Anyone can be a forex trader. All you need, essentially, is a small amount of capital with which to open a trading account. Not everyone is cut out to be a successful forex trader, however. It’s true that there are many different styles of trading. Successful traders can come from any walk of life and they can be very different people, but there are a few traits that most successful traders seem to have in common.
Knowledge is power
If you were starting a new business, you wouldn’t plunge in or commit your precious time and resources without doing your homework. This would generally include such things as researching the market for your products or services, checking out competitors and compiling a thorough business plan complete with financial forecasts. Starting to trade the forex markets should be approached just as seriously. There’s a lot to learn, and the more prepared you are when you start, the more likely you are to succeed.
Reading up on the subject is useful, and professional training can also be useful. Many new traders find practising with a training account can be invaluable, but it’s a different experience when you’re trading with substantial amounts of your own money. You can’t learn experience, of course; you can only earn it, and that also takes perseverance. Experience is certainly invaluable, but that doesn’t mean that beginners cannot be successful. The successful beginner who is not simply enjoying a lucky streak (and trust us, those don’t last forever) will tend to have a good basic overview of how the forex system works and a more in-depth knowledge of their chosen or favoured strategies.
Some traders continue for years with the strategies they begin with, but if you continue to learn about new styles and techniques, this can give you the flexibility to change your game when the situation dictates.
A detached viewpoint
Most successful traders are able to approach trading in a calm, rational and analytical manner. This can be difficult for some people, but even those prone to hot-headedness can usually learn or train themselves to curb their emotional responses, at least to a degree.
Patience is one of the greatest assets a trader can have. Exactly how much patience you need will, of course, depend on the trading style you prefer, but even intraday traders and scalpers need to wait until the right time to make a move. Greed and fear are two of the motivations that can lead to a trader abandoning their carefully considered entry and exit points, and they can manifest themselves in a number of different ways. A winning streak can kick the greed muscles into gear, prompting the trader to gamble on too-risky propositions. Fear, meanwhile, can lead to missed opportunities – to a position being closed too early for fear of making a loss or kept open too long for the same reason in a different situation.
There are no guarantees when it comes to forex trading, but working on your knowledge and reactions can certainly help you improve the odds.