For the majority of people, trading the financial markets (such as the foreign exchange market) is a very tricky road, leading to losses, but with the right education and mindset, a success of it can be achieved. It doesn’t matter how it is phrased, or how often they are told otherwise, novice traders in the foreign exchange market look upon their entry as a bit of an adventure, but the problem is the majority of traders with this unhealthy and totally incorrect attitude to Forex trading are, mostly without exception, the ones who are listed amongst those who have made a brief incursion into Forex trading and are from the 90% of those who lose their working capital. Why does this have to happen?
We have to be blunt here. Most traders lack the necessary mental fitness that they need to gain and nurture to survive and indeed profit in this fast paced business. Like the man once said “There are no shortcuts.” Aiming continuously for a big profit, will invariably result in big losses, and usually the end of an eventful but singularly unsuccessful career as a Forex trader.
So what does it take to build sufficient mental fitness for traders, which will allow them to stay in the market and make increasing profits from Forex trading?
The first and most important attribute that a Forex trader should have been born with and improved upon in their life and in their career is self discipline. Without that gift, life will be difficult in general and as a Forex trader in particular.
Self discipline is what will make the novice wait the full two months to complete their unwritten but obligatory “run-in” of simulated trading. Except 2 months is nowhere near enough; one just needs to read the countless testimonies of traders who acknowledge this fact, such as at forex forums or blogs. Initially, they will often complete this period without flinching and with their teeth gritted. Even if after a few short weeks, the “wannabe” Forex trader has caught the full drift of what is required to generate profits consistently, he or she will stick to their pre-arranged plan. Throw away what you’ve been told regarding timeframes – and get any preconceived ideas out of your head; this is a long road, requiring the right type of emotional state. A steady one.
Hence, when the novice Forex trader thinks he or she can start to play with the “big boys” they’ll go in with a plan and a trading policy that will have been looked at from every angle and will have every conceivable chance of succeeding. What can make it fail? Where can lack of discipline spoil the plan and trash the theories of a novice and begin to send them towards the waste basket of Forex traders? When they begin to panic, chase losses and throw their plans out of the window. And who are the traders who know how this oft repeated pattern can be avoided? Well, one thing’s for sure – those who have trained themselves to avoid the pitfalls of fear and greed have at least a fighting chance. They know that losses can occur, but they have enough confidence in their systems or forex indicators to see them through. They know that the golden nugget lands only occasionally and are content to make a small and consistent profits, grabbing the low hanging fruit, as opposed to jumping for the rainbow. They know that losses need to be absorbed and kept in proportion. This is the mentality a trader needs to have.
The one thing that a disciplined trader with a firmly developed mental fitness doesn’t forget – is never to let one’s heart and emotions rule one’s head. Never panic and don’t take any losses personally. And whilst failure is a probability, with success only being a possibility, just remember, there’s more to life than just the analysis of lines across a screen.