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Why is it that only a group of a few forex traders manage to build a track record that earns them the right to be called successful forex traders? The vast majority of traders consider themselves as failures when it comes to forex trading and the statistical data seems to strongly confirm that view.
In fact, it is a popular saying in trading circles, that as many as 70% of forex traders lose more money than they make and that only a mere 10 - 15% make enough from forex trading to live off.
So, what are the secrets of that 10 - 15%? What do they do differently from the majority of traders that allows them to be successful? Here are some of the habits of the most successful forex traders.
Successful Traders Never Quit
The average trader is mostly concerned just about making quick profits. On the contrary, the successful forex trader knows that being successful is so much more than just making quick profits.
They know that in order to become successful, they must learn to make gains on a consistent basis, while minimizing their losses. They also know that this process takes time since there are several learning curves along the way that need to be overcome.
Successful traders are in it for the long haul and they are prepared to learn everything that they can to master both the art and the science of forex trading. This means that they don’t give up after the first few years.
They know that if they stay at it and make several small improvements over time, they will eventually master forex trading. As Vince Lombardi aptly states, “Winners never quit and quitters never win”.
Successful Traders Take Calculated Risks
Every trader knows that forex trading is risky. The successful trader is also aware of this but unlike the average trader, he only takes calculated risks. This means that he spends the time to analyze the risks of every single trade in dollars and cents (or whatever currency is applicable) before trading.
He does not trade arbitrarily like the average trader. For every trade, the master trader knows exactly how much he stands to lose in dollars and cents and he knows how many lots he must confine each trade to in order to keep risks within the established boundaries (based on stop-loss needed to stay enough long in the market to make profits and his risk appetite).
Successful Traders Stick to Their Chosen Strategy
The practice of doing the complete opposite of what they had planned to do, is far too common among traders. This impulsive behaviour is what causes many traders to lose money unnecessarily.
On the other hand, traders who make consistent profits, stick with their original strategy regardless of what other traders are doing. They trust themselves to do the right thing and avoid the herd mentality.
Not because the majority of traders are selling means that you should jump on the bandwagon if your original strategy told you to buy.
Successful Traders Use Price Action
Forex trading experts know that psychology plays a large role in how the market operates. They know that if they can get into the minds of forex trader, they stand a greater chance of making accurate predictions.
The successful trader realizes that because of this, there are patterns and trends in the movements of exchange rates that form over time.
They tend to use technical analysis in their trading because they believe that everything they need to know is already reflected in how the price of a currency pair is moving.
The successful trader therefore is proficient at technical analysis, pays attention to price action, and using professional tools that are based on the price action like our forex indicators here .
Conclusion
Successful forex traders never quit. In addition, they only take calculated risks and they stick to their chosen strategy regardless of what other traders may be doing. They trust themselves to do the right thing and avoid impulsive trading. Price action plays a major role in how successful traders make their decisions. Since price usually moves in patterns, these traders become proficient at technical analysis and follow price movements to make more accurate price forecasts.
