How to Grow into a Prosperous Currency Trader

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You can either make money or make excuses, but not both at the same time!

Most of the people trading in Forex have limited knowledge and experience because they do not have the time to learn about this rich market and its keys of success. These people hear about the potential profits that they can gain in this market, so they start working in it without being armed with what they need to gain substantial profit.  These are very real challenges that most new traders face.  It is difficult to start with little experience, little money and little time and build it into a full-time trading career.

There is a myth that 95% of traders fail to make money. That’s a scary idea if you think about it for minute.  But what it also is… is a warning.  It’s a warning and a reality check.  Those numbers help you to see that this is not an easy business.  It is not an easy game we place as traders.  You should keep this in mind whether you are a beginner trader, an intermediate trader, or even an advanced trader.  It is very hard to find even experienced traders who do not experience times of drawdowns and losses.

I write this only to warn you of the difficulty of the question you ask in your mind: ‘how do I become a successful Forex trader?’ But once you understand that Forex trading is not easy, then it does become easier, if you understand my meaning there.  What I mean is that if you know already that the odds are stacked against you then you will have a greater appreciation for learning the systems you have been exposed to.  Chances are high that if you have been involved in Forex trading for any length of time you have already come across a number of Forex trading systems.  We’re not here in this article to delve into the systems that you may have run across but rather to look at some of those less-tangible factors that will contribute to your success.

Why New Traders Make The Decisions That They Do

For new traders, trading decisions are usually based on the brokers’ alerts, copy and courses from friends, or tips from forums based on individual experience.  (This is already a jumble in your mind, isn’t it?)  Then after traders start to indulge more in Forex trading, they tend to learn more about the best method to achieve success in their daily trading. In their search for this method their aim is converted to finding a super program or method of harvesting profits with no effort whatsoever.  (Hint: this ‘holy grail’ does not exist)

At this point traders start to buy systems and methods to start trading with.  This sometimes will generate profit for them, but after a couple of losses they just leave it and look for another new method.  Have you been here before?  I know I have…

After a few more tries and a couple of frustrating experiences, most of the new and intermediate traders stop trading altogether. Meanwhile, a few of them understand that the problem was not with the methods they used but with themselves. They failed to setup strict rules for themselves and follow them.  Excuses do not lead to profit.  You can either make money or make excuses, but not both at the same time. Perfect systems with an undisciplined mind and little knowledge of Forex trading cannot make a profit; instead, good thinking and a good knowledge of Forex provide the keys to win in this market.

The ‘Market’ Is Not The Reason For Your Failure To This Point

Most Forex traders have a relapse in their Forex career because of market conditions or because of not following their trading rules. If the trader instead perseveres and uses wise capital management, the trader can survive and continue trading.  Markets, by their very nature, will move in unpredictable ways much of the time.  As traders we try to identify the times when they appear to be moving with some fluidity and in steady waves.  We also try to see the times when they appear to be doing the exact opposite.

It is a common mistake to let emotions control our trading decisions and make us reevaluate a successful strategy that has been working well for months.  Because of one or two losses it is possible that a beginning trader can become derailed. Fear and greed must not affect our steady, daily routine of trading.

To help with this, try to avoid the common deadly mistakes below:

  • Over-trading – What is too much  it’s too much. There will be times of discouragement and sometimes you will need a break from trading.  Taking a break is a good thing but quitting is not.  Take some time off and gather your thoughts.  Often this can be a time for refocusing and gaining perspective on the way you are going about your trading.
  • Continuing to search for new methods and strategies without giving a chance to one method to prove success or failure.  Mastery is the key to Forex success—not dabbling.  Mastery takes time and patience and so you must stick with your system in order to master it.
  • Not understanding the market conditions that may generate losses.  Sometimes the market movements are erratic at best and cannot be safely traded.  Avoid these times and do not abandon your system as soon as you hit one of these rough patches.

