What separates winning traders isn’t their better-performing strategies or extensive market analysis but their mindset. Most traders believe that once they are done with countless courses and find an effective trading strategy, they will immediately make profits. But more often than not, it doesn’t work that way.
The volatile and unpredictable nature of the forex market has led to many traders losing money consistently or quitting the market entirely. So, those traders who consistently make a winning in the market, might not be the most intelligent traders. However, they possess certain beliefs and attitudes needed to conquer the world of trading.
Let’s take a look at what beliefs winning traders embody and how you can develop them.
5 Core Beliefs Of Successful Forex Traders
The top forex traders in the world may have different strategies for making a profit, but they share certain beliefs or attitudes. These beliefs are largely responsible for their progress in the forex market and are instrumental to keeping them focused on what is important.
Here are the 5 beliefs possessed by successful forex traders:
1. They Don’t Let Losses Or Mistakes Affect Their Sense Of Value
When you are faced with obstacles when trading, it is easy to believe that the market is rigged against you. This negative and erroneous mindset usually sets in after a trader has experienced several losing trades and starts to doubt their ability.
As the self-doubt and negative perception build up, it becomes a self-fulfilling prophecy. Traders who doubt their ability and are affected by their failures will be skeptical about making trades and end up losing good opportunities.
Because they are fearful of the market’s volatility, these traders cut their trades short before the profits set in and are increasingly affected by perceived shortcomings when trading. Successful traders, on the other hand, are different.
The top richest forex traders in the world are brimming with self-confidence and believe in their ability to be successful. This belief in themselves and their ability is not shaken by losing trades.
Successful traders don’t lose their self-value in face of loss because:
They Focus On The Opportunity Provided By The Loss Or Mistake:
Rather than making their sense of value dependent on the results they get in the beginning, successful traders focus on the information presented by such loss. They use the information to improve their trading strategy and conduct better analysis.
They Are Persistent
Every trader regardless of how good they are as a few losing trades under their belt. But rather than becoming despondent, they see it as a stepping stone to doing better. These traders keep improving and moving towards their goal no matter how long it takes.
However, this doesn’t mean you shouldn’t try to cut your losses when necessary. There is a difference between realistically pursuing your trading goals and letting losses mindlessly eat away at your portfolio.
After experiencing a few losses, cut back on your trading capital or use a demo account. This will allow you to make the most out of the information gotten from the mistakes without completely wiping off your capital.
Once you are sure that you understand what needs to be done, you can try again.
They Don’t Take Themselves Too Seriously
Successful forex traders take each trade seriously but they do not criticize themselves for every single mistake. They understand that it is impossible to be successful all the time. This is also the case for traders and investors in other financial markets.
No one likes making mistakes but don’t let your thoughts and emotions about your losses influence your process or trading strategy.
2. They Maintain Their Discipline And Objectivity When Trading
Without discipline, trading strategies, and proper risk management, they lose their value. Regardless of how current market action affects their portfolio, winning traders remain objective by keeping their emotions in check. Even if you try to “outsmart” the market, you will discover that discipline is a non-negotiable ingredient for success and a skill every trader has to cultivate.
Having the required discipline for trading can be developed by doing the following:
Understand The Emotions At Play:
When there is bad news about the market, traders naturally get scared and overreact. Although acting based on fear could protect their portfolio to some extent, they could also miss out on profitable opportunities.
Greed is another emotion traders have to deal with. Greedy traders tend to hang on to trade longer than they should and end up getting caught when the trend reverses. Greed is a powerful emotion to curtail because everybody wants to keep doing better.
Once you recognize that there is a high chance of acting on your emotions when you trade, it makes it easier to manage them.
Develop A Strategy
A trading strategy that works and sticks to it is essential for success in the forex market. Another benefit of it is that it takes emotions and speculations out of the way when trading. You know what to do when to do it, and how you do it.
The important factor here is, “a strategy that works.” Knowing that you have a poor approach to trading will only increase your hesitation and fear of the market. In addition, it increases the risk to your capital.
Take your time to understand how the forex market works before formulating a strategy and work with a mentor to discover what you should or shouldn’t do. If you don’t have a mentor, there are excellent free resources that can provide you with the information you need to form a practical strategy.
Once you have something down, test it out in a live demo account or a micro account. The demo account allows you to see what works without losing any capital. The micro account, on the other hand, gives you the opportunity to use small capital to test your strategy against the market. You would experience losses, but it wouldn’t be anything you can’t handle.
Stick To Your Strategy
Sticking to your trading strategy is the best way to discipline yourself and be objective when trading. Always have a stop-loss and take-profit target in place and don’t modify it until you have more knowledge.
But, remember to stay flexible with your strategy by consistently accessing your performance and experimenting from time to time. Over time, the experience you get will help to curtail emotional influences.
3. Top Forex Traders Genuinely Accept The Risk Of Trading
The forex market is perhaps one of the most lucrative financial markets. As such, it is easy to get caught up in the idea of making endless profits without recognizing the volatility of the market and the risk associated with each trade.
No matter how skilled or experienced you are, every trader faces the risk of losing as soon as a trade is initiated. Successful traders genuinely accept that trading is a risky venture but still trade without hesitation. The big difference is that winning traders find a way to stack the odds in their favor.
There are a lot of factors affecting forex trading and traders have to deal with them as long as they are actively trading in the market. Funny enough, these factors can be both beneficial and dangerous to traders depending on the circumstances. These factors include:
If the prices were static and unchanging, traders won’t make a profit. But the change in price is also what makes traders lose money. The market could suddenly go against the prediction of traders and make their trades unprofitable.
Market volatility can be increased by sensitive economic or political news, especially from countries with big economies like the United States.
The forex market is the most liquid financial market because there are always people buying and selling assets. However, there are periods when the market becomes less liquid like on weekends, bank holidays, and financial crises.
It goes without saying that leverage is a double-edged sword. While it increases your potential for profit, it also increases your prospective losses.
Successful traders have learned that trading is all about taking risks especially if you want to be successful. But, they pick and choose their trades. Winning traders carefully evaluate the potential risk of trade against its reward before making any decision. If the chances of profit are higher, then they take the opportunity.
4. They Understand The Place Of Learning
The learning process never stops. In fact, it becomes more advanced as you get successful in the market. Successful traders are experts on the market and are aware of most major events affecting the market.
They also build their skill set by learning more advanced and accurate means of predicting the market. Some traders even create their own algorithm for automatically spotting the trades that would be most profitable.
As a beginner, your knowledge of certain things like technical analysis and fundamental analysis is limited and if you want to grow as a trader, you will need to build on it. Understand that you may not be able to do as much as successful traders when you start out. But the more you learn, the easier it gets to predict the market.
5. They Remain Dedicated To Their Trade
Most successful forex traders took years to get to where they are. The reason they were able to do that, is that they never thought of quitting. They believe that they are in it for the long haul and give their all to trading.
Winning traders are those who take time to understand the market and learn the difference between a good trade, a bad trade, and a losing trade. Just because a trade ends up losing money doesn’t necessarily make it a bad trade.
In addition, a good trade is not only defined by profits but the risk endured to make such a trade. If the risk is greater than the potential for reward, then it cannot be called a good trade.
Plus, winning traders put great effort into mastering themselves and their trading skills. The more they understand what is important to them as they trade, the easier it becomes to make good trading decisions.
To get yourself in a winning mindset, always start your day on a positive note. Motivate yourself to do better with every trade and do not let your actions be influenced by fear or greed.
Above all, stick to your trading strategy and modify it as you become more experienced. The market is not programmed in favor of anyone and your attitude toward trading largely determines your success.