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đź’ˇ IDEAS Essential Elements of a Successful Trader

Courage Under Stressful Conditions When the Outcome is Uncertain

All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.

You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.

However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.

Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.

Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.

The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.

For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.

The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).

So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.

Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?

If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.

Patience to Gain Knowledge through Study and Focus

Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.

To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.
 
the secret to becoming a profitable forex trader is having courage and self-awareness. Understanding charts and indicators is only one aspect of trading; another is managing your emotions, especially overconfidence and fear. You may be held back by "paralysis by analysis" or "irrational fear of losing," but realizing that fear is common and learning to live with it can change your life. Patience is also essential. To thrive in the forex market, one needs a strong foundation in knowledge, constant study, and risk management. Although the journey is lengthy, it calls for striking a balance between bravery and self-control.
 
There are many elements of a successful forex trader. A good forex trader initially creates a plan that could help him succeed in the market. The biggest problem with being a forex trader is the fact that creating and implementing a specific kind i trading strategy or a plan is the most difficult hi g a forex trader could do and this is where most forex traders usually fail in the market. You must not only create a plan, but you also need the right kind of timing to implement the strategy in the market.
 
Every time I had to press the buy or sell button when I first started trading forex, I felt the weight of my anxiety and fear crushing me. I came to understand that courage is acting in spite of fear, like a firefighter venturing into peril, rather than simply not feeling it. I discovered that while fear management is essential, overconfidence can be equally harmful. My biggest challenge was maintaining my discipline and patience, particularly in determining when to hold winning trades or cut losses. I now realize that in addition to courage, success requires in-depth knowledge, ongoing study, and emotional control to prevent costly errors.
 
It takes 5–10+ years of arduous training to become a surgeon, a commercial pilot, a CPA, a lawyer, an F1 driver, a pro athlete. What makes you think you can start your trading career by entering one of the most competitive fields on the planet without years of gruelling training? The best analogy I can think of would be to learn martial arts straight in the octagon against top fighters. Chances are you may not feel so pretty.

Even pros with decades-long experience, such as yours truly, suck air through our teeth at the simple mention of developing strategies for day trading. I profitably trade sub-daily bars, but this is by no means day trading. I don’t think it jives with my psychological makeup
 

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