Note: This is part two of our two-part series. Make sure you read the first part if you haven’t already. In this article, we will 3 more qualities of a successful trader.
4. Successful Forex traders don’t try too hard
But striving is what it takes, isn’t it?
This may apply to other areas in life, but Forex is an exception. Successful Forex traders know that trying too hard is an indication that maybe something isn’t right.
This is different from studying a lot. As a new Forex trader, it is highly recommended to study the market.
For example, you can’t spend too much time learning the ins and outs of different currency pairs or how to draw key levels. The harder you try to learn those particular topics, the better.
However, trying too hard make a strategy work will only lead to destructive behavior, such as emotional trading. Similarly, trying too hard to find trading opportunities is a good way to lose money in poor setups. No one strategy will fit into every situation or setup, sometimes you will be better off waiting rather than entering a trade.
Jack Schwager, the author of the Market Wizards series, said it best when he wrote, “good trading should be easy.”
I’m a big fan of this book series. In fact, I wrote a publication that presents several of his books.
When I started trading Forex, I remember spending countless hours studying settings over the weekend. I would often come back to my ideas several times on Saturdays and Sundays.
Then, on Monday, most of the time I would end up taking a completely different trading setup just to see how the original idea moved in the desired direction without me.
It happened because I was trying too hard. As soon as I stopped over-analyzing the settings and trying to force them to work, my profit curve started to go up.
Now I spend 20 to 30 minutes a day looking at my charts.
As contradictory as it may seem, learning not to try so hard was one of the things that completely changed my Trading career for the better.
5. Think in terms of risk
It is often the smallest things in life that generate the greatest improvements.
The concept of thinking in terms of the value at risk, as it applies to Forex trading, is no exception. It is an extremely simple concept that can have a big impact on your way to becoming a successful Forex trader.
I have never met a successful Forex trader who does not calculate what is at risk before entering a position.
You may think it’s an obvious statement, but a surprising number of traders don’t think about how much money is at risk before opening a trade.
This is because they are using an arbitrary percentage to calculate risk, such as one or two percent of the value in their trading account.
Think about your last trade for a moment. Did you define the exact amount in dollars at risk before performing the trade? Or were you more focused on the number of pips and the percentage of your account at risk?
The convenience of Forex position size calculators has made us never have to consider the amount in dollars at risk. This convenience has led to great carelessness.
Don’t get me wrong, I use the position size calculator before every trade.
However, I am just as interested in the amount in dollars at risk as in the percentage of my account balance.
Aren’t they the same?
Yes and no.
Obviously, 2% of $5,000 is $100. In that sense, 2% and $100 are essentially the same.
Without a doubt in terms of how our mind perceives these two figures, they are at opposite ends of the spectrum.
It is important to think in terms of money being risked as well as pips or percentages.
This is because pips and percentages do not represent emotional value. So, when you define your risk in a trade only as a percentage, it activates the logical side of your brain and leaves the emotional side looking for more.
When you calculate your risk only as a percentage, you are defining your risk but do not accept it.
As soon as you convert that percentage into a dollar amount, your mind can visualize what $100 looks like. This allows you to determine if you are prepared to lose that $100. In other words, does the trading setup look good enough for you to risk $100?
It’s much easier to risk 2% without fully accepting the potential loss because it doesn’t have the emotional value of money.
The best Forex traders know that. That’s why they always define their risk in terms of a percentage and a dollar amount.
6. Don’t need the money
There are not many guarantees in the Forex market. But one guarantee I can make is that there is no successful Forex Trader who is trading today to generate the money they need tomorrow.
In other words, trading Forex to earn a certain amount of money over a specific time period.
I’m not saying I can’t generate most of your revenue by trading Forex and do it full-time. Such a statement would contradict my own experience.
What I’m saying is that no successful Forex trader needs a profit today to pay the light bill tomorrow.
No Trader can withstand that type of pressure and be consistently profitable. Such an environment will only foster destructive emotions such as fear and greed.
This theme brings us back to the notion that the best Forex traders don’t try too hard.
If you need the money to pay the bills, you’re likely to feel pressured to win all the time. If you feel pressured to win, you will hardly try too hard instead of allowing the market to do the heavy lifting.
The conclusion is as follows…
You should only trade with money you are willing to lose. Do not trade with the money you need to pay the rent or provide for you or your family. You need to have capital available that can be put at risk.
Similarly, don’t let money be your only reason to trade. The desire for money is probably what attracted you to trading in the first place, but don’t let it be your only wish.
Accept the challenge and focus on the journey to become a successful Forex Trader and the money will come.
Let money be the byproduct of good trading.
Whether you’ve been trading Forex for a month or five years, I hope the six attributes of successful traders you just read will help you on your journey.
The most important conclusion is that there is no secret to success in trading. Clearly, there are several tips that can help you, but those who have made consistent profits are not magical.
In other words, there’s nothing you can’t replicate, but it is not always easy.
However, if you intend to rise through the ranks and join the club of the best successful traders, you should be prepared to work and spend the time necessary to succeed.
Embrace the journey, because there isn’t a defined end to this process. Even those who have achieved success have more to learn.