The forex trader's attitude is an important element that must not be neglected. In order for a trader to elaborate a trading style that matches his mindset, he must identify his key personality traits (both strengths and weaknesses).
Lots of traders think that profitable trading is just a matter of having a good trading system. This view of trading falls short of what is really needed to be successful. A quality trading approach combined with proper risk control and good money management is key, but the biggest factor determining your success will come from developing the trader within you.
The trader within you is the result of many things: your beliefs, your personality, your attitude or mindset, your character and your health. You cannot buy these things at the trading store! Instead, you must identify and know yourself, and then make whatever adjustments are necessary.
You must first find or develop a trading system that matches your personality and trading style. Many traders fail because they choose a trading system that is not aligned with their belief system. For example, chances are that if you're a loner and don't like crowds, then you will not be a good trend trader where you would be required to follow the crowd of traders to make money by being with this crowd in the trend. Know yourself well enough to know what your beliefs are so that you can trade in accordance with them.
You must hone your trading skills through education, trading, and even more trading. You must practice or "paper trade" until you develop a profitable trading approach. It may take years to develop both the "science" of trading, which represents your trading skills, and the "art" of trading which represents your judgment and attitude. Most new traders fail in this area because they do not have the discipline to work on their trading approach until it is profitable.
If you think about playing golf or tennis, you would not compete for money until you became a good player. And you do not become a good player until you have practiced for years. The same is true for trading! Think how foolish it would be for you to play against expert golfers or tennis players if you were just a beginner. Yet, this is exactly what many new traders attempt to do. Every time you actively trade the financial markets, you are competing against other traders, some of which are the best in the world. You must therefore acknowledge that all markets are championship arenas and that you are competing against the best traders of any financial market you choose to trade in.
Think of how foolish it would be for a novice trader to enter a market and expect a positive outcome competing against traders that are experts. This is why new traders need to practice until their skills are developed enough to be able to successfully compete.
Another important part of the trader's attitude is to incorporate balance into both your life and your trading. While it is important to be a focused trader and also one that is focused in pursuit of proficiency, there is a line in which focus can become obsession. Do not cross this line! If you find you are becoming obsessed with your trading, then it is time to pull back and take some time off. Relax regularly to avoid becoming obsessed with trading. If you are not balanced, work on being balanced. Make sure that you devote time to your relationships outside of trading. Get some exercise in order to improve and maintain your health. Do activities that you enjoy besides trading. And don't forget to relax. A well-balanced, skilled trader will usually win more than an obsessed skilled trader because his or her body will be more relaxed, less anxious, and less susceptible to negative emotions such as fear and greed, which cause poor trading.
When you are developing your trading skills and trading mindset, make sure that you're having fun at the same time, and treat it like a game. Develop a stress-free environment where practicing and learning are fun. This is where "paper trading" can help you. "Paper trading" is a great way to practice your trading in a stress-free environment where you can have fun while learning and improving. When you are ready to trade with real money, trade to win! Be relaxed yet focused. Don't take it too seriously or you will lose your edge and become uptight and stressed. Instead flow with the markets but make no mistake about it, you are there to win! The US Navy have some great sayings: "It pays to be a winner!", and "Second place is first loser!", and this is true for trading as well.
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