Who are the successful people in the markets? How are they doing it? Who are considered as the losers and why? The answers to the questions you have been asking are important for the evaluation and improvement of your own trading, as well as to its success.
Forex attract different types of people: clueless newbies, gamblers, deluded investors, those who want to make fast money, and others. But aside from that, there are other groups that make a living from these markets: the professionals. So, who are these traders and how do they do it?
Characteristics of a Successful Trader
Professionals are informed traders. They know the “what”s, the “how”s and the “why”s of the market. To be a doctor, you need to know the important medical information about your expertise; to be a lawyer, you need to be well-versed with the law; so, why would it be any different in trading? The way they trade is validated by their experience and that’s exactly how they know how to use the information they’ve gathered.
They trade using their brains, rather than their emotions. When trading, emotions should only play a small role as it is the fastest and most sure way that you’ll lose money in the markets. Average traders, on the other hand, subjects themselves to emotion because they:
- Fear losing
- Fear missing out
- Trade with greed
- Are impatient
Those are just some ways our brains and the market trick us.
- Market Perspective
Successful professional traders know what other traders do. Traders don’t simply just look at one’s information and decide the perfect entry spot. Do not expect to see your favorite indicators or the basic information and decide whether the market will rise or fall — your analysis should be confirmed by the condition of the market, as well as their prices and volumes to validate that there are other traders that have the same perspective. A certain currency can be massively undervalued according to the interest rates and export outlooks; but in the end, the supply and demand still governs the market. If other players don’t think the same as you and are dumping sell positions in the market, it’s hardly going to rise sooner; and thus, you should wait until the conditions of the market change.
Therefore, you should know the very important piece of information that you can use in order to understand the markets and make better decisions in trading.