5 Tips For The Struggling Forex Trader (Keys to Trading Success)
How long have you been trading in the forex market? A year, two years, five years? Have you achieved what you set out to achieve? If your anything like myself you’ve probably had many more ‘downs’ in the early stage of your career as a trader than you had ‘ups.’ Learning to trade forex was something that didn’t come overnight to me, and I believe most will agree with that! Along the way, however, there were certain key lessons that helped me become a successful trader and the goal of this article is to share those trading tips and hopefully help you go from a struggling trader to a profitable one!
Be Determined To Achieve Success In The Forex Market
Today something strange happened to me. I went to the airport, did my pre-flight like normal, and just as I was starting to come off the ground, I just had this overwhelming feeling of how fortunate I really am. For me learning to fly was a dream that became a reality. As I continued off, I started to think back on where I started in my trading, my journey and struggle learning the art of forex trading, and where I am now…
I don’t often talk about my struggle to become successful in the forex market, but I think it is relevant to the topic of being determined. I remember literally everything about that exact moment when I made the decision I was going to make a living from the forex market. I could tell you the exact trade I was in, what I was wearing, the exact day and time, what I was feeling…it’s like that one moment was and still is frozen in time for me. From that point forward things did not get easier right away, and I didn’t magically become a successful trader overnight, but I knew nothing was going to stop me from learning how to trade forex successfully! You must have this determination if you are to succeed as a trader. I want you to right now write down on a piece of paper, “I’m a successful forex trader!” The determination to be successful must precede the actual success and write it down, and then read it aloud daily will reaffirm that determination daily.
It’s important to remember that it took Edison over 10,000 tries before he perfected the light bulb. Success often comes on the brink of giving up or after a series of failures. If you have never read the book Think and Grow Rich, I recommend you do so. One of my favorite quotes from that book Says it best…
“Before success comes in any man’s life, he is sure to meet with much temporary defeat, and, perhaps, some failure. When defeat overtakes a man, the easiest and most logical thing to do is to quit. That is exactly what the majority of men do. More than five hundred of the most successful men this country has ever known told the author their greatest success came just one step beyond the point at which defeat had overtaken them.” -Napoleon Hill
Keep in mind Napoleon Hill was talking about those who created dynasty wealth. People like Henry Ford, Andrew Carnegie, and Thomas Edison. Do you really get the point of what he said? It was at their darkest hour, after their greatest defeat…then and only then did they achieve success. The only thing that separates a Henry Ford from the average man is the determination never to stop until they have achieved success.
Pick Your Trading Times And Walk Away
Just because the forex market is a 24 hour a day market doesn’t mean you should be trading 24 hours a day! Many times of the day the forex market is dead and directionless, thus making trading a guessing game. Pick active times of the day when you are more likely to experience a trending market such as 2-5AM EST and 8-11AM EST. During these trading hours the megabanks are actively driving the forex market, and thus these are the hours we should look to trade.
It is equally important to understand how the brain functions and what this means in regards to the length of time you should trade. Our brains, like a muscle, can only operate at 100% for a window of time before it needs rest. Trying to trade forex 8, 12, or more hours of the day will have your brain ‘running on fumes’ and thus more likely to make a mental error you otherwise would have never made. Not only that but excessive trading will put you outside of active market hours discussed above. Pick your trading time and stick to it!
Learn From Your Mistakes!
For us to learn from our mistakes, we must first recognize any easily recognizable patterns in our trading. I call this the “low hanging fruit.” This low hanging fruit consists of major errors that when fixed, will readily increase your chance of becoming a successful forex trader. The easiest way to recognize these mistakes is to keep a trade log. Write down not only the trades you take but also the time, what you were feeling, greed/fear, did you stick to your plan, did you have a plan, were you chasing the market, etc. Every week you should examine the trades that were taken to determine clearly visible errors. Having dealt with thousands of traders over the last 4 years two common errors most aspiring traders make are…
- Having an overall risk/reward of 2 to 1 or less
- Averaging more than 2 trades per trading day
In my experience, every profitable trader I know has a risk/reward better than 1/1. This allows you to win only 50% of the time and still turn a good profit. From a psychological standpoint, it is easier to maintain a positive attitude when you know one winning trade makes up for at least 2 losses. It is also important to note the number of trades taken. More often than not there is a negative correlation between the number of trades you take and your weekly profit. To put it simply the more trades you take, the harder it is to remain profitable, especially when you’re still learning how to trade forex. The bottom line is that it keeps a log of your trades so you can analyze the mistakes you make and fix them!
Don’t Trade With Money You Can’t Afford To Lose
The bottom line here is quite simple. If the money your trading with is money you cant afford to lose, you will lose it….this I promise you. Why? If your trading with next months rent, you’re going to be thinking about how you cant afford to lose next months rent. Trading is more a mental game than anything else and putting that type of pressure on your trading is sure to create failure. The best thing to do is get the proper forex education and trade with a demo account or a micro account until your profitable. I personally believe in trading with a micro account in place of a demo as it puts at least some of the real emotion of trading in play.
Simplify Your Forex Trading Strategy
Our beliefs here at DTFL are quite simple. We believe the forex market is driven by the banks. Because of this, we do not believe in creating a forex trading strategy, rather we believe in following the strategy used by the banks. Because the banks move such massive sums of money when acquiring their desired position they have to search out ample supply to meet their demand…this leaves us as retail traders a “footprint in the sand” we can learn to follow. If you know the position, the banks are taking you thus know the next direction of the market. I urge you to take all the junk off your charts and get back to basics. Begin to put into practice the trading strategies you see used on this blog. Remember Chad, and I have both been there and are willing to help. Why not shoot us an email with any questions you might have? We’re here to help!
To Learn More About Our Advanced Bank Trading Forex Course, Daily Market Reviews, Live Forex Training Room, and Members Forex Forum Click Here
Also, if you like these articles, Chad commentary, or anything else on the site then please “Like It, Tweet It, or +1 it”. Everyone has a social network and if you enjoy what your reading and think it might benefit others then please do so!
Check Out These Other Forex Training Articles