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Winning Traits: Keys to Successful Forex Trading

   

forex-winning-traits

There are several specific traits that assist winning traders and that losing traders do not consider.

A common trait for many losing traders is the search for the Holy Grail or at the very least, the development of such a complex trading system, that even the trader who thought up the approach, will likely lose their place a few times should they describe it to you.

Traders often undertake a search for the perfect entry system, even if it is subconsciously. If the trader does not search for the perfect system, they may develop an overly complicated approach, with the belief that ‘more complicated must be better’.

Some of the most effective trading systems have simple trading rules and entry criteria, and winning traders often use stick with these simple techniques. Invariably they use either a modified version of an existing methodology or else they have developed their own.

It could be argued that the simplest of trading methodologies are easier to implement than complex techniques. Having said that, there is another myth that says that trading requires some level of intelligence to be successful.

One of the greatest qualities of any open and free market is that it will not discriminate. It does not care what colour your skin is, whether you are male or female, how old you are nor how intelligent you are.

It is for this last reason, that a trader who possesses nothing else but patience, discipline, and a simple approach, is likely to outperform a lot of people who are more intelligent but using a complex trading system.

No Drastic Changes

Another trait with losing traders is when they have a bad losing trade. Sometimes, they will want to start from the beginning with a new trading system with the belief that their present system is useless.

When winning traders have a bad trade, they will devote some time to analysing the trade and determine whether there is a lesson to be learnt from the outcome. It is unlikely however, that they will make drastic changes to their present system.

The only time they would consider significant changes to their approach would be when it was blatantly obvious that their present approach was no longer suitable.

Keep it Simple

Again, winning traders will often use simple approaches and they will use them consistently. It could be argued that even a poor plan however with solid risk management rules, used consistently is going to outperform an approach where you are constantly jumping from one system to another.

When a lot of traders start out, they seek the best software available to fulfill their needs. Many charting software packages include various technical indicators that are available, and new traders seek to discover how these various indicators can be interpreted.

Numerous texts include the more popular indicators, and many assume that as they are so widely documented, that they must be the best indicators to use.

Many losing traders rely too heavily on these indicators and the very mechanical systems that use them. Many would not be able to provide a brief overview of how the indicator is constructed let alone a more detailed explanation with why it should be used. Furthermore, often they will not consider using any other variables other than those declared as the defaults or the variables that the creator of the indicator stipulated.

There is no doubt that winnings traders will take advantage of computers because of their speed in analyzing large amounts of data.

What you will also find is that often, they would have also taken the time to learn the actual mathematical construction of the various technical indicators to fully understand what it is displaying. It is likely, that they could probably construct them manually if the need arose.

The importance of this is that they fully understand what the indicator is designed to achieve and therefore the best way of interpreting it and applying it practically.

Focus on the Right Things

Losing traders will attend seminars and courses like many others however they will often focus on the wrong things. They will try to copy the presenter's technique, by asking which indicators they use and even what time frame they use in their moving average.

This is misguided because even though the presenter may use indicator A and B does not mean that the individual asking the question should also use those two indicators.

Winning traders will always monitor new methodologies and indicators that are developed but will maintain their confidence in their own approach. They will no doubt consider them but will only incorporate some part of it should they see something that could make a valuable contribution to their present trading methodology.

This is important because your confidence in your own trading approach is vital. Winning traders realise there is no perfect trading system and their own may be close to as good as it gets.

One of the common problems new traders face is developing an approach that is not right for them. Often new traders will tend to develop a way too short-term trading system as they are attracted to this form of trading.  They will want to trade 1 or 5 minute charts because they believe that is where the action is and where the money can be made.  

This style of trading by its very nature demands constant attention and a reasonable amount of your time during the trading week to monitor open positions, adjust stops, conduct analysis, and make your trading decisions.

Generally speaking, the potential for returns in short term trading is greater than those with medium or long term trading approaches and many people are naturally drawn to short term trading because of the very real possibility of achieving good returns quickly.

For many people, a short-term trading system may not be right for them and if it is not right for them, the chances are they will not achieve trading success over the long term.

Furthermore, often new traders who begin trading short term do not have sufficient capital to make it worth their while. They cannot tolerate losing months and the capital drawdown, and the high number of transactions results in potentially lots of commissions being paid or at least losing a lot with spreads.  

Right or Wrong?

Losing traders place a great deal of importance on being right in a trade. There is a sense of control they think they have and there is also a degree of excitement and adrenalin associated with keeping in touch with the markets and the latest prices.

You will find some winning traders who will go for days without checking any prices confident in the knowledge that their stops are well placed away from the market action. They also do not care about being right, only entering high probability trades and not caring when they suffer losses.

They treat trading like running a business knowing that they make some good decisions and they make some bad decisions.

There are several traits that separate consistently profitable traders with losing traders.  Make the change yourself and commit yourself to trading profitably.

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Disclaimer:

The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

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