Many traders with desire are constantly trying to figure out the magic words that would make them successful in Forex trading. The desire for success is ancient in a human being, as nature seemingly respects more greater ones. Scientifically, there is a constant of complexity attached to any activity in the “real world”.
As for the world of markets where a human being trades and invests, the huge part is what we do with ourselves. First thing to know is that things appear to us differently than they do to others. That means that what had proved well for somebody else doesn’t have to do the same for us.
We are naturally driven to always attempt doing things to improve the result of our effort. What is wrong in Forex trading is to copy somebody else’s mental strategies. A successful forex trader will always be the one who focuses on his own mental strength.
The essential rule for trading is what many find the hardest to follow, and that is focusing on your own strategies. However, as hard it might be, as good it is. Long-term profiting hides behind developing, patience and focusing on one’s own strategy. It is strange that human brain goes against the way successful trader does. Of course, one thinks he is following the steps of a successful trader, but what actually does is mimicking one’s steps on totally different terrain. Because we are not following path, we have our own, so we should adjust our steps to the path we go on.
Complexity is a part of living in this world and in turn, those who follow the complex world the best are being rewarded with the most complex set of prizes.
However, to become capable of trading in the Forex market, one needs to be freed of the idea that grace is something related to the Forex market. Only then, when we are not ashamed of taking “cowardly” steps, as the means of our defense, we can see some success.
Many rising traders believe that it is better to go along somebody “better” and “proven”, so they invest in mutual funds, just for the sake of how it looks good when the successful ones do it.
But, what is not often considered is that many mutual funds are operated in a way that wont make fast money to an investor. It rather allows only long positions, and are designed to be mostly 100% invested for the whole time. Thus, they are fully dependent on bullish stock market conditions, designed to boost profit for the investors.
Such funds are many times bounded by rules which are not in favor of the investors. Fund managers rather get paid even when money is lost, just for the reason that losses turn to be less than the limits that measure their performance. Whatever the case might be, the important thing to know is that we should not blindly invest our money to somebody who appears successful when we look at them, because, that their success might mean our loss.
Before the outbreak of the technology, market prices were written on chalkboards and sticky notes (made from paper, with glue that would make the paper stick to a surface). Anyway, market prices are the result of numerous decisions of trading. Every “tick” in the price is the affected by simultaneous trading decisions at one point in time. That was a good opportunity to some type of traders who could understand the goings of the market and move along the trends with profit.
Modern technology has equipped us with tools for better monitoring the stream of crowd philosophy, and has boosted the growth of many different methods to analyze the market.
The numerical data that traders use to decide where to turn in the market can be presented on a 2D chart, on a candlestick chart that represents the information about the price.
Tools for helping us improve analysis are different technical indicators. They are based on a certain calculation comprised of price data from real time history. Actually, there are a limitless number of possibilities that indicators can produce.
Seemingly, experienced traders prefer leaning on their cool charts, lines and curves. One might think that more indicators they have and understand will bring more money. But money and success were here before the computers, so again, rethink about the true power source is not a computerized indicator, but rather something from the inside of a human being.
To put it simply, the “new indicators” are not indicating anything new. It is more probably just a new and another way of showing one and the same thing that was present thirty or forty years ago. And the one who could feel it and understand it, doesn’t really depend on the looks of their charts. It is showing the historical path of the prices of high, low, open and close.
The thing that charts show is a reproduction of crowd psychology, which helps us evaluate trends and predict the future market trends. However, the complex network of indicators might confuse traders, and it leads them to think that indicator is leading the market, forgetting that stream of crowd psychology is actually driving the market. Indicators just indicate where the real thing has been, and based on that you can guess where the real thing will go.
Regardless of how sophisticated an indicator may appear, the market does not follow its lines, rather, indicators’ lines are going one step behind the market. The same way, you are the part of what makes indicator point this or that. Your action is prior to the indicator’s action.
Having this in mind, let’s not start assuming that this story is about ignoring the technology. No, rather technology should be encouraged, but pointing all the things above meant to be just a call for being cautious.
Of course, indicators help us plan and build strategy. However, they can’t predict what will happen to the market. And this is why defense has to be set. Defense is something that doesn’t seem popular, but every successful trader that seems leisured and calm is only giving that appearance because of their defense system working properly. Planning for losses, having an escape plan is having a defense set.
To a novice trader, trying to break through complex systems of analysis might seem to be a way to success. One might think that if something is hard to understand, it is good.
Accordingly, those people like having their charts colorful and scribbled as if something important is going on and they can understand it. But really, there is no need for losing your focus on resolving complex set of lines, since you can achieve the very same success with one or two indicators in reality, or sometimes without any on your chart.
Actually, being pure at heart and clear-minded is what brings success in forex trading. The important thing is to stay focused, and not let too many different opinions to blur your judgment of the market.
