Becoming a successful forex trader means achieving more earning trades while suffering some small loses. The biggest mistake plenty of forex traders are making is letting emotions control the decisions. Experiencing several loses in a row is very difficult to handle emotionally and can put the trader’s patience and confidence down. Conquering emotion is achieved by trading within a well-constructed forex trading plan and maintaining a very high level of discipline.
The first step in achieving successes in forex trading is creating and following a personal forex trading plan. “Failing to plan is planning to fail” is an adage that holds true for any type of trading. The successful trader works with a documented plan that includes risk management rules and specifies the expected return on investment.
It is a very good idea if you have created a forex trading plan for every trade before the market opens. Conducting the analysis and planning the moves and countermoves for every potential market situation can reduce the risk of large unexpected loses. The most successful traders adopt to market changes and modify their strategies to confirm to them.
Having unrealistic expectations is one of the reasons so many traders are failing. Becoming proficient enough to accumulate profits is not a spirit, it’s long term trading. Trying to force the market to provide abnormal returns usually results in traders risking more capital than warranted by the potential profits. Forgetting the trade discipline and gambling on unrealistic gains means abandoning risk and money management rules that are designed to prevent market remorse.
Forex traders should put as much focus on risk management as they do on developing the trading strategy. Some forex traders will trade without protection and abstain from using stop losses and similar tactics in fear of being stopped out too early. Successful traders know exactly how much of their investment capital is at risk in any given moment. Superior forex traders will segment their accounts into separate risk-return tranches, where only a small portion of their account is used for high risk trades and the balance is traded conservatively.