What Are the Secrets to Trading Success?

In a recent article, we commented that trading is one of the most lucrative businesses in the world. It’s hardly surprising, then, that so many people want a piece of the action and that there are more amateur traders setting up trading accounts with brokers than there have been at any time in history.

Adding up those two points, you might be led to wonder why sales of Ferraris and yachts are not going through the roof? The sobering answer is that while thousands of people are giving trading a go, the vast majority – perhaps as many as 90 percent – are making a loss.

So where are they going wrong? That is really looking at the question from the wrong angle. What we should be asking is where the 10 percent are going right. Here are the simple rules that successful traders live by, day after day.

They take education seriously

There is a wealth of information out there. You broker, your fellow traders, blogs, articles, news stories and online tutorials are just a few examples. Successful traders know that to make money on the markets they have to make the best use of that information. And for beginners, in particular, that means starting with the basics. If you are not clear about what is a pip in Forex or how to interpret the MACD indicator, then you are doomed from the start.

Successful traders have a thirst for knowledge, and understand that it is not a case of learning all that there is to know – because there is always a new tool, a new indicator, a new piece of analytical software. They simply never stop learning.

They set their strategy to match their own psyche

There are lots of different ways to approach trading. Some traders “set it and forget it,” while others are stuck to their computer screens all day. Some like the excitement and fast-moving nature of day trading, and others prefer the long game. And then there is the question of how much risk you are prepared to take.

There is no right or wrong approach to any of these, and there are successful traders who occupy every extreme, and all points in between. But the factor they have in common is that they understand their own trading personality and align their strategy accordingly.

They follow a routine

One of the most obvious signs that an amateur trader is more about style than substance is that he or she pulls out the trusty smartphone and opens the trading app at random times during the day or night to get stuck into some forex trading.

The markets never sleep, but successful traders know that there are certain hours that certain currency pairs are more active, and will set their trading schedule accordingly. The opening and closing of stock markets often causes fluctuations and volatility. Some day traders look to leverage that, while others follow the general rule that they can realize better long-term profits by trading when there is less market activity.

Again, it is not a case of there being a “right” time for trading – in a 24/7 environment, that would be nonsense. But successful traders consider the time facto, and build their own daily routine around market patterns.

They stick to the plan

This factor is absolutely fundamental to success. A successful trader spends a lot of time researching his or her killer trading strategy. Remember what we said earlier about being educated and informed – this is what is has all been for. So when they implement that strategy, they stick to it.

It sounds obvious, and that’s because it is – yet it is easier said than done. Here’s the problem: As human beings, we have a tendency to prevaricate when things are going badly and to react quickly when things go well.

In other words, when a trade is clearly losing us money, we’ll hang on to it far longer than we should, a little like a rabbit stuck in the headlights. But when we see a profit, we are quick to cash in, often too soon. The most successful traders are the ones who have the strength and courage to do the opposite, and let the profits run big, but cut their losses early.

In the midst of trading, that’s not always an easy thing to do, but it is what your stops and limits are for. Set them, use them and never make changes to your strategy when you are in the middle of trading and caught up in the emotion.

Anyone can make money in Forex

It’s true that anyone can make money as a Forex trader, so it’s frustrating that 80 to 90 percent fail to do so. Success is in your own hands, and by following the above guidelines, you can join the happy and profitable minority.

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