What It Takes To Be A Forex Trader
Have you ever wondered what it takes to be a trader? Do you think you are pretty clued in to the markets but are just a little unsure if you are ready to hit the live environment? I’ve put together a list of signs that will tell if you have what it takes.
- You are a left-brained thinker
The left hemisphere of the brain rules logical and analytical thinking. Analysis and logic are integral parts of successful trading since they help you decipher what charts are telling you. Additionally, you need to follow a logical thought process when deciding whether or not to execute trades!
2. Analysis ‘does it’ for you
Your idea of an X-Rated title would be ‘Debbie does algorithms.’ You look at charts and your mind is excited, instantly keen to test and prove information. If you are a geek for data and analysis, these are great traits to have as a trader.
3. You are well centred emotionally
An essential quality of anyone that wishes to succeed in trading. Emotional stability is key to maintaining discipline with trading. The most common cause of deviation from a trading plan is an emotional response to a loss or a gain. Overconfidence and fear are both fatal to quality trading plans and strategy. If you are well centred this sets you in good stead for trading. If you’re not well centred- explore ways to get that way. Many traders meditate for peace and clarity before trading.
4. You understand your emotional and mental state.
The end game goal is to be completely in control of your emotions. That is a pretty tall order for anyone. What you can do to help it along is work in emotional controls into your trading plan. Fail three trades? Take a couple days off. Win a big one? Take a day off so your excitement doesn’t taint your decision making.
If you are truly in control of your emotions, you have a much better chance of avoiding any account blowout. If, on the other hand you are reactive and impulsive, you risk letting emotion become the driver to your trades rather than your system. You have to be able to accept the inevitable losses that come with working to be a successful trader.
5. Your trades in a demo account have been consistent and you win more than you lose
If you have been learning the Forex market in a demo account, taking the market seriously and basing trades on live and current data, then you can take a lot from that environment. If you have just been playing, putting on ridiculous trades and stupendous levels of risk to try and make as much money as possible in as short a time as possible, then don’t expect to trade well in a live platform. You will destroy any financial worth you have achieved. If however, you are taking the demo seriously, trading successfully and consistently, developing a strategy that wins more often than it loses, you could be ready to take your game to the live environment. If you are doing particularly well in demo, try taking it to the next level and opening a micro account before jumping into the deep end.
6. You know your tools and your charts inside out
Successful forex trading is a process of constant learning. Once you settle on a strategy and system; you’ll want to investigate as many avenues surrounding the contributing factors as possible. The goal is to develop an intimate understanding of why an indicator gives you a particular signal or what the charts are telling you. While it is good to understand a large scope of indicators and tools; not all information is going to be relevant to your strategy.
7. You have deeply researched and understand your system/strategy
There are different schools of thought regarding how to go about finding a system and strategy. Some people are more comfortable demo testing a strategy for six months; others are better off trading on a micro account after they’ve spent a few weeks learning how it works. It is really difficult for a novice to understand how these different things function together. Your best bet is to find a quality mentoring service or join some forex communities and look for free systems. There are several forex sites that offer “free trading systems” where people have already done all the testing that requires an experienced mind and regularly trade that system. You do not need to spend hundreds or thousands on a system.
Credit Daniel Lindsay
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