Statistics say that hardly 2% of traders actually make the cut. The remainders of the 98% are merely a flash in the pan. Some traders give up at the first taste of failure; others continue to spend money in hopes of finding the ‘Holy Grail’ of trading.
Others simply use a social trading or a PAMM account and hope that other’s decisions will affect their equity to grow. Trading, be it stocks, forex or bonds is just like any other endeavor. Nothing happens overnight! You cannot expect to find a trading strategy and expect that you will get the same stellar results as the guy who posted it on a forum or a vendor selling you a system.
Hard work and perseveration are one of the essential aspects that will determine your success in trading. What keeps the best traders going is that hunger to understand how the markets work. Success in trading is in finding a system that suits you perhaps in a way a trading system is like an extension of yourself.
Struggling to make the cut? Probably more than money management or a trading system you should prime your mind.
Trading, as you might know, is a part-psychological game. It is after all the reflection of other humans/traders. When you trade, you are basically trading with or against this mass sentiment.
It can be easy to get discouraged with trading. A few string of losses (which are not that uncommon) can easily make a trader to doubt one’s ability to trade successfully. Further to this, the fact that losing money is the result of such losses can easily make a trader to give up.
Here are three things that will help you to have a winning mindset and will help you to become just a little bit more successful.
1. Know what you are trading
So you want to trade EUR/USD. That’s great. But do you know what factors are behind moving the price in this currency pair? Using just technical indicators will not help you get far. And if you aim for consistency you need to take the time and learn and get intimate with the currency pair or the security that you want to trade.
Most often, traders only focus on a security or a currency pair because they think they can bank money easily. But sooner or later you will realize that this will only end up in burning a hole in your pocket. There are numerous resources available these days. Traders can easily take advantage of this and learn more about the fundamentals and the history of the currency pair that they are trading.
To illustrate this point, take the example of the EURCHF peg that was broken in 2015. While many traders were surprised, history showed that the SNB did this quite a few times before. Therefore, traders who spent time researching into the history of the currency pair were at an advantage while most others relied on technical indicators and the greed to make money quickly.
2. Make a commitment and stick to it
Traders who keep jumping from one strategy to another will often find themselves running in circles. They will end up either spending money on black box trading systems or paying a signals provider without actually making much money.
If you want to be successful in trading, then the first thing to do is to build your own trading system. The options are endless. What determines a good trading system from bad is how well you know it.Successful
Some traders are quick to jump from one strategy to another at the first sign of taking losses. This way one doesn’t really give themselves a chart to truly understand the dynamics of their trading system.
It is only through these losses that you can get to know the strength and weakness of your trading system.
3. Don’t give up
If you think you can become rich trading forex within a year, then that is being very ambitious. While the timeframe may vary, traders should know that the only way they can make the markets work is by not giving up.
For some, it might take a year, for others, it can take more than three years. The bottom line that differentiates a winning trader from a losing trader is that they don’t give up. The urge to excel at trading is what keeps some traders going until they make the 2% cut.
Forex trading is often glamorized, and most often the trader’s psychology is preyed upon. Disguised as a way to trade and make money, most traders fall prey to this tactic.
However, being fully aware of what the currency markets are and how they work, and most importantly taking a serious step to learn and be good at trading is what will eventually decide whether you will be consistently profitable or here just to give your money away to the other 2% of successful traders.
by John Benjamin, Orbex
John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.