Instead try to stick to the advice below:

  • Watch the market and start trading first with small amounts, especially when trying new strategy, and wait for the market to be valid for big trades.  If you are not yet ready for a live account then trade on a demo account.  Trade for a long time on a demo account if needed and make sure that you are ready to go live before you commit to going live.
  • Study the market condition and your favorite method to figure out the best way and time to start using a successful method.  Not all times of the day are created equal in the markets.  A strategy that works during the US/EUR crossover may not work at all during the more erratic Asian session.  Conversely, a scalping strategy that seems to work well during the Asian session may have a hard time during the more fluid European session.
  • To be a successful Forex trader you need to be patient, willing to learn and have the self confidence to be objective in your trading decisions.  These qualities will only come to you with much experience and practice.  Think of yourself as a pro athlete… how long does it take to gain the skills to go pro in sports?  More than 10 years should be your answer.  So why then do we as traders think that we will arrive at a professional level in just six months?  This is crazy of us to think so, but it happens to us all, doesn’t it?

Some Ideas For Better Trading Success

There are a large number of ideas that may be helpful to you on your trading journey.  Because everyone reading is at a different level it is hard to give perfect advice on what you should do to improve your trading patterns.  Here are rather some general ideas that should be able to provide insight and help you to reflect on what it will take to become a better trader.

Trading requires a good deal of introspection and personal evaluation to determine the ‘gaps.’  These gaps are the missing links that is keeping you from being a successful part-time or full-time currency trader.  If we can identify these gaps together and create a systematic plan to eliminate them then we should be able to accelerate your journey to success.

Some Common Gaps Between Where You Are And Trading Success

1. Not practicing long enough on a demo account.

This can be challenging.  You have the desire to go forward and earn money, real money.  Trading on a demo account earns you no money.  However, it is wonderful preparation time.  There is a danger in staying with a demo account for too much time.  At the same time there is a danger in going to a live account too quickly.  There is no quick-fix, one-size-fits-all  answer here, as everyone’s experience is different.  Unfortunately it’s just the way it is and it will take your own discernment to find out what is right for you.  I will caution you, however, to be careful of leaving the demo accounts too quickly.  Just because there have been a few wins does not mean that you’re necessarily ready to head out into the live account.  Consider these ideas if you are still on a demo account or if you have fallen into the trap of needing to switch back and forth between demo and live trading.

As a secondary note, make sure that when you do switch over to the live account, you stick with it, even when you have a few losses (your next few wins will help make up for these losses, and remember, losing is a part of trading and it cannot be completely eliminated).  The tendency can be to grow very uncomfortable when it comes to live trading when there are a few losses back to back.  There will be losses, but make sure you have not changed your trading disciplines when you go live.  There is a tendency to modify the rules and trade timidly when it comes to the live account so be on guard for yourself in this area also…

2. Deviating from a successful plan after some losses.

If you find something that works, stick with it.  There is a common problem that some traders have and that is known as ‘system jumping.’  You will know it if this is you.  The grass is always greener on the other side it seems.  While sometimes this is true, there are many other times where you will have a good system but still be tempted by distractions and by the success of others and their systems.

Remember that focus and correct actions are what make money in Forex…  you cannot continue bouncing around from system to system and expect to focus on and master your system.  It is very easy to lose focus, and for some more than others.  The challenge to you is to remain focused on your system so you can get better and better at it.  After all, what professional, in any field, got to where they are by continuously dabbling in different things.  It is the focus of light in a laser that cuts through metal.  The power of the light is nothing to cut through objects until it is brought to an intense focus, and in this same way so is your power when it comes to effective trading.

Try to stick with one timeframe and with one currency pair at a time.  Only grow into more timeframes and more pairs when you have mastery over the first.  This is a very difficult discipline to obtain also, but it is very very necessary to your success.  Do not deviate from your plan and become distracted with the other systems you have lying around your computer desktop (yes, I know that they are there, but do your best to focus, focus, focus.)

