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Forex Trading Mindset – Patience & Persistence

In this day and age of instant gratification and vicariousness, people want thrills without risks, wine without alcohol, more money without effort, beer without calories and, yes, a profitable currency trade as soon as they can get it.

Look, if I could give you one QUICK piece of advice, in regards to this necessary mental skillset, it’s this: The forex market knows better than you and I when the time is ripe. Don’t rush it.

The successful trader realizes that patience pays! Every successful forex trader has a special talent for ‘watching and waiting‘ and waits until forex trading behavior has dictated when to enter the market. The prudent Forex trader specifically applies patience to his/her advantage by:

Listening To The Forex Market

The market is continually donating valuable forex information, and you must get into the proper frame of mind where you are in reality taking your orders from the action of the market itself or the signals your trading system is sending you.

Your judgment will become poorer from the very time that you decide you know more about the market than the market itself is telling you, and you throw patience aside and give in to fear or hope.

Sitting On The Sidelines While Waiting For a Forex Trend to Develop

It has often been said that looking at one’s screen during the online forex trading day is like sitting in front of a slot machine and trying to resist gambling. It’s hard. Just as the one armed bandit tempts recreational gamblers, the constant stream of quotes on a computer screen tempt seasoned and novice traders alike to make hasty trading decisions.

Successful traders in the FOREX have learned that they cannot buck the major price trend of the individual currency-pair they are trading. Or, even if you’re not a long-term or position/swing tradinf forex sailer, but daytrading, you still don’t want to let impatience cause you to trade against the short-term trend – buy on a micro-downtrend or sell on a micro-uptrend.

The successful FOREX trader will enter his/her trades in the direction of the prevailing trend or wait until a new trend is established. Several hours, or perhaps days/weeks, may elapse before this trend becomes apparent.

While patience is important not only in waiting for the right trades, it’s also important in staying with the trades that are working. Although trades are held for much shorter windows, as a daytrader you must know how to wait patiently for the optimal time to sell. Selling a winning trade too early is not going to allow your account balance to increase exponentially at an ideal rate.

This is where a the ‘persistence’ mental factor comes in as well. You can be ‘patient’ until the cows come home but if you don’t persistently control your impulses and don’t persistently follow your exit rules, then your profits won’t balance out losses overt time. As a famous trader William Eckhardt once said, “while amateurs go broke by taking large losses, professionals go broke by taking small profits.“

Be patient with winning trades; be enormously impatient with losing trades. Remember, it is quite possible to make large sums trading/investing if we are “right” only 30% of the time, as long as our losses are small and our profits are large. – Dennis Gartman (forex trader)

Posted in Forex Trading Mindset

Create Your Trade Plan for Forex Trading

Forex trading is not at all like playing Poker, Blackjack, or any other casino game. Forex trading is an activity best done by people who are educated about it, who have a plan, and who follow the plan.

If you are relying on any element of luck in your forex trading, then you will not be a successful trader. While no forex trader is profitable 100% of the time, traders who are educated about how the market works, who create a forex trading plan and trade that plan, who do not allow themselves to become emotionally involved in any trade, are the traders who are consistently successful.

The education you received in the last 30 rapid forex blog posts will contribute greatly to your success as a forex trader, providing that you practice what you have learned.

In addition, it is important to be psychologically prepared as a forex trader in order that your emotions do not overrun your intellect and begin making trading decisions for you.

There are several forex trading strategies, in addition to forex education, that will help you succeed as a forex trader:

1. Decide to be a day trader or a position forex trader
2. Manage your risk. You may or may not be able to quantify how much you could potentially profit in a trade, but you can quantify how much you could potentially lose, and from that decide how much you are willing to risk.
3. Risk no more than 5% of the value of your forex account on any single trade. If you risk more than 5% of the value of your forex account on any one trade you will be overtrading your account, a practice that successful traders do not engage in.
4. Once you have identified the risk in a given trade, decide if that amount of potential loss fits within your equity management plans. If it does not, pass on the trade. There will be other trades that do meet your equity management requirements.
5. Use Proper Risk/Reward Ratio- The amount of money that you could potentially lose on any given forex trade should be proportional to the amount of money that you could potentially win; this is called your risk/reward ratio. That ratio should be, at least, 1:1.5 on every trade you make.

For example, if the distance between your entry and your stop loss covers 40 pips, you are risking about $400 on that trade, so you want to make sure that you can set a profit limit order at least 60 pips away from entry such that your potential profit is about $600, 1.5 times your potential loss.

6. Learn how to take a loss. You will lose – no trader profits 100% of the time. Know, however, that percentages mean nothing.If you practice sound equity management, set your stop orders and limit orders according to a risk/reward ratio of at least 1:1.5, and only enter trades where potential loss is relatively small, then you will likely profit (make money) overall.For example, consider a forex trader who wins 30% of the time and loses 70% of the time. If that trader goes for rewards of $2000 on each trade and minimizes his potential losses on each trade to $300, then he will still net $3900 in profit, even though he lost 70% of his trades.# of wins is 3 out of 10 (30%) * $2000 profit limit for each trade = $6000 gross profit

   # of losses is 7 out of 10 (70%) * $300 stop loss for each trade = $2100 gross loss

   = $3900 net profit

Following these six steps for having a solid plan for your forex trading will help you become a forex winner trader (nobody wants to be a forex loser trader). These are fundamental concepts, if you ever start losing money as a forex trader you should re-review this blog post.

Posted in Money Management

7 Habits of a FOREX Winner!

Making money in the forex market is of the utmost importance! If forex trading were a religion, consistently making money would be a the highest virtue. Surpassing all the forex losers & forex gambling addicts would help you ascend to the ranks of the true forex genius traders.

The best way to become a forex winner is to know how forex winners act and behave.

By looking at the characteristics of a winning forex trader you’ll know what to emulate for success.

There are seven reasons why forex winners are successful:

1. Forex Winners educate themselves on how the market works.
2. Forex genius traders have a well-analyzed, well-thought trading plan that they stick to. By sticking to a pre-defined trading plan, successful traders allow themselves to remain reasonable and logical. Sticking to a trading plan helps keep emotions at bay.
3. Successful Forex Winners quantify their potential loss before each trade. They don’t risk everything on one trade (in fact, they don’t risk more than 5% on one trade).
4. Brilliant forex traders create a trading plan and stick to that plan when they’re trading. If they deviate from their original plan, they do so only after creating a new trading plan.
5. Forex Winners maintain their focus.
6. Forex Winners do not marry their trades. They are quick to change direction if that’s what the charts and indicators are telling them. In other words, they are not emotionally tied to a particular trade. They do not take it personally if a trade does not go their way. Successful traders do not allow their emotions to overwhelm their intellect in a trade.
7. When successful traders are unsure of the signals they are getting from their charts and/or indicators, they stay out of the market.

Traders who adopt those seven characteristics and attitudes as their own are the ones who will be successful winners, the ones who will net profit overall no matter how often their trades win or lose.

Successful traders, in addition, are disciplined, confident, self-reliant, motivated, optimistic, intuitive, honest, strategic, patient, focused, independent, risk-taking, hard-working, high-achieving, energetic, objective, proactive, organized, goal-oriented, self-confident, knowledgeable, open-minded, determined, ambitious, and committed.

Forex winners enjoy trading, they manage their risk, they manage the stress that comes with trading, and they visualize their success.

If you have, or are willing to develop those qualities, and you educate yourself on how the market works using this book as a guide, then you will no doubt be a successful trader, too.

Nobody wants to be a forex loser. Follow thes habits of a forex winner and create success in your forex trades!

Posted in Forex Trading Mindset