If you believe the widely-held opinion that is perpetuated across the internet, which says that about 95% of forex traders actually fail in their quest to make money, you need to find a way of getting yourself into the top 5%.
Using platforms like MetaTrader to provide live streaming prices and charts, will definitely give you the information you need at your fingertips, but it is how you act upon the data that will set you apart from the others.
Think Outside the Box
Even if you hate business-speak quotes like that, the philosophy is what you need to take heed of.
In order to be a successful forex trader you need to try and think differently than the others. You need the characteristics of a successful trader such as a keen sense of discipline and the mental fortitude to stay on track with your plan even when you hit the odd bump in the road along the way.
Only you can be the one who ultimately determines whether you are profitable overall or not and it’s never going to be one specific feature or niche that necessarily defines you but a combination of factors that sets you apart from the traders who struggle to make consistent profits, but blame market conditions or plain bad luck for their lack of success.
No forex trader can operate without incurring losses on some of their trades but there is a critical aspect of successful trading that relates to losses.
A profitable trader will be able to adopt the right mindset to accept that losses are a part of the path to making regular profits. This is because a successful trader will not actually view a losing trade as a bad thing altogether, more an opportunity to understand and learn for the future about where and when you entered the market and whether your stop loss limit was correct.
Losses can actually be a powerful learning tool and as long as you are able to analyse your losing trade without getting to hung up on the short term pain of losing some of your capital, it will help you to be more profitable in the future.
Making Use of Price Action
If there is actually one common denominator amongst successful traders it is probably the fact that they all tend to use price action as part of their strategy in some way.
They may be using and interpreting price action in some different way to each other but whether they are using raw data or simply wanting to identify key levels in the market, price action plays an important role and provides access to areas that are worth watching for potential entries and profit targets.
Many successful traders would consider trading forex without using some form of price action as the equivalent of trying to ride a bike with your eyes closed. You can probably do it, but is hardly something that you would advise or recommend doing.
Moderate your Efforts
This sounds like a crazy piece of advice but basically, trying too hard is very often a sign that what you are doing is probably not quite right and changes need to be made to your strategy.
Putting in the groundwork and studying the markets to define a successful strategy is highly recommended and perfectly acceptable but it is when you are trading regularly that good trading should appear to be relatively effortless.
Trying too hard to make things work and to force profits, will almost certainly lead you down the path of emotional trading and put you firmly in the fabled 95% of traders who are unable to make consistent and sustained profits.
Healthy Respect for Money
There are very few successful traders in existence who do not know exactly how much money they were putting at risk on any given trade.
A surprising number of traders simply don’t think about how much money they are putting at risk and this is often because they may be using an arbitrary percentage in order to calculate their risk, such as defined percentage of their total trading account balance.
Focus on the amount at risk rather than the number of pips and the percentage of your account at risk, it will give you the required healthy respect for money.
No successful forex trader who is placing trades in the market today, actually needs that money within the next 24-48 hours.
It is not really feasible to trade forex or any market for that matter, to try and gain a specific amount of money within a specific period of time. It is unlikely that you will be able to sustain your efforts successfully under that level of pressure and you will probably therefore succumb at some point to the evil twins of fear and greed.
Never be afraid to learn from your mistakes and if you adopt the mindset and strategies of a successful trader, you have a far greater chance of joining that exclusive 5% club.
Lydia Cameron has made her share of mistakes in the Forex marketplace. An avide blogger, she enjoys sharing her experiences with Forex newbies. You can read her illuminating articles on investing and financial blogs sites on the web.