In the course of your trading you may find that you have a system that is working.  Do not deviate from it.  If you get off track, will you have anything that can remind you of the success you had with the previous system/pair/timeframe?

3. Not tracking/measuring your stats.

There are a couple of wonderful services available for traders that will help you to track your stats.  My favorite one is called MyFXBook.com which does a brilliant job of helping you to measure your metrics.  Metrics are simply numbers/data that can be analyzed that will help you to get better at your trading.

Let me give you one example from a friend of mine.  This friend of mine does manual trading based upon a certain system and uses a trade assistant to help identify proper setups.  When he started he would take trades at random times of the day and on a large number of different currency pairs.  After a month of testing he stopped and looked back over his results.  What he found was quite amazing.

As he analyzed the numbers with the help of MyFXBook.com he saw that his account equity (he was trading a demo account) had lost about 2%.  But here’s the interesting thing…  When he began surveying his results he noticed some patterns.  With the help of MyFXBook.com he noticed that there were patterns in both the currency pairs and the hours of the day.  Some of the currency pairs were profitable over the month-long test, and some of them were not.  By using a filtering tool from myfxbook.com and isolating the profitable currency pairs as well as the profitable times of the day the results came back quite differently.  Instead of a 2% loss, there was a 3.5% gain.

Do you see how important this can be?  You may think that your trading method is flawed, and perhaps you are considering abandoning it, but maybe you should take a closer second look.  Try using this tool if you are not yet familiar with it, and use it to examine the results of your trading more closely.  You might be very surprised what you find out about yourself and about your trading results.  Maybe you had an equity loss overall, but when you filter out bad times of the day your trading will become profitable.  This can be profound for you—make sure to spend some time here in research!

See this picture below illustrates my trading system summary on www.vavatrade.com. You can spot least profitable pairs immediately.

myfxbook advanced stratistics summary

Step Back And Gain Clarity On Your Trading

Not knowing where you are right now makes it difficult to advise you exactly of the best next steps forward.  Here are some ideas, however, that might help you gain some clarity and make some progress:

1) Trading Journal

If you are not keeping a journal of your trading results and the actions/activities that you do each day then it would be a good idea to start.  This that alone can help you gain clarity and make progress with your trading business.  Getting your ideas on paper can be a very effective way to help see things from a different point of view.  Forcing yourself to take the time to write down your ideas as well as the actions that you are taking is often  a good starting point on the path to greater success in trading.

2) Use MyFxBook.com

Make sure you are using a tracking system like myfxbook.com to study your trading.  If you have any friends in trading or people that you can ask for feedback, you may wish to send them over your myfxbook.com link/account stats and ask them to review it for you.  They might be able to provide some valuable feedback from an outside point of view that will be instrumental to your learning.

3) Focus, focus, focus

If you are like many traders, focus is a continual issue.  There is always a new system or a new method (like breakout trading) or a new idea to test.  There may be nothing wrong with testing new ideas, unless of course it helps to derail you from your existing plan.  Try and get yourself back on track and remain focused on one thing at a time.  Make sure to give yourself enough time for testing—don’t give up on an idea or system after just a few losses.  Instead be willing to test for at least a month or two before passing any judgments on it.

Conclusion

There are a number of ideas here that might make a difference in your trading from this day forward.  Leave a comment or a note or question below if you would like to share and receive feedback on your questions/concerns.  Gaining feedback from other traders is often a very valuable thing to do.  Go at this time to your trading journal and take down some ideas that you have for implementing these ideas.

About the author

Rimantas Petrauskas

First I am a father, a husband and then the author of the book “How to Start Your Own Forex Signals Service”. I am also a Forex trader, a programmer, an entrepreneur, and the founder of ea-coder.com Forex blog. I have created two of the most popular trade copiers and other trading tools for MT4 that are already used world wide by hundreds of currency traders.

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Copyright © 2009-2018. Rimantas Petrauskas | Terms and ConditionsPrivacy PolicyEarnings Disclaimer
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
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