3 Defining Traits of a Successful Forex Trader

Though the potential profits are limitless, succeeding on the forex market is by no means an easy feat. On the contrary, the highly unpredictable and volatile market means big losses can be just as common as big wins.

That’s why today, the forex educational experts over at Learn To Trade are offering up 3 defining traits of the successful forex trader, helping potential traders identify whether they’re cut out for the 24/5 trading lifestyle of the forex investor.

Not trying too hard

OK, so our first characteristic needs some explaining…

Like in all aspects of life, dedicating time and effort to forex is bound to help you reap some rewards. By all means, studying the market extensively as a novice is certainly advisable, helping you attain the necessary fundamental knowledge of how the market operates day-to-day.

When it comes to trading strategy however, over-attentiveness can in fact be a detriment to the trader. The successful forex trader refines his strategy based on empirical evidence, making minor adjustments based on indicators, charts and observable market movement. Trying too hard to immediately establish a successful strategy is not only bound to fail, but could have more severe consequences in the long run.

For example, by becoming too deeply entwined in your strategy, it’s likely you’ll become somewhat emotionally invested in its success. This can result in emotive reactoray trading, abandoning reasonable logic in favour of the desire to make back losses or extend wins. The successful forex trader, on the other hand, remains emotionally detached at all times, accepting profits and losses as they come and refining their strategy accordingly.

An innate awareness of risk

Perhaps the most important trait possessed by the successful trader is an innate awareness of risk. As previously mentioned, the high liquidity and volatility of the forex market means for every big win, there’s the potential for an equally big loss. Understanding risk, therefore, is imperative to achieving any form of success.

To the profitable forex trader, every trade is calculated in terms of contingency. While risk indicators and position calculators can be useful to develop the mindset of danger awareness, these can be problematic as they give values in an arbitrary percentage – which can cause confusion about the amount of capital they’re actually risking. Instead, think in terms of objective monetary value – understanding that your trade is risking £500, for example, is sure to help you think more cautiously than simply knowing you’re risking 1% capital.

Non-reliance on your profits

Forex is an uncertain game. So, while market profits can serve as the primary source of income for most (if not all) successful traders, developing a reliance on this unsteady income stream can have a series of negative implications.

As a rule of thumb, no successful forex trader needs to profit today to pay the bills tomorrow. This kind of financial dependency can only lead to emotive reactionary trading and, in turn, the abandonment of logic and strategy in favour of chance – which, it should go without saying, can easily have disastrous consequences. As a result, only trade with money you are prepared to lose, ensuring you never exceed your daily trading limits regardless of whether the day has been a mountainous success or one to forget.

Achieving success on the forex market takes time and effort, so don’t expect instant results. Ensuring you possess these 3 defining traits, however, is sure to set you in good stead as you become more familiar with the market, helping you on your way down a potentially prosperous path to forex success.

Author bio

John James is a content writer for Learn To Trade, the foreign exchange education and learning specialists – offering a range of training courses to help people understand the currency trading market, as well as its opportunities and risks.