A trader going deeply into Forex should realize that currency trades imply a certain risk: you can open profitable positions one by one, but any wrong step may bring you a total loss in the blink of an eye.
Your success does not entirely depend on your trading experience and professionalism. Every novice and professional should understand that the risk is always there, so it is better to keep an eye out. In order to trade on Forex and gain profit, you have to follow a constructive approach, be attentive and analyze every factor which may affect trends.
Below we are going to deal with 9 factors underpinning a successful trading strategy:
1. Traders who decided to work in a short-term period are initially in a risk group, which brings them closer to failure. The main reason for failure of short-term traders is a lack of training and a strict trading plan to follow, not the time limits they set. Lack of experience and knowledge does not allow even a tiny mistake, which can result in a loss of deposit. At the same time, such traders often do not have a lot of money on their accounts. More successful traders work in medium- and long-term periods. Statistically, medium- and long-term trading is more successful. The same can be referred to the funds invested, a capability to stay on the market depends much on the starting capital.
2. Losing traders often spend a lot of time on analysis of where the market will be tomorrow, while more successful ones decide how to behave in the current situation and apply their strategy in accordance with their conclusions. If a trader can foresee the reaction of crowd, he/she will definitely achieve success. The probability of deriving profit would be much higher if a trader can respond to irrational buying and selling of the crowd by a rational action plan. Therefore, it is much more difficult to be a successful analyst than such trader. An analyst has to perform more complicated work, as they have to predict the market movement and recommend how to earn a maximum profit while a successful trader just follows the market.
3. Successful traders pay attention to losing trades and to correlation of profit and loss, while losers only concentrate on their successful trades. It is much more important to track your risks than your profit or loss. Professional traders always estimate how much they can earn and how much they can lose.
4. As a rule, those traders who cannot control their emotions are never successful. Professional and experienced traders analyze the market putting their emotions aside. In case a trader opens and closes positions based on emotions only, this approach cannot be considerate or logical. However, complete ignorance to one's emotions is wrong too. Sometimes excessive stress may lead to mental disease and loss of all trading skills. The best way is to track each emotion and consider if the reasons for one or another decision still remain.
5. All unexperienced traders are concerned about their rightness, while professionals admit their emotions being able to master temper. Successful traders only acknowledge those factors that may help or prevent from obtaining profit. It is very important to stay aware of processes on the market; however, it is necessary to separate private life from trading. Considerable exertion may result in mental disorders and physical exhaustion. Professional traders promptly react to market processes, as it is the only way to earn money for them.
6. After losing money while trading a loser starts buying new books or trading systems and following their concepts. In the meantime, a professional analyses the incident and edits his methods with a regard to the analysis results. More successful trader does not switch to another trading system at once; he/she rather does it after realizing that the old one does not work properly. Successful traders always stick to their developed system using only a few trading strategies usually.
7. Traders without a considerable trading experience often try to repeat trading techniques of famous traders. At the same time, professionals consider all possible strategies, including ones of famous traders, but use them only in case they suit their trading style. Trader's individuality, a knowledge about the market and own trading system are much more relevant than the achievements of famous market players.
8. Often inexperienced traders do not notice numerous factors that could help them to derive profit. Profit of each trader determines the amount of funds in circulation, that is clearly realized by all experienced traders. The amount of money flowing into Forex must exceed the one flowing out, and this is what every trader has to take into account.
9. As a rule, all beginning traders losing any opportunity to get profit really take it too hard, while more successful traders take it easy. Trading is a pleasure for them; however, they take it absolutely seriously. Psychiatrists argue that an excessive seriousness makes person more vulnerable to diseases.
Both successful and losing traders take Forex trading as some sort of a game.
If we compare trading with a game, for example, bowling, newbies realized that strikes thrown by experienced professionals without any visible effort are results of much time spent outside the "big game". As in sports, trading implies numerous internal and external factors. You should be extremely serious about each of your trades. The difference between a professional and a beginner is that the former follows an accurate trading strategy and the latter takes trading as a game.