Today we will take a look at the Top 5 attributes of successful forex traders. It is no secret that the failure rate among forex traders is roughly 98%, this means that out of 100 forex traders only two (sometimes even less) will able to succeed. There are different definitions of success, but in general forex traders need to be able to generate consistent profits with their trading strategy, at least on a weekly base.
Let’s take a look at the Top 5 attributes of successful forex traders:
Do not waste your time in demo accounts. This is a very vital step for new forex traders as they try to decide if they should practice in a demo account. We have written a topic about this last week and we recommend that new traders take the time and read about the Myths and Dangers of Forex Demo Accounts.
Take the time to learn the basics in order to build a solid foundation. Most new forex traders tend to rush into forex trading and jump into the cold water with both feet. They have unrealistic expectations, partially due to false sales pitches by terrible forex brokers. It is vital to pour a solid foundation and understand what forex trading consists of. Take your time, educate yourself and then open a live account. We recommend new forex traders take advantage of our Free Forex Guide in order to start their learning process.
Create a forex strategy which you trust and execute it regardless of market conditions. This is one of the most important aspects of successful forex trading. Successful traders have a strategy which they trust and follow, even if a trade moves against them. It is not possible to generate a profit on every single trade, but a successful forex trading strategy will allow you to generate profits on a weekly and monthly base. Do not make adjustments to your strategy, regardless of market conditions. A successful trading strategy will allow you to trade without emotions which is vital to the success of every forex trader. Please take a look at ‘Creating and Believing in a Forex Strategy’.
Forex Profits are generated when you enter a Currency Trade. This is one of the most overlooked parts of forex trading. Most new traders believe they will generate their profits when they exit a currency trade. This is 100% false. Successful forex traders understand that their profits are generated when they enter a currency trade. They also never adjust their stop loss or hedge levels when a trade moves against them and they also do not adjust their take profit levels when a trade develops as they predicted. Those levels are chosen before a trade is executed as it is only at this time you are 100% emotionless with the trade and are able to think rational. Successful forex traders then use pending orders and fill them out properly, place the trade and do not worry about it anymore.
Forex Risk Management is vital to the success of your forex portfolio. Successful forex traders never sway away from their risk management levels no matter how good a particular currency trade may look. Keep in mind that forex trading is conducted free of emotions and it is vital for the success of any forex trading strategy that risk management procedures are executed in case a trade moves against the analysis. Conservative traders may only deploy 1% to 2% of their available capital to a particular forex trade, while more aggressive traders move the threshold to 5%. It is not recommended to exceed the 5% level, however it is an individual choice and the most aggressive traders may go as high as 10%. Every successful forex trader knows what works best for them, but regardless of the percentage allocation they always stick to their risk management.
Familiarize yourself with the above mentioned Top 5 attributes of successful forex traders and implement them into your forex trading routine. Work on them and perfect them as you are guaranteed to achieve better trading results if you adopt the above five principles. When you feel comfortable you have tackled number one as well as number two, we recommend that you proceed with opening a PaxForex Micro Trading Account and start to develop your own trading strategy. Until you reach that point you may want to follow our PaxForex Trading Recommendations and generate profits in your account.