Like a few other businesses, forex trading demands skill, patience, experience and some dose of luck. Trading forex has its own risks which makes it not suitable for everyone.
The traits of a forex trader maybe similar to someone skydiving every other weekend. In as much as skydiving is a thrilling experience that sticks even for a life time, only a few will take the courage to jump 10,000 feet above sea level.
There are a few things in common between a forex trader and a skydiver. Let’s examine what traits have kept a few traders profitable while staying long in the game..
How well have you managed money in time past? If you were given a new opportunity with money, how would you treat it? Your decision to invest in currencies needs to be examined to know the real motives. Are you investing in the currency market just to get your chest of your failed business(s)?
Well, there is not right and wrong reason to take a shot at trading currencies. Having the right mindset towards trading currencies is the Sign_up_form_EN” target=”_blank” aria-label=”signup for a trading account. (opens in a new tab)” rel=”noreferrer noopener” class=”rank-math-link”>signup for a trading account.
Once you have all these sorted out in your mind and have taken the right steps to disabuse your mind of getting rich quick, then you can trade learn trading currencies purposefully and effectively.
Trading the currency market requires a combination of these set of attributes to invest, stay, earn and profit in the long run. These are smart set of attributes to develop as a currency trader:
Must have an analytical mind
Without the ability to read and understand currency pairs and market charts, how would one analyze the market. As major economies of the world make economic and fiscal policies, the currency markets react to the news thereby influencing the direction of the market.
Technical analysis is a tool in the trader’s arsenal that he must deploy before initiating any trade, he must analyze currency trends through hourly, daily, weekly charts to get a sense of the likely direction of the market.
Ability to take calculated risks
Take risks does not mean making decisions without weighing the corresponding consequences. Currency trading can be very profitable and it can also be risky as well if you do not know what you’re doing.
Before you click the “Buy” or “Sell” button, ensure you have predicted with tested tools that 50-80% of the time, your trades will end in a profit.
As a beginner, test of your predictions with smaller lot sizes until you understand the flow and gain confidence in your risk taking. Bottom line, avoid the temptation to take more profit which have ruined many currency traders today.
Patience and staying power
Like every other business, there will be good and bad days, experienced traders also face it. Bad days could arise as a result of government policies, social unrest, adverse climatic changes and so on, which is not your fault or that of the trader’s.
These events affect the currency market, causing an uptick in certain currencies and a plunge in some. Depending on the currency pairs you’re trading, you could be trading above the curve to a massive profit exit or be far beneath towards a loss. Bad days does not mean that currency trading is bad all together. Having this at the back of your mind will prepare you better for the days ahead.
Ability to follow and understand the news
The currency market is one of the most volatile markets in the world today. Since it is a global market where currencies are exchanged every second over the counter, the currency market reacts to virtually economic and financial news most especially news emerging from the 4 trading zones (North America (NY & CAD), Europe (UK & EU), Asia (JP & HKG), Australia (AU & NZD)
Taking a loss
Taking a loss is a trader’s nightmare. In currency trading, losses do occur despite nearly accurate predictions. One needs to understand the reason for losses and make amends. These are the areas you possibly could check for errors.