Characteristics of Successful Forex Traders (part 2)
By Ultimate Trading
Not All Forex Traders Started Out Successful
Successful 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
traders apart from the crowd. In this article, Ill cover a few
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
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
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
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
Analysts may have inside knowledge or years worth of experience, but
in the end their opinions on the markets are just that opinions.
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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