5 Core Skills To Develop As A Forex Trader
While it may be true that anyone can start trading currency pairs on the FX markets, it’s important to remember that it takes time, motivation and a lot of dedication to become a truly successful trader and to start making a real career out of it.
Of course, it’s essential that you take the time to read up and research the markets themselves so you can gain a solid understanding of just what’s involved. This will ensure that you get off on the right foot and know what to prioritise in order to start seeing the wins start piling up.
While this is an excellent first step to take when considering entering the FX trading melee, it’s also essential that you work on developing a range of different skills that will stand you in good stead as a trader.
By prioritising the core skills that are absolutely vital for any successful trader, you’ll really be putting yourself in a strong position and you’re sure to grow in confidence quickly, as you feel increasingly capable of reacting in the appropriate way, no matter what happens with the markets.
But where to begin? Where best to focus your attention first?
To help you work out which core skills are the most relevant to you and where you are along your trading journey, here are some of the most essential of them all. Which of these resonate with you right now?
It’s the digital age, which means that we’re well blessed with all sorts of innovative technology that can do the hard sums for us, but traders will certainly find that they’re able to trade more effectively and potentially enjoy the process more if they’re comfortable and familiar with numbers and maths terminology.
Think of the market as a series of numbers on a graph, numbers that fluctuate in positioning over time. If you become proficient at processing and analysing these numbers quickly in relation to what’s happening on the graph, you’ll find the trading gig starts to click.
The key word here is ‘quickly’… you can, of course, use technology to its full advantage if you want, but you’ll likely find that it’s too late for the answers you receive to be applied, with the markets moving on quickly – which means you may miss out on some interesting trades.
That’s why personal maths skills are an absolute must!
The Beatles said it best when they sang, “think for yourself ‘cause I won’t be there for you”… and this is a great little phrase to remember when you’re trading.
Yes, it’s important to learn all you can and absorb as much information as you can from external sources and other traders, but it’s all about how you go about applying the knowledge you acquire that will make the difference where your own individual trading is concerned.
Remember that what works well for one person may not prove particularly effective as a strategy for you and over time, you should start to build up your own unique trading profile and style.
This is where a trading journal really comes into its own. You need to take in a huge amount of info as a trader and it can be difficult to order your thoughts accordingly or to make sense of what’s happening day by day.
Writing everything down will help you develop as a trader and make market analysis a lot easier, so you can see where you’re going wrong and where you’re doing it right.
How quickly you progress as a trader will largely depend on how good you are at maintaining your focus on the task at hand, ignoring all other distractions… no matter how tempting they may well be.
If your attention wanders and you find yourself no longer truly zeroed in on what you’re doing, it’s possible that you’ll miss vital market cues that could have led you down the path to a very lucrative win indeed.
The good news is that there are lots of ways you can work on your focus and concentration, helping you to build the skills you need to trade.
Getting rid of the distractions is a good place to begin, so turn off your notifications, switch off your devices, put your phone on silent and perhaps even hide it away somewhere.
An interesting study recently revealed that having your phone out on the desk can actually impair cognitive capacity, affecting your ability to think and problem solve… even if you’re not using it!
So if you really want to start making waves as a trader, it might prove beneficial to stay well away from your phone while trading.
There are all sorts of personal traits that you’ll work on if you prioritise leadership skills with a trading perspective in mind.
Good leaders are able to be disciplined and motivated, have the confidence to forge ahead with their plans but the humility to admit when they were wrong, have strong emotional intelligence and are able to keep their egos well in check… all of which will really serve you well when trading.
If you’re unable to lead yourself, you won’t be able to develop the mental and emotional skills you need to successfully take on the challenges presented by the markets… but it doesn’t have to be this way!
There are lots of techniques you can employ that will help you develop your leadership skills – and you’re sure to see the impact the next time you sit down to trade.
Discipline, for example, can be engendered in lots of small ways, whether that’s by waking up early every day, meeting all your deadlines, keeping all your appointments or making sure that meetings end on time.
Taking on more responsibility can also help hone your leadership skills, so don’t shy away from opportunities if they come your way. Always make sure that you don’t take on more than you can manage, but try to step out of your comfort zone if you can… you’ll be surprised at just how much you learn!
Critical thinking is an absolute must when trading currency pairs! Emotional management is an oft-discussed topic on the blog and any trader worth their salt knows that it’s vital they keep their emotions well in check while trading so as to ensure solid decision-making at all times.
By developing your critical thinking skills, you’ll find yourself better able to make more rational decisions, rather than being led astray during emotionally charged sequences of events.
But also don’t be afraid to turn your critical thoughts inwards on a regular basis. Becoming more self-aware is essential to your trading progress and being honest with yourself will help you develop the technical skills and psychological resilience you need to have a lucrative career in forex trading.
There are lots of different elements involved in critical thinking, but the key concepts are open-mindedness, analysis, decision making and problem solving, good communication, self-improvement, analysis and interpretation.
One particularly important aspect for traders is becoming more aware of your own mental processes… how and why you make the decisions and choices you do.
Because we’re bombarded with such swathes of information on a daily basis, our brain has to compensate for it by using heuristics (or shortcuts) to help us make sense of everything that’s happening.
This is very useful, of course, but it can often get in the way when it comes to making decisions, so as a trader it’s perhaps a wise idea to try to become more aware of your cognitive biases and personal prejudices, which can actually have a big impact on your choices… even if they seem objective to you at the time of making them.
To help develop your critical thinking skills, why not start by questioning all your assumptions?
Ask yourself why you’ve done something in a certain way and see whether it was actually the best way after all. Be open-minded and accepting of all different arguments and points of view to see if you can make any positive and effective changes in how you trade.
And, of course, evaluation of your own work is a must if you’re to identify weak areas and those ripe for improvement. Look through your trading journal and see how what’s in it stacks up to the realities you see before you, then decide if further analysis is required so you can change your trading strategy for the better.
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