How To Define Success On Your Own Terms In Forex Trading
When you are learning the art of forex trading, ‘success’ is a word you will probably see bandied about a lot. After all, the reason you turned up is to make successful trades, and you need to find out how this is done. However, success can be a relative concept, and this is particularly true in the world of forex trading.
The slippery concept of success
There are different interpretations of the term ‘success’ even if you try to find an unambiguous dictionary definition. For example, Oxford Languages defines it as ‘the accomplishment of an aim or purpose’; while the Cambridge Dictionary goes for ‘achieving of the results wanted or hoped for.’ Some subtle differences right there.
Meanwhile Merriam-Webster informs us: ‘the meaning of SUCCESS is degree or measure of succeeding’, while Collins Dictionary explains: ‘The success of something is the fact that it works in a satisfactory way or has the result that is intended.’
This goes to show that there is no single and narrow definition of success, and of course it means different things to all of us. Some individuals are very goal oriented and materialistic, while others are more motivated by learning widely and having a range of experiences, interests and achievements in their lives.
In forex trading, it’s best to avoid thinking of success as a black and white concept. If you equate success simply with making large profits all the time, this is likely to hinder your progress rather than help you to accomplish this aim. Here’s why.
Building a solid plan should be your first step to success
Naturally, you want your goals to focus on making money, but in the early stages of your trading career, making money should not be your main goal. This may sound counterintuitive, but profits are the byproduct of a well-constructed trading plan, a careful risk management strategy, and the persistence to stick to them over time.
A strong trading strategy will have well-defined risk parameters that are aligned with your financial situation and overall attitude to risk: in other words, you should not be trading with money you cannot afford to lose, or with amounts that make you wake up in a cold sweat in the middle of the night.
The trading plan should also define the currency pairs that will be traded; position size; the entry and exit points in the market; and the technical and fundamental analysis methods that will be used. All this should precede any profit goals, because profits without a plan are simply a matter of luck, and that tends to run out.
With a one step funding prop firm, the opportunities to make profits really are there for the taking, but it’s all about the methods you use rather than the blind pursuit of money. You might have heard stories about forex as a ‘get rich quick’ scheme, but in truth any early windfalls are down to pure chance, and you might as well gamble instead.
However, if you take the time to develop a solid and detailed trading plan and learn to identify genuine opportunities in the markets, it is possible to make good returns.
Chasing profits means you could be blinded by greed
Good forex trading is not just about knowing the markets well, but also knowing yourself. Money is something that we all need to survive, and also to help us have freer and more comfortable lives. Therefore it naturally evokes strong emotions, including greed, one of eternal seven deadly sins.
Greed can blind emotionally unprepared traders, causing them to deviate from their trading plan, take unmanaged risks, and make too many unsuitable trades. You might think that you would be immune to it, but when the pressure is on, almost everyone can be prone to emotional or biassed thinking.
Spend some time researching the psychology of forex trading as well as the technical aspects, and learn to recognise signs when your emotions may be clouding your judgement. Take a step away from the screen, refer back to your trading plan, and stick with it.
If profit is your first goal, you may not learn to let go of a losing trade
Losses are an inevitable part of trading, and even those elusive ‘successful’ traders will make losses on around 50 per cent of their trades. Novice traders can tend to hang on to a losing trade because they are afraid of losing, but this tends to exacerbate the loss. Get out of a falling trade early, analyse what went wrong and move on.
If you take losses too personally, you may not develop the resilience to bounce back from failure, and you will also be over cautious in your trading, and this will get in the way of making steady gains in the long run.
How to avoid the trap of chasing empty ideas about success
Don’t be too influenced by the opinions of others
Sharing ideas, tips and opinions in forex trading can be useful, and you may even wish to be mentored by a more experienced trader to help you develop and boost your confidence. However, keep a sense of perspective and don’t get too hung up trying to emulate the moves of other traders.
Remember success is your individual journey, and there’s no fixed role model for a successful forex trader; this is something that is different for everyone. Set personal goals that are achievable and take into account your other commitments in life and the time you have available for trading; and your level of confidence, experience and emotional resilience.
Remember that progress is about more than profits, and minimising your losses over time is still a valuable achievement on your way to long-term prosperity. Learn to enjoy the journey, not just the outcome, and don’t compare your progress or results with others.
Focus on all-round growth
You can have growth-oriented goals that go beyond the narrow confines of making profitable trades. As we said before, profits are the by-products of a good process, so work on continually refining your process and reaching smaller goals rather than just the results.
Focus on skill development, such as getting to grips with new technical analysis tools or applying different sets of economic data to your trading strategy. Risk management is another important skill that you can focus on cultivating, such as finding your comfort level with leverages, stop losses, and trade volumes.
Have a psychological strategy
New traders often underestimate the importance of trading psychology, but it really can make the difference between a trader who gives up the game, and one who is generating a steady second income stream in six months or a year. For example, you might want to set a daily loss limit to avoid becoming overly discouraged or provoked into revenge trading.
You may even want to have a daily win limit so that a winning streak doesn’t go to your head and create a sense of invulnerability, as this could equally lead to some disastrous trading decisions. Finding some way to become aware of your emotions and take control of them really is one of the best ways to improve your trading skills.
You may wish to do this as a part of a wider lifestyle plan that involves a meditation or mindfulness session in the morning before you start trading, or a stress busting exercise session to clear your mind and keep you emotionally well balanced.
Focus on the whole picture
The best forex traders tend to enjoy the whole picture, and don’t expect their every move to immediately translate into profits. The forex markets are highly dynamic, so it’s a continual learning curve and the more time and intellectual energy you invest in it, the greater your rewards in terms of both enjoyment and profits.
So, there you have it. Learn to define success on your own terms in your forex trading. This doesn’t mean kidding yourself that all will come good in the end when you are persistently making more losses than gains, but developing a long-term mindset and a consistent approach.
What the diverse group of ‘successful forex traders’ tend to have in common is not a secret box of magic tricks, but an approach that includes a solid trading and risk management plan, a businesslike attitude to losses, and above all, a genuine curiosity to keep learning about the forex markets and the wider economic and political events that drive them.
It is impossible to always be right in your trades and there will always be losses along the way, but if you are willing to learn from each experience and shift your focus from short-term wins to long-term growth, you will find that success and profits are the natural byproducts of your hard work.