While natural talent in anything is a privilege, it requires far more than a knack to be a successful forex trader. Everyone that’s ever experienced consistent success in this field will exhibit some evident character traits that are learnable and repeatable for anyone.
This article will explore the five necessary qualities inherent in every successful forex trader and explain their importance.
Of all the qualities a trader should have, patience is probably the most important because it is the glue for every other necessary skill. We can apply the concept of patience in two approaches, the patience of learning the craft and also the patience behind making trading decisions or executing positions.
Most people underestimate how many years it can genuinely take for someone to be really good and consistent with trading. Although there is inexhaustible information on the internet, this is also a drawback because not all of it is entirely correct.
Unlike going to a university where everything is professionalized, traders don’t have the luxury of learning from one place because the knowledge is spread out through a multitude of content outlets.
We can liken becoming a professional trader to studying a degree in terms of length. It can take at least three years to make sense of everything where one can now produce consistent results.
The second crucial aspect of patience is the art of waiting until the right trading opportunity arises before taking a trade. Over-trading is one of the mistakes of losing traders. Also, markets are somewhat slower than what most would like them to be.
Big moves don’t often happen at the time we think they will. It’s about being very patient before making any trading decision.
Being comfortable with risk and uncertainty
Trading is a game of probabilities, not certainties. The risk of losing money on any given trade never goes away, no matter how skilled a trader is. This risk comes because of the prevalent uncertainty. No trading outcome is ever guaranteed. Unfortunately, no individual trader in the world can control price.
Being fearful about losing money is not something a successful trader has. However, it does not mean they will ever blindly execute a position without proper planning, which is one of several ways of minimizing risk.
Dealing with unpredictability is all about appreciating a profitable trader’s hallmark is measuring results over the long term. One random trade’s uncertainty is very high, though a large series of thoroughly tested trades will show a quantifiable expectancy.
Successful trading is about taking trades with the highest chance of a significantly greater reward than the money on the line.
Discipline and patience are related. While the latter deals primarily with time, discipline is more all sticking to rules. Trading forex is rule-based, and rules need to be in written form. This is where a trading plan comes in.
This plan details aspects such as the instruments one trades, the ideal set-up before taking a trade, how much they plan to risk per position, how long they plan to hold an order, etc. An undisciplined trader doesn’t follow any rules, which makes it challenging to make consistent decisions.
Being disciplined allows someone to control their emotions and perform every action through logic rather than feeling. Although trading is natural for some, rules are still an essential part because, unlike computers, humans are more vulnerable to mistakes, many of which are emotional.
Instilling discipline also allows a trader to take full responsibility for any of their wrongdoings instead of blaming their broker, mentor, or other traders.
Having a curious mind
A successful trader is consistently inquisitive, researching new information to enhance their understanding of the markets. This attribute even translates into real-life situations. However, seeing how things play out in the markets is hard work since trading is much more practical than theoretical.
Building a trading system involves rigorous and time-consuming testing because a trader is going through processes of elimination. During the demo and sometimes even the live stage, one always creates ‘what if’ scenarios through applying certain parameters and observing their effects in real-time.
For example, if a trader has discovered a new indicator they believe could improve their results, they can spend several months plotting different settings, seeing how it performs during specific periods, where it fails and works, etc.
Being curious also means never taking things at face value. Making a trading decision means considering the possibility of things going against someone’s favor. Some traders often react to what might seem like a positive thing, but a curious trader will want to know why it occurred.
Having a genuine passion for the markets
Lastly, having passion also relates to being curious, though the former is a long-lasting quality. A passionate trader will enjoy the process of continually learning new things and improving their craft over several years.
Most people entering any market are primarily driven by monetary potential. The issue with this mentality is many won’t have the persistence to go through the difficult times; only a genuine passion that is not financially driven can overcome this.
Fortunately, all the traits, despite being challenging to acquire, are teachable. Although trading forex from the retail perspective isn’t an actual profession, becoming a trader does mean being professional.
Professionals in any sport all have a list of character traits for conducting themselves and optimizing their performance. Ultimately, becoming successful in forex means being serious at developing the right qualities.