Characteristics of Successful Forex Traders (part 2)Provided By Ultimate Trading Systems Not All Forex Traders Started Out SuccessfulSuccessful forex traders are not simple people. They are intelligent, disciplined professionals that have taken the time to master their craft. In my previous article Characteristics of Successful Forex Traders I touched on some of the traits that set successful forex traders apart from the crowd. In this article, Ill cover a few more. First, successful forex traders are flexible. Staying flexible requires you to be detached and unemotional about your trades. No matter how strongly you feel about your analysis of a position, you have to be willing to change that opinion and act quickly if you need to. Successful forex traders also realize that bad trades reduce the gains made from past trades and the potential gains from future trades. They change their minds quickly, when necessary, and are not concerned about whether they were right or wrong. Theyre concerned with maximizing their gains and minimizing their losses. The more flexible a trader is, the more successful they are. While these forex traders are flexible when they are confronted with changes in the market, they dont respond to emotional impulses. Many forex traders get excited when their positions are making money, and increase their stake in the position. Then, when the price goes down, they panic and sell. Emotional traders are affected by the highs and lows of gains and losses, and fail to stick to their plans and their strategies. Successful forex traders understand how the markets work, what to expect, and how to capitalize on trends and events. They arent affected by the excitement or the disappointment that can come from good or bad trades. No one likes to have bad trades. But losing is a fact of life for forex traders; the key is to limit your losses and maximize your successes. A losing trade is not a failure. (If it was possible to be right every time, wed all be rich.) The only way a losing trade is truly a failure is if you arent willing to take the loss and move on to find winning trades. By accepting that theyve made a losing trade, and getting out of the position, successful forex traders focus on making profits. Many forex traders feel they dont want to lose money on any trade, and they stay in losing positions in the hopes that it will recover to at least the break-even point. There are three problems with this approach: First, the position may never recover to the break-even point. Secondly, holding on to a losing position ties up capital that could be placed into winning trades. And lastly, holding on to a losing position is an example of unfocused trading and a lack of discipline. Successful forex traders are willing to take small losses. If you arent willing to take small losses, or dont have the discipline to take small losses, trading isnt for you. Successful forex traders understand that money can be lost or made extremely quickly, and they stay calm and rational in both circumstances. Most people are raised to think that it takes years of hard work to acquire wealth. That applies to the markets. You can make thousands of dollars in minutes under the right circumstances. But you will only retain these profits if you stay focussed on the trade. Lets say youve made several thousand dollars over the course of an hour trading futures contracts. Youre thrilled and excited, and you lose your composure and start making irrational trades. You stay in the position longer than you should, for one of two reasons. You think the market will keep going up, and you dont want to limit your gains, or the market falls, and you dont want to give up all the gains youve made, so you hold on in hopes your position will rally. If you accept and understand that huge amounts of money can be made in a short period of time, you wont make these mistakes. Successful forex traders take their gains in stride, no matter how large. They quickly move to protect their positions by setting stops, or covering a percentage of a short position. These forex traders stay rational and disciplined in the face of rapid gains or losses because they understand the nature of trading. Another part of the nature of trading is the abundance of advice that will be offered to you. Blindly following the investment advice of a broker or analyst is foolish. Oftentimes, the brokers motivation is at odds with yours, because the broker gets paid when you make a trade, whether its a good trade or not. They want you to trade. Analysts may have inside knowledge or years worth of experience, but in the end their opinions on the markets are just that opinions. Successful forex traders take responsibility for their trades and, as a result, their money. They learn, they stay focused and disciplined, and they make their own judgments about their trades.
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