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Why You Need To Be Prepared For Success In Forex Trading

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Forex trading is an exciting opportunity, with trillions of dollars exchanged on the markets every day. Besides the possibility of making extra money, learning how to trade can expand your outlook on life and even change you for the better as a person. It’s a steep learning curve with great potential rewards.

 

Before you even begin trading, you can give yourself the best chance for success with the right preparation. Some people might dream about how success will change their lives, whether that may be through extra money or increased power and status.

 

However, the truth is that you need to be prepared to be successful, rather than sit back and hope that success will change your life. As the saying goes, ‘Success occurs when preparation meets opportunity.’ But what does this mean exactly?

 

Well, success tends to be elusive to people who lack confidence and self-knowledge, so there is little to be achieved by telling yourself that when you are successful you will become happy and confident. This is the wrong way around; you need to work hard to cultivate that positivity and self confidence in order to attract success in the first place.

 

Of course, this is easier said than done, and at times it may be a case of winging it and bouncing back from failure. The important point to remember is that all successful people go through this process, sometimes to an extreme and lengthy degree. Behind the story of any famous sportsperson or musician is a tale of hours and hours of practice and preparation.

 

Sometimes, fate will play a role and even the best laid plans will go astray. This is particularly true in forex trading when even the most seasoned professional can’t be sure 100% of the time which way the markets will turn. However, learning to deal with failure is all part and parcel of becoming a successful forex trader.

 

How do you define success?

 

 

The first step is to define what success means to you. Most people, if they are completely honest, will equate success with making a lot of money, and there is nothing wrong with this goal in itself. Almost all of us would like to live with greater financial security and comfort, with the freedom to travel wherever we please and enjoy the finer things in life.

 

However, this level of financial success rarely happens when we pursue money for its own sake, particularly in the complex world of forex trading. Therefore it’s important to refine what your goals are, and look beyond the simplistic one of making a lot of money.

 

This is because the only way to give yourself any chance of making consistent profits in forex trading is to focus on minimising and managing your risk level. When you are purely chasing dollars you will inevitably take your eye off the ball and come a cropper. And how do you best manage risk? You have probably already guessed, it is through preparation.

 

How to prepare for success

 

So by now it is clear that the success fairy does not sprinkle you with magic dust at random; you have to take charge of your mindset so that you are in the best position to recognize and take advantage of the opportunities to make consistent profits. These chances are always out there for the taking of the well prepared person.

 

Prepare a sound trading strategy

 

Trading strategies are obviously a whole separate topic, and there is plenty of advice out there about how to cultivate a trading strategy that works for you. You should already know your preferred time frame, methodology, and currency pairs, and have practised implementing them with a demo account.

 

Most of all, you should have a sound risk management strategy in place. These are the checks and balances that will stop you from incurring catastrophic losses and compromising your ability to afford the basics of living. Make sure that you understand what your risk tolerance is, how to use stop losses, and how to safely use leverage.

 

Underpinning all of this should be a wider level of understanding of the forex markets and the factors that influence them. This includes learning to analyse the economic news for signs of changes to monetary policy, political events, natural disasters and so on. You should know how any geopolitical current affairs will impact the value of your currency pairs.

 

Mental preparation

 

The next step is to cultivate the right mindset for forex trading. Think of yourself as a mental athlete who needs to get fit in order to be competitive and stay the course. Your strategy will give you the rules of the road, but you still need to learn how to drive the car in a smooth and efficient manner.

 

 

The best place to start is with your pre-trading routine. This helps to set up your day so that you begin in a calm and orderly manner and are ready to deal with the rigours of the day. Some people find that 15 or 20 minutes of exercise is beneficial to help them mentally focus and feel alert and energised.

 

Other people find that a short meditation routine puts them in the right frame of mind. This involves training your mind to focus on the present moment rather than follow its natural tendency to wander from one thought to another. It can take practice to see the benefits, but many people use it as a way of sharpening their powers of concentration.

 

Once you are mentally warmed up and in a positive state of mind, work your way through a checklist before beginning to make trades. This might include checking the economic news for any events relevant to your currency pairs, and making any necessary adjustments to your trading strategy.

 

Emotional management

 

Forex trading elicits strong and deep seated emotions in even the most laid back personalities. You might more readily associate primal emotions of fear, greed, and loss and their dastardly consequences with Shakespearean tragedies, and that seems a whole world away from the logic driven numbers game of the financial markets.

 

However, when we are trading as an individual, we are putting our finances on the line, and this is tied in with our ability to pay for life’s essentials. In other words, the primitive survival instincts will come into play, passed down through the centuries from our ancestors when losing really was a matter of life and death.

 

These emotions can catch out the unwary trader, especially those who think that they are too strong to be affected by them. Everyone makes emotion driven decisions whether consciously or subconsciously, so to try and deny or repress these feelings is very dangerous.

 

The best traders are aware of their emotional state even at moments of intense pressure. They are not prone to hubris and overconfidence, and yet neither are they timid and overly cautious in their decision making. They deal calmly with failures and never indulge in the temptation to revenge trade.

 

This requires self-knowledge to overcome any personal traits, such as impatience or impulsiveness. It also demands emotional intelligence and the ability to recognize and step away from a potentially risky situation. A good trader will always refer back to their trading strategy and market research rather than cave into their instincts.

 

Remember: you do not ‘trust your gut’ ever in forex trading, because this will lead to poor decisions. It’s a game of strategy, not of chasing dollars, which is why it is so dangerous to equate success purely with money. Patience and discipline are the qualities that give the biggest pay-off between risk and reward.

 

At times, you will feel nervous, excited, frustrated, pressured, confused, and so on when you are trading, because no one can completely shut down their emotions and it isn’t a healthy state of mind in any case. The key is to always learn to step aside even when faced with the unexpected and refer to your trading strategy, and act on objective reasoning only.

 

Everyone is different, and when it comes to the most effective way to manage your emotions, it may be a case of trial and error. For some, maintaining a good work-life balance with plenty of exercise, a healthy diet, and positive relationships is key. Other people draw on meditation strategies to help them focus and filter out the ‘white noise’ of their emotions.

 

All this takes time, but if you are determined you will find that your mental resilience and powers of objectivity improve with practice. This will help to set you on the best path to success as a forex trader.

 

The right environment

 

One point that can be overlooked is the physical space in which we trade. While trading can be carried out from anywhere with an internet connection, your surroundings can subconsciously influence your mood and behaviour.

 

If at all possible, have a dedicated zone in your house where you can be completely free from distractions and keep your workspace tidy and well organised.

 

If you are looking for instant forex funding, please get in touch with us today.

 

FTUK Funded Account Disclaimer

CFTC Rule 4.41 – Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

All our funded accounts come with a fixed equity stop out level. Once the account equity level gets below this fixed stop out bar, we will close all running trades and disable trading and access. The stop out level is a fixed value for each funding level, this means that any profit which has been made by the trader increases the loss allowance.

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