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What Do Successful Forex Traders Do

What Do Successful Forex Traders Do?

Too many people take too much risk in the forex markets. They feel the consequences quickly when they don’t do their homework.
If a trader combines research with planning, success rates increase.

Prepare & Plan

Prepare and plan – these are two key components that many traders don’t take into account. As in business planning and financial planning, ask yourself what your goal is and what your strengths are in the markets. For instance, if you have a strong grasp of retail markets, then it makes sense to focus on retail stocks – not orange futures. Here are some additional factors:

Target Time for Success

Investing in Commodity & Forex tradingThe target time for success is the trading that jives with your outlook and style. Trading with five-minute charts in mind means that you can’t sleep easily with overnight risk. By choosing weekly charts, you’re ok with overnight risk and are open to seeing some days go poorly in the larger effort to see positive returns.
Moreover, are you ok with looking at a computer screen all day or would you prefer to complete research on your downtimes and then make trading decisions for the upcoming few days based on your analysis. It’s worth reiterating that to make money in forex requires time. Trading in the short-run, called scalping, results in small profits or losses. This means more trading is required more frequently.

Methods

Once you choose a target time for success, choose a method. A good example is how traders buy with support in mind and sell with resistance in mind. Some other traders buy or sell breakouts, or they trade by reading indicators such as MACD or crossovers.

Any method requires testing. If the method works more often than not, that’s good. Your method also requires backtesting, although this method is not a perfect barometer for success. Testing more than one method is a good idea; when you establish a method that is consistent in financial success, stick to it and test it on an ongoing basis with different target times for success.

Trading & The Instrument

Trading & The InstrumentTrading instruments: order or chaos? It goes without saying that chaotic trading instruments are not likely going to be winners. Evidently, testing your approach with several instruments to measure your approach is congruent with the instrument traded. To provide a potential scenario, let’s say that the trader is trading the U.S. Dollar and the Japanese Yen in the Forex market; under this situation, Fibonacci support and resistance might be appropriate.

Attitude Is More Important Than Aptitude

Our attitude is a tremendous barometer of what we value in life. Attitude can measure how whether we will succeed in relationships; attitude is also essential to successful trading. Key tenets of a good attitude for a trader include:

  • Managing Your Own Expectations

Markets can move quickly – even gyrate – than planned. Managing your own expectations means that expecting a 500% return on your investment each trade is totally unrealistic. There is no universal target time for success; that is, smaller trades in the short run mean less risk (assuming there’s some discipline in each trade). Risk vs. Reward is the name of the game in this context.

  • A Trader Is A Disciple of Discipline

Above, we spoke about establishing a method. No method can fully be tested without some discipline. In other words, stick to the method, give it some time. In the event that the price doesn’t reach your planned price, traders need the discipline to stick to the method. Pulling the rug out from under your own method is one of the worst things that can be done. Discipline also requires action when the method says to act (especially with stop losses).

Emotions Need Not Apply When Trading

Emotions Need Not Apply When TradingEmotions can drive consumers to behave badly when investing; the same holds true for traders. Removing emotion from decision-making speaks to the strength of your method. Expressing confidence in that method means that traders have entry points and exit points that are appropriate. Emotions can limit traders’ objectivity, especially when they listen to talking heads. A successful trader’s method, if tested and deployed appropriately, must provide the trader with confidence to make decisions based on the market’s signals.

Good Things Happen To Those Who Wait

Upon devising your method and having the discipline to stick to it, patience is needed (while keeping your emotions in check). This means waiting patiently for prices to be at your pre-established point of sale or point of purchase. A method that stipulates a purchase at x level but the price never reaches that level creates a situation for a patient trader to accept reality and pursue another trade.

Key Items To Consider In Forex

An instrument can trade differently under different circumstances. An excellent example is how hedge funds differ from mutual funds in strategy. Those who trade spot currency markets (i.e. banks) are driven by different goals than currency traders trading futures contracts. Knowing what drives players like banks can provide traders with opportunities to fulfill their financial goals by aligning themselves with those players.

Testing Your Method

Applying your method to several currencies, stocks & commodities and keeping track of them over a specific time period can determine the method’s strengths and shortcomings. This can help discern which instrument aligns with your approach. If this approach is repeated regularly, the method can be weighed against swings and gyrations in the market.

What Strategy Is Best In Forex?

There are almost no certainties in trading. No one can only have profitable trades and no method is perfect. When you look at the best teams in pro sports, they still lose games. Similarly, a profitable method will still have losing trades. Knowing when to hold ‘em and when to fold ‘em is part being a successful trader.

Managing Risk

Risk Management in tradingA successful trader is constantly considering risk without becoming obsessed with it. It’s clear that to get your best trades, evaluation of your method and making adjustments if necessary is important. Sometimes traders need to have some losing trades before they understand how to make the right moves. A good attitude, patience & discipline – in addition to risk –are some of the keys to success.

Author: Sophia Mason

"Success is no accident, It is hard work, perseverance, learning, studying, sacrifice and most of all love of what you are doing "

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