There can be many factors that may lead to failure in Forex trading, but one possible explanation is the lack of desire traders have to actually work on themselves. With the need for an education on how the Forex market works, the ability to understand analysis, and many other prerequisites, comes one of the main factors needed to succeed in Forex; a strong personality.
While many other factors affect how and when a trade is opened and closed, or how long a position is traded before being closed, the trader’s personal decisions are a crucial part of the equation.
The following is a list of five personality traits needed to succeed in the Forex market:
Trait #1: Courage
This might sound strange to you, but traders sometimes experience major fear and anxiety when opening up a new position. No one will tell you Forex trading is worry free, it is not, but there are a few ways to decrease the anxiety level when trading. One of the primary methods to increase your objectivity in trading is to trade money you can afford to lose. If you know you are trading money you will need tomorrow to feed your family, you will be overcome with fear, which will have a major effect on your trading skills. One of the first things to do when beginning to trade is set aside some capital that if lost, will not leave a long lasting impact on your life. Once you have done that, your fear and anxiety levels should be much lower. Now all you need to do is take that first leap and jump into the Forex market.
Trait #2: Self Control
This is a very important factor when trading Forex. You need to ensure you are in total control of your emotions. Do not let a winning trade lead you down the path of greed, control yourself and follow the plan. On the other hand, when experiencing a painful loss, do not get caught in the trap of overcompensating with another trade. Follow your plan religiously, and do not be swayed by your emotion. Let the brain do the navigating, not the heart.
Trait #3: Self Awareness
This characteristic might have been at the top of the list had it been in chronological order. One of the first and most important things you need to do as a trader is get to know your trading personality. Ask yourself what kind of trader you are. Are you the type of person who is willing to take huge risks, lose some big trades, with the hope that your most successful trades will have made it all worth it? Are you the type of person that can leave a trade open overnight? Will you be able to sleep with that on your head? These are just some examples of decisions you need to make before trading. The most important thing is that you know who you are and only then can you decide how to trade.
Trait #4: Patience
This might be the hardest trait to acquire. Experienced traders can tell you that sometimes the most profitable trades are not trades at all. Sometimes the best move is to wait and not trade. Before jumping in, make sure this trade is right for you. Have you done your homework, read the news, analyzed the market, listened to the experts? Is this trade what your strategy is telling you to do or are you being impulsive? Sometimes, it is best to be patient; there will always be another trade, another possibility to profit.
Trait #5: Integrity
This might not be the same kind of integrity you are familiar with in the business world. This is about internal integrity. When trading, it is important to use a trading strategy, but even more important than choosing a good strategy is sticking to the one you chose. Even if you feel that a certain trade is not right for you, stick to the plan. If you think that now is a good time to get out of a position, but your strategy dictates otherwise, it is best to stay on track. No one is monitoring you and your decisions, so it is tempting to follow your hunch, but this will eventually lead to losses, maybe not right away, but definitely in the long term. The best way to keep it real, objective, and scientific is to choose a strategy, implement it, and stick to it no matter what.
Summary
In conclusion, many traders fail at the game of Forex because they are not willing to change or train themselves. They are willing to learn the trade, read the news, and watch the trends, but self improvement and personality development is not what they signed up for. This is a basic and fundamental mistake that will lead to catastrophic results in your trading. Let your Forex trading develop your personality and you are sure to see positive results in your Forex trading as well as your day to day life.