8 Things Successful Forex Traders Won't Say
Here at Trading Education, we believe that when done well, forex trading can be a successful and profitable business. However, there are many misconceptions and misleading statements out there. These are the eight things that you won’t hear from a successful forex trader:
1. “I never lose.”
No matter the exact market, losses are an inevitable part of financial trading. The true mark of a successful trader is being able to win more than is lost, as steep losses could be detrimental to your account and activities. If you hear someone say otherwise, they’re most likely exaggerating their success.
Forex is about trends and numbers. The sums go up and down. That’s how we make a profit, but it’s also why we can lose it. It’s a natural process and all traders have to utilize it. That dynamic has inherent negatives and positives. True traders know and embrace that. They don’t think winning 100% of the times is possible. You should understand that fact of the forex game if you want to become a good player.
2. “Money management is not important.”
As with most types of financial trading, determining how much you can reasonably afford to risk is important. With forex trading, this is just as important as having solid entries and exits. If anyone tries to tell you it isn’t important, you’d do best to ignore their advice.
3. “It’s good to average down.”
A trade starting off strongly is a good indicator of forthcoming success when compared to a weak start of a lost trade. If a trade looks like it’s going to be a loss, why would you want to add more to it? Continuing to add to a losing trade is not only risky, but also incredibly financially dangerous.
When it comes down to it, knowing when to quit is an essential skill in all trading. You should follow the trends and avoid fighting battles you can’t ever win. Know that this temptation is often fueled by wishful thinking. Recognizing that will help you get ahead in increasing your profits and decreasing your losses when they do come.
4. “I am 90% accurate when predicting short-term movements based on chart readings.”
If you hear a financial trader boasting that their predictions are 90% accurate, take that claim with a pinch of salt. In the real world, even the most successful traders don’t hit a success rate of 70%. Bravado may serve a purpose when intimidating a person, but numbers and sums don’t get intimidated. Lying to yourself and others about your chances can only result in bad investments.
A good trader doesn’t expect every deal to be a home run. Great deals do occur from time to time, but the forex market is too big and chaotic for them to be reliable. A great writer may write masterpieces every time, a great musician may always compose amazing pieces, but a great forex trader relies on many small victories rather than big home runs.
5. “You should be trading actively every day.”
There are many situations where taking a break from active market trading is the right move to make. If there is a sudden political event, for example, the market might take a hit, making it wise to take a break while the volatility settles. Don’t forget; like most things in life, it's good to take a break to enjoy the fruits of your labours or recover from a loss. It can be beneficial for not only your bank balance but your mental health too.
Sometimes not doing anything achieves more than any Herculean effort. The most successful traders have more patience than aggression. Making too many choices and acting too much only increases the chances of something going wrong. Don’t be reactionary. The good trader doesn’t react to the market but predicts it and wins based on what’s going to occur.
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6. “My strategy is profitable in all market conditions.”
When it comes to the world of forex trading, there is no such thing as an infallible strategy that is successful in any market climate. If there were, just about every trader would have taken it up already. The closest strategy to this principle is high-frequency trading; however, this is often not possible for retail traders.
There’s also the fact that the market changes constantly and strategies that work well in one situation don’t translate into another. Some methods become completely obsolete, while others may seem to be, but gain relevance once the wheel turns to that position. You should always follow the market and never miss out on new developments and shifts.
7. “I taught myself everything I know.”
Though successful traders can teach themselves an awful lot about forex trading, it’s highly unlikely that they taught themselves everything unless their path to success was extremely rocky and littered with large losses.
Whether from observing other traders or embarking on a training course, it is likely that a truly successful forex trader learnt from other successful traders. There's no shame in this. If anything, learning from the triumphs and mistakes of others will help to make you stronger and more successful in the long run.
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8. “I know everything there is to know about forex trading.”
No matter your industry, there is always more to learn. Advances in methods and technologies mean that every industry is developing all the time. Forex trading is no exception. Continuing to learn more about the financial trading industry will only help you grow both your trades and mind over time; don’t be afraid to keep learning new things!
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