In order to be successful in Forex trading you need to work hard. You need time to learn all you can about the market itself, the fundamental and technical indicators you can use, the different currency pairs and how each one reacts to a certain release and, obviously, you need time to put all this knowledge into practice.
But this is not all you need to finally be profitable in Forex. There are other trading skills you need to develop. And this are the skills that will allow you to be in control and help you handle any situation that occurs while you’re trading.
Skill #1: Patience:
Usually, when most people hear about Forex, they feel tempted to try it. With such a low entry level, why wouldn’t they? And here resides the first skill you need to develop: patience. You need to have time to learn all you can about Forex, as outlined above. Without this knowledge, you won’t succeed. Forex trading success doesn’t happen overnight.
Besides, patience is a skill you need when you’re actually trading. So, why not start right from the beginning, developing it?
Skill #2: Risk Management:
When you’re trading Forex, or any other market, you need to be aware that when you enter in a trade, you can either win or lose. There is always risk involved, although you can try to minimize it. And this is where risk management takes place. By applying a good risk management strategy, you’ll be not only maximizing or profits as you’ll be protecting your account at the same time.
Just to get the idea, some people won’t advise you to trade more than 3% of your entire account in a single trade; others say 1%. It really depends not so much on the percentage but also on your trading account balance.
The main purpose in using risk management is protecting your account. So, you need to use your good sense and decide how much money you want to place in a single trade.
Skill #3: The Right Mindset:
This skill is crucial if you want to succeed in Forex trading. First of all, you need to look at Forex trading as a business and not as a casino. You can make consistent profits in Forex, but this can only be achieved with hard work, patience, a good system, a good risk management strategy and the right mindset.
Usually, when someone enters in the Forex market, they assume it’s easy to make a profit. They think they’ll be rich overnight, mostly because of reading about all the advantages of this market. People with this mindset can’t be named traders; they are gamblers. Forex trading is risky and you’re main goal should be protecting your account. With this in mind, combined with a good risk management strategy, you’ll know when the time comes and you’ll need to close a trade with a loss. And you’ll do it because you’ll know it’s best to close it than just letting it run based merely on hope.
Skill #4: Goals and Expectations:
Yes, you should have a goal when you start trading the Forex market. But it should be a realistic goal. It’s just like when you look at yourself in a mirror and you think you could lose a pound or two. You just don’t expect to go to bed at night and wake up without those pounds off. Goals and expectations should be defined for the long term. This way, you won’t feel the rush to make decisions that might not work as expected.
If you can develop this four skills, it will be just a matter of time until you reach consistent profits in the Forex market.