The trader’s mindset is just as crucial to their success as technical analysis and strategy, yet this aspect can sometimes be underestimated by new traders. Successful forex trading calls for the ability to perform well under pressure, bounce back from failure, and have strong focus and discipline.
This winning attitude has a lot of parallels with sports psychology, and as we have just enjoyed the spectacle of the Olympic Games and look forward to the Paralympics, it’s a good time to be inspired by and learn from this sphere.
The athletes have trained intensely over several years to reach the pinnacle of physical fitness, but winning is about much more than being the fastest, jumping the highest or throwing the furthest.
When Keely Hodgkinson won gold for Team GB in the 800m, she said that winning the race was 90 per cent about mental tactics, from learning to pace yourself and place yourself within the pack, to building up resilience and believing in yourself even when you are behind. She has also spoken about her battles with mental health after the Tokyo Olympics.
It’s fascinating to listen to the often emotional post-event interviews with the athletes, whether they have won or lost: we gain an insight into the human struggles behind their superhuman achievements, and understand the highs and lows, self-discipline and sacrifices they have made to get where they are.
All this provides food for thought for forex traders: although immensely different spheres, there are many parallels between the world of elite sports and forex trading psychology. Here are some valuable insights that cross over the divide and can help you get the most from trading with instant forex funding.
Be wary of peaking too early
The eager sports competitor might shoot out of blocks like greased lightning and stream ahead of the pack, but this early lead can soon fizzle into burnout, or generate a false sense of confidence and security.
Forex traders can also learn from this mistake: remember that it’s a long learning curve, and if you aim too high too early in the game, you are likely to become overwhelmed or be too bold and overconfident in your approach. Good forex trading is mostly about managing risk rather than making big flamboyant moves.
Learning to embrace losses
In forex trading, learning how to handle losses well is crucial to long-term success. New traders can take losses personally, and allow themselves to become discouraged and lose motivation. However, as in sport, losses are all part and parcel of the game, and successful athletes know how to pick themselves up, learn from the experience, and try again.
The sports player will analyse their performance to understand what went wrong, and refine their strategy so that they can bounce back stronger. Forex traders also need to cultivate this kind of mental resilience to allow them to make steady progress. As in the 800m, forex trading is all about consistency over time rather than a sprint to the finish line.
Even experienced traders will continue to make losses on a fairly regular basis, but they view these simply as expenses on a business account. What is important is that you are making consistent profits and take more wins than losses over a longer period of time, such as three or six months.
You may not be at this stage yet, so be patient and give yourself time to develop and grow your skills. Do not beat yourself up about being a failure, and do not be tempted to act recklessly in an attempt to make up for your losses.
New traders can sometimes feel angry, anxious, or even ashamed about a bad trade, and will rush into more trades in an effort to make up for it.
However, this will result in poorly researched trading and only perpetuate the problem. Instead, step back until you are in a more neutral state of mind, and then work out what went wrong. By treating the loss as a learning opportunity, you will not only strengthen your trading skills but also your mental fortitude.
The power of maintaining discipline
Self-discipline is at the core of athletic achievement, and it is also a cornerstone of successful forex trading. Athletes must stick to a stringent training regime, a controlled diet, and carefully worked out performance strategies. Similarly, forex traders need to develop a daily routine to keep on top of the fast-moving forex markets.
They also need the discipline to stick to their trading plans, and not let themselves fall into emotional trading. That means not being driven by fear, greed, panic, pride and so on, but always making rational decisions that adhere to their risk management and trading strategy.
Admitting it’s OK not to be OK
Perfectionism can be the enemy of success in the sporting as well as the trading world. Even elite athletes have off days when they find it hard to drag themselves out of bed and go to the gym, or even question the point of it all. The key is to accept that you are not perfect, and it is human to have these ups and downs.
Success in forex trading comes after a long learning curve, and you need to build up your skills as an athlete builds up their physical fitness. Think about it as training for a marathon: it’s fine and even necessary to have rest days as long as you don’t completely take your eyes off the prize.
If you are struggling with motivation, reassess your work-life balance. We all need time to spend away from our screens to mentally, emotionally and physically refresh ourselves. This is not self-indulgence; it also enables us to perform to the best of our abilities.
Aim to exercise or get outdoors at least two or three times a week, eat a healthy balanced diet, and make sure you see family and friends on a regular basis.
Mastering focus and concentration
The ability to maintain laser-sharp focus is crucial for sporting success, as even the tiniest of mistakes can mean the difference between a podium finish and going home empty handed. This can leave years of training in tatters, and also mean missing out on potential future earnings or prize money.
Forex traders have to get used to performing under similar amounts of pressure, and this calls for excellent concentration. Athletes often use mindfulness meditation to help them stay anchored in the present moment rather than let their mind wander to past mistakes or future possibilities that could cloud their judgement.
Similarly, traders often use mindfulness or other meditation techniques to help them mentally prepare for a day’s trading and ensure they are not prone to distractions or a wandering mind that could lead to unnecessary risks.
Being ready to adjust your strategy
Athletes need to constantly evolve in order to maintain their competitive edge, whether that’s learning to deal with different climates and environments, new opponents, and their own changing capabilities. Sometimes they may even need to adjust their tactics midway through a performance if it is not going the way they expected.
Traders also need to master this mental agility in order to thrive in the dynamic forex markets. Too rigid an approach can mean you miss out on opportunities, or stick to an outdated strategy that is no longer working for you.
The market sentiment shifts in response to geopolitical events and economic conditions, and you need to be able to keep yourself well informed and be ready to respond and adapt if necessary.
This doesn’t mean allowing yourself to be buffeted about in the breeze of every economic data release, or following the herd, but remaining vigilant and independent minded. Over time, you will hone your instincts for when it is time to pivot and when you should leave well alone.
The importance of continuous learning and improvement
When Keely Hodgkinson won a silver medal in the 800m at the Tokyo Olympics in 2021 aged just 19, she was as proud and astonished as anyone. She said that she was unprepared to be thrust into the limelight so unexpectedly, and some of the pressure led to a period of depression.
Keely picked herself up and refocused for the next challenges. However, at the next two World Championship events in 2022 and 2023, she won silver medals: an amazing achievement by anyone’s standards, but Keely revealed that she was gutted not to have beaten her former Olympic rival from Tokyo.
She vowed that her next medal would be gold, and through intense training and mental toughness, she achieved her dream in Paris this summer at the age of just 22. Keely’s self-belief and willingness to evolve has carried her on to greater heights.
Similarly, forex traders should recognise the importance of investing in continuous training and development to help them fulfil their potential. This will arm you with the skills to continuously adapt and set yourself up for trading success.