6 Lifestyle Secrets Of Successful Forex Traders
There is a wealth of information out there about the technical analysis skills that you need in order to be a successful forex trader, and of course these are very important. However, a good trader possesses more qualities that gives them a competitive edge over others.
These often boil down to the right mental attitude and daily habits, which might seem trivial or abstract, but are in fact key ingredients to their success. Here are some of the best kept lifestyle secrets of the top performing forex traders.
They are eternal students
A successful forex trader knows that they don’t and can’t possibly know everything. However, they are not daunted by this prospect. In fact, accepting that you don’t know everything can save you from becoming overconfident, and making poor decisions on the spur of the moment.
Good traders know that there is really no such thing as a ‘magic touch’, or a genius who knows everything about the forex market. What they do understand is the importance of learning in depth about the aspects of forex trading that are most relevant to their personal trading strategy.
Besides an in-depth understanding of technical trading methods, forex traders also need to have a good grasp of the wider economic factors that influence the forex markets. A successful trader will be well read on the history of the foreign exchange market, and why it is so sensitive to the ebb and flow of supply and demand.
They will keep up to date and well informed about the latest financial news by following an economic calendar to ensure that they never miss key data releases. These can include factors such as interest rate changes, unemployment figures, inflation rates, GDP, and commodity prices.
There are a wealth of forex learning materials available, from online tutorials and seminars, to podcasts, books, and journals. Experienced traders read widely and will also follow current affairs closely.
This is because geopolitical events such as elections, natural disasters, national and international conflicts, and pandemics can have a direct influence on the movement of the forex market.
In summary, successful forex traders know that learning is a constant and lifelong process. They are also selective in which areas of knowledge they want to learn more in depth about, so that they are acquiring the information that is most beneficial and relevant to their trading strategy.
They will also keep a sharp eye on wider current affairs that can have an impact on the markets. By being well informed but not bogged down in a lot of superfluous detail, a forex trader will be in a stronger position to spot opportunities to make a good trade at the right moment.
They are not motivated by money
Strange as it may sound, the best forex traders are not motivated by money. They understand that steady profits are the by-product of a good trading strategy, rather than an end goal in itself. If you are trading because you need the money to pay the bills, you are putting yourself under too much pressure and are likely to make mistakes.
Of course, it is possible to make a living out of forex trading, but this is a long term goal that will be achieved when the right level of skill and experience has been built up. It is a much better strategy to only trade with what you can afford to lose, and never risk the money that you need to cover your essential expenses.
Good forex traders are also in the game because they enjoy the whole process of learning and the challenge of agile thinking and forward planning. If you view it solely as a means to an end, you are unlikely to thrive and become really successful.
They have a daily routine
The importance of following a structured daily routine cannot be overstated. No matter how good your knowledge and technical skills are, if you don’t have the discipline to apply them to your trading in a consistent manner you will never be as successful as you could be.
It goes without saying that the trader will already have a solid strategy in place before embarking on live trading. The next step is to make a checklist of each daily task that makes up this goal. By writing down each step, you will be able to focus on small details, keep accurate records of your trading, and see new opportunities more clearly.
Many forex traders fit their trading in around a full or part time job, plus other demands of raising a family and running a household. Even the most focused of individuals can find that this affects their concentration, and distractions and interruptions can be difficult to avoid if you are working from home.
A routine that is set out in writing is a great tool for impatient personalities in particular, because it can help you avoid the temptation to rush and cut corners. Forex trading requires patience and attention to detail, so by following a checklist you can be sure that you are not overlooking anything that could lead to a costly mistake.
They are emotionally intelligent
Understanding the psychological factors that influence our behaviour is fundamental to developing good trading skills. Trading brings out strong emotional responses in a person, including fear of losing and greed for bigger profits.
Even the most well-balanced individuals are not exempt from this, and in fact assuming that you are too strong to fall prey to your emotions can be a dangerous strategy. We are all motivated by our instincts to a certain extent, because of thousands of years of conditioning.
The key is to recognise when you might be tempted to make a decision based on your emotions rather than a detached analysis of the situation. All your trading decisions should be made in accordance with your trading strategy and your risk tolerance.
In most situations, it’s best to take your money when you hit your profit target and likewise cut your losses when they hit your predetermined number.
They know when not to trade
A common mistake that inexperienced traders make is assuming that the more trades they make, the better the chance of success. However, trading for the sake of it rarely pays off in the long run. Having the discipline to make a few well researched trades rather than a lot of guesstimates is one of the best routes to steady profits.
Sometimes, the fear of missing out (FOMO) can drive a trade, rather than a logical and objective strategy. Never trade to try and make up for a previous loss, as your desire to rectify your mistakes will only cloud your judgement further. If your pride has been wounded with a painful losing streak, take a step back and pause your next trade.
Look objectively for the causes of your bad run. See if you can identify a pattern in your recent trades that might be responsible for the poor outcomes, and if so, adjust your trading strategy accordingly.
They take care of their own wellbeing
Most successful traders also know the importance of maintaining a life outside of the intense world of forex trading. Those who treat trading as an all consuming obsession will inevitably burn out, or be forced out by a series of poor decisions made under pressure.
It’s essential to schedule in recreational time away from trading and your other jobs. This helps you to clear your mind, so that you can bring a new approach and refreshed energy to your trading.
Some of the most influential people in the world practise a daily meditation routine to help them mentally focus and to break through any negative bias in their thought patterns. Even the most upbeat and optimistic of personalities can be prone to negative thinking, because this is what the human mind has naturally evolved to do.
We need to be on our guard against danger and potential pitfalls in life of course, and this is why our minds tend to amplify problems and doubts, rather than let us enjoy our successes and dwell on happy memories.
However, with practice, we can train ourselves to recognize negativity bias in our thinking, and learn to see situations in a clear and more neutral light. It is easy to see the link between this mindset and the benefits for making sound trading decisions. When we are not influenced by emotions, the more logical and effective our actions tend to be.
There are no right or wrong ways to meditate. Many people start by sitting quietly in a place free from distractions for 10 or 15 minutes. They try to focus on the present moment, and gently bring themselves back if their mind starts to wander.
It takes some patience to master the technique, but gradually the benefits will reveal themselves.
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