A mindset of a successful broker is not concerned with predicting the future, and is not excessively affected by past market directions. A successful broker puts focus on the present, that is, what the market is at the moment, and responds with a good idea for trading, backed up with escape plan and having defense set.
Importantly, the new technology did not raise the percentage of successful brokers. History shows that mindset and psychological tendencies have not changed. Things around us did change, became more fancy and appealing, but we don’t change psychologically, and statistics show, if you don’t believe anything else, that it is mindset that wins. Regardless of the technology traders use to predict the market, there are still people losing, and probably among losers, you will find many of those described here as the ones who lose.
We, therefore, must make effort to overcome our habits in trading, or join the majority that doesn’t.
You will find in many articles, printed or digitalized, that the most (very very )important thing of success in trading is having the right way of thinking – nice risk management strategy. Winning traders and losing traders are being recognized by their approach and not by trading strategy.
Let see why is that? First, the majority of traders have all “proven” strategies, actually, in the time-lapse of our lives, there have been numerous “successful” strategies, so if it is the strategy that wins, how come those who copy can’t repeat success? The answer lies in psychological mindset.
As most traders make effort in creating a good winning strategy, they alongside lose money. Few of them focus on having the right approach to trading.
One attribute of the winning traders is their ease to trade and being natural. The money attaches to them. On the other hand, losing traders see trading as something stressful, as a nightmare full of worry, fear, and ultimately, losses. Success to them always appears on the other side of a huge wall, and they keep spending time, day after day, watching their money go away.
So, what’s the point, what’s the difference? Intelligence isn’t because you will find many phd’s in the losing crowd, professional traders. Trading systems is not what it is, as said, if it were, copying it would make profit for all of us.
It is mindset and trusting in yourself. The winning traders always try to remain confident and calm (but small risk helps them to do a lot), even when their backup (losing) plan gets activated. For comparison, when a losing trader enters the red, he/she starts panicking and, further describing is stating the obvious. Losing focus and letting go any remaining sensible move to attempt, even forgetting pulling a possible ace up the sleeve.
It takes time to gain experience in being calm and staying that way. Not many people are natural born traders, so if you know that you are not, you won’t become one. But you can become a successful one by training to become a calm person.
For example, elders teach us as kids that avoiding risky situations is good. Winning traders are trained to take risk. It isn’t natural in them, they probably were teenagers who stood by the “don’t take risk”. But the thing is that loosing traders are still bounded by that one about taking risk.
When winning traders recognize a price in a place they want it to be at, they act according their strategies, without hesitation they jump the horse and take a ride.
On the other hand, loosing traders a lot of times in their life feel fear, reconsider time and again if that is what undergoes their “winning” strategy and then act. Obviously, because they are thinking under fear, their decision is easily the wrong one.
It is important to have a backup plan and go along without fear. You have to know that anything can happen, so nothing can get you as a surprise. When you know you won’t be stunned, you won’t have to worry about it. Just move along – with a clear mind.
Escaping from a trade is easier for a winning trader. That’s the part that makes them not “losing” one. When a wining trader sees that the trade chosen is going to be lost, the trader exits it before the loss empty’s the pockets.
Losing traders stay married to their trades and many times go along with it to the bottom. They go down with a lot of pride (and no money).
Winning traders know that risk is involved, and it means losing, so that subject is not something that bothers winning traders.
Once you achieve that you’ll realize that trading is way easier and you will see how good trading opens its world for you.
Successful traders have overcome fear, the big obstacle for successful trading. Fear makes a trader stunned and panicking. Fear fogs vision, and instead of focusing on trading a trader focuses of overcoming the fear – in the middle of the trade. In that case, the only success could be overcoming the fear – forget about the trade, because nobody’s dealing with it.
First step to becoming a winning trader is to learn controlling emotions. We must approach trading fearlessly to keep the discipline and awareness of the actual ongoings on the market. That means we need to see clearly at all times and we must not allow our focus to be lost. We mustn’t think about what if the market goes here and there; we must follow what market is doing now. We must focus on that.
Most traders keep eye on their strategies instead of their attitudes. Strategies are more easily to be adopted, if you have the proper trading character. If we adopt a strategy, and then go for learning to be patient and cool, can confuse us further, because a cold headed trader might want to use different strategy than a hot-head we used to be will.
There is no way to know for what the market is going to do at any given time. Therefore, be reminded that accepting the simple fact that any trade comes along with taking a risk, and that any given trade may end up being proven wrong.
The difference in attitude and mindset is what empowers winning traders to rise above the crowd and be consistent in winning. They operate rationally fully aware of what they can do. Fear doesn’t bother them and it doesn’t interfere in their trading.
But, to become a winning trader who knows no fear is something that comes with training. It is not something that comes naturally to us. It also has to be maintained.
Having mindset like that, trading becomes less-stressful and in turn a profitable job, such that it almost seems like money is just falling into our laps every day.