always good to be optimistic. However, you have to be careful about choosing what to be hopeful for. Cutting your losses early does not mean you’re quitting. It simply means it’s time to move on and try another currency pair. It really is that simple.

Don’t Fix What’s Not Broken

It is a cliché, but that doesn’t stop it from being true. In fact, ignoring clichéd advice is quintessential example of how people insist on leaving the path to success in order to take a wrong turn. Why put a stop to an account that’s doing well? Although there’s a chance for trading pairs that are doing so good to plummet and suffer a huge drop in their rates, these things rarely happen without any noticeable signs. In most cases, you will have enough clues to warn you and fall back to Trait #1: cutting your losses early.

Know The Right Time To Trade

Some people just like being the exceptions to the rule for the sake of it. However, that kind of attitude is dangerous for a Forex trader to adopt. More often than not, it will lead to heavy trading losses, enough to break the bank for good. Timing is everything in Forex trading. You may like to think it as a subjective factor, but studies show that timing is actually objective. Numerous experts have proven with their case studies that the best time to trade in the Forex market is between 1900h – 1100h in UK time, which in Eastern Time will be around 1400h to 0600h.

Know The Best Times To Use Trading Breakouts Versus Range Trading

Rather than letting mere instinct to be your guide, there’s a surer way of determining which of these two essential trading strategies is best to use.

  • Range trading is best to use during active hours as your strategies are given sufficient time to work.

  • Trading breakouts are best to use during volatile hours as they can take advantage of the extreme changes that currency pairs will undergo.

Make Use Of An Effective Leverage

How much leverage you allow yourself to use will always have a considerable impact on your trading strategies and its eventual outcomes. There are many different formulas you can use to compute how much leverage you can afford to use, but at the end of the day the factors listed below will prove most important. Keep it conservative. Always apply a stop-loss point to your strategy.

Risk tolerance levels do not have to be proportionate with leverage. There are always exceptions to the rule, and those are simply an inevitable part of the game. Even if things do not go your way, the above traits will serve to minimize your losses and increase your winnings.

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Knowledge & Experience

Those who attempt to day trade without first learning the fundamentals of the market frequently lose money. A day trader should be able to perform technical analysis and understand charts. Charts, on the other hand, can be deceitful if you don't have a thorough understanding of the market you're in and the assets that exist within it.

Discipline

Winning and losing trades is part of learning. It takes time to remove emotion from trades. Accept losses before facing defeat. Day traders rely largely on market volatility to make money. If a stock moves a lot during the day, it may be appealing to a day trader. This could occur as a result of a variety of factors, such as an earnings report, investor attitude, or even basic news events.

Focus On Managing Your Emotions Instead Of Ignoring Them

Emotions are not your enemy. This is extremely important to understand. Ignoring them will not help you at all. If anything, they will simply make you more prone to bad trading decisions. What’s more critical is being the master of your emotions with the right mindset rather than the other way around.

Avoid Over-analyzing Forex Trading

Some traders are so opposed to the involvement of emotions in their trading strategies that they go to the extremes and over analyze their next steps. Again, doing this will only backfire on you. When you over-analyze and even over-complicate your trading strategies and market trends, you will simply end up confusing yourself. Remember that every complicated equation can be broken down to various simpler equations. In fact, it’s one of the golden rules when writing algebraic equations: the simpler, the better! It’s the same with Forex trading. If a system proves too complicated for you, then forget about it! If it works for another trader, good for them! But don’t let that sway you into knocking your head against the wall. There are many other systems you can try – and some of them will surely prove much more suitable to your personality and preferences.

Stay Objective

If you succeed in emotional management, then you will be able to use your emotions to help you stay objective. With emotional management, you’ll know which emotions to believe in more. If you are presented with a very high-risk investment that you do not understand but your friend recommends, what should you do? Greed will tempt you to bet on it, but your instinct for danger will warn you against doing something foolhardy. With successful emotional management, you will be able to take the more objective middle ground instead and that’s to carefully research your options before making any decision.

Constant Training And Practice Leads To Permanent Habits And Mindsets

Consistency and constancy are essential in making price action trading a permanent part of your mindset. It’s not enough to know how price action trading works. It’s not even enough to be aware that emotions can have a positive and negative impact on your life. You should also make a conscious effort to apply your knowledge to your trading decisions. It’s all right to forget these principles once in a while, but don’t let that hinder you from trying again. Having the right mindset will not make your strategies fail-proof, but it can significantly reduce your risks of incurring heavy trading losses. With the right mindset, you become more aware of the pros and cons of your decision and that’s more than what you can say about other traders.


Understand The Power Of Patience

You can employ a variety of methods to aid you in your quest for earnings once you've mastered some of the tactics, created your own particular trading methods, and set your final goals. Patience is the key and the most effective method to maximise your profits - ask any professional trader.

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A lot of people make huge losses in Forex markets just because they make simple mistakes like overtrading or not being patient enough to allow their trade setups to play out and instead they enter and exit the Forex market compulsively. The problem may lie not so much with your trading strategy but with your inability to exercise patience by waiting for the best low risk opportunity with the highest probability of success. The tips discussed below will help any trader step up their trades from mediocre trading to consistent and profitable trades.

Here we can see how basic patterns can just show more than an "up or down" movement:

Create a Trading Plan and Stick to It

The best traders in the market always plan ahead and are prepared at all times having compiled an elaborate trading plan after which they always act according to their plans. Creating a plan does not necessarily mean that they trade all the time; novice traders usually accumulate losses because they think that they should be on the market trading all the time. Preparation is an important aspect to any successful trade but at times it’s better to sit tight and wait for the trade to play out; just because the Forex market is open 24/7 does not mean that you should be trading all the time.

Wait for Your Trade Setup to Play Out Good

traders never anticipate how their trades will play out, those who do lose a lot of money in this manner. Exercise patience when your trade plays out and bear in mind that a good trader can be compared to a lion, an amazing predator due to his great stalking skills, and a patient one at that, always waiting for the perfect opportunity to go for the kill and what’s more when he goes for it he rarely misses. Jesse Livermore once said that big money is made by sitting and waiting, and never by thinking, he adds that it’s important to wait for all the factors to tilt in your favor prior to making the trade.

Trust Your Instincts

Accurate gut feelings are indisputable with one of the greatest Forex traders, George Soros revealing that he depended heavily on his instincts when he traded. Soros said that he relied on his animal instincts and that when he suffered from back pain he used the onset of the pain as a sign that something was wrong with his portfolio. This will prompt him to check whether something was amiss when he might have done the contrary, if he had ignored his instincts he might have incurred huge losses.