For those not aware about the chances of success in the Forex market must know that more than 90% of the trades end in losses. The forex market is a highly volatile market and it requires utmost discipline and patience for traders to achieve long term success. With the growing numbers of investors in forex market in the recent years, it often becomes an important to know to how to remain in the 10% who achieve regular success in the forex market. While most new traders leave success in the hands of chance and treat forex like a game of dice, the successful traders employ several techniques and possess several qualities that make them a master of the forex trading game. But what are the essential qualities of a successful forex trader?
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- Love For Trading
The main reason for more than 90% trades ending in failure is people’s lack of interest and leaving most trades to chance. Like a musician should love playing his instrument in order to create musical masterpieces, a forex trader should love trading in order to make a driven effort to make more profits. There not exists, a successful trader who is not passionate about trading and if you want to be a part of the 10% of successful traders in the forex market, you need to be highly passionate about trading.
- Lowering Trade Frequency
Believe it or not, more trading is not the key to making more profits in the forex market. As the forex market is open 24 hours from Monday to Friday, it makes up for a highly lucrative market that can be accessed anytime. Overtrading is one of the most common reasons for money loss in forex trade and is sadly the most common practice followed by the failing investors. Forex trading is all about waiting and making a movie at the right time. Forex market is like a garden where you must wait patiently to harvest the benefits from your investment over a long period and not a bag of microwaveable popcorn.
- Correct Use of Stop Loss
Another common cause of forex loss is the incorrect use of the Stop Loss order. While it is an important tool that can help you crawl out of tight market situation, stop loss if placed incorrectly, can lead to earlier than expected loss of your position. Most people tend to place stop losses based on their desired position sizes. This situation is quiet similar to using a butter knife to eat a steak which will most likely end in a really bad dining experience. Placing a stop loss correctly is all about thorough market analysis and the most successful traders know exactly where to place the stop loss order to derive the maximum profits.
- Respecting And Understanding The Nature Of The Market
Most failed forex transactions are due to the brash and random decision making of the new traders as they think they can predict the nature of the market. Trying to predict how the market will rise or fall is similar to hitting a piñata with closed eyes. Most successful forex traders understand the risks of being in the forex market and hardly try to match their actions according to their beliefs. Making assumptions without proper market analysis or with over analysis is a dangerous thing as no force can control the nature of the forex market.
- Taking Calculated Risks
Most new traders confuse risk with gambling and thus suffer from losses. Trading in the forex market is all about taking fewer but calculated risks based on the market situations. No one can predict the trends due to the extreme volatility of the forex market and it is important to take decisions based on the current marketing trends rather than mere assumptions. Perseverance and loss bearing is one of the essential quality of a forex trader. Feeling regret over losses and overtrading to recover losses can lead to poor decision making and lead to further losses.
While there is not a single specific secret to success in forex trading, it is important that the traders must understand the above points to become more and more adept at trade. Trading without a sound trading strategy is like trying to hunt a wolf with a kitchen knife. You might be able to achieve initial success through random trading but long term success only comes with proper planning and analysis of foreign markets.