The forex trading market is one of the biggest financial markets in the world. Millions of traders enjoy vast liquidity, hundreds of instruments, and the opportunity to make money whichever way the market is trending.
While there is undoubtedly a huge opportunity in the forex market, many people who go into forex trading end up failing to make a profit. This is because they have not learnt or followed the principle of forex trading.
In this article, we will discuss 10 habits of traders who are big winners in the forex market.
- They are psychologically strong
Traders are humans; hence they have a tendency to move out or move in when the market is not in their favor. The fear of losing investments is the major factor that separates highly effective traders from amateur traders.
When a trader makes a move and closes the currency pair too early, the currency pair might continue to move in a profitable direction, meaning that money was left on the table. A psychologically strong trader trusts his instincts and does not make decisions based on fear.
Trading should be based on trust that the decision will work out, whereas fear of losing money compromises this trust.
- They have a strategy
A business leader must have a clear strategy to win the heart of his customers. A general must have a strategy in order to win in battle. In the same vein, successful forex traders almost always have a master plan.
Successful forex traders should rely on strategies of diversification, money management, risk management, particular market trend, and so on. This strategy part is the aspect most neglected by new traders.
They think they can win by making too many decisions. But successful forex traders understand that making a lot of decisions all at once does not lead to the greatest profit. Highly effective traders never open a position without a reasonable reason and they don't gamble on trades without knowing the trend or the behavior of a particular currency pair.
- They keep on top of fundamental analysis
Forex trading is built on information. Successful traders are well informed about the goings on in the currency market. They are informed about the decisions made by the government and the likely effects the decisions will have on specific currency pairs.
Highly effective traders have complete insight into the historical data of a currency pair, and the trend a currency pair would likely follow during a trading period. Successful traders are also always informed about trading strategies such as Fibonacci trading strategies and how to take advantage of a market trend with those strategies.
- They take reasonable risks
Highly effective traders know that putting their money into the forex market means they are at the risk of losing, however they effectively take on what they assess as reasonable risk. Some new traders think forex trading is a way to make quick money, without realizing that forex trading requires a high level of discipline and dedication.
Successful traders know that there is no sure bet in forex trading. Because of this, they don't risk all their investment in a single trade and don't overuse leverage in their investments. Highly effective traders would rather prefer to follow the principle of compound interest rather than taking unreasonable risks.
- They understand the principles of timing
Highly successful traders are disciplined. They don't jump in and out of trades without reasonable reasons. They have studied and learnt when to and when not to trade.
So many new traders don’t understand timing in forex. They don’t know at what time of the day it’s safe to trade. So they just invest a lot of capital when they should have held back. Successful traders know that timing is the key to long-term trading success, and they know when to hold back and when to invest.
- They learn from their past mistakes
Successful traders do make mistakes, but they avoid making such mistakes twice. They learn from every wrong trading decision they have made in the past, and they pull out stronger strategies every day. Their consistent efforts to learn from past mistakes makes them unshakable and highly effective. In the end, they are even happy they made those mistakes, if they lead to future success.
- They are determined to succeed
Every highly effective trader obviously started as an amateur trader. They could be foolish at first but the determination to succeed drove them to move beyond any obstacle.
Interestingly, not all highly effective traders win every day they trade. Often times they lose, but they don't dwell on these losses. They pick themselves up and they come back even stronger. If there is any reason a successful trader looks back on his losing days, it is to learn from the errors he made.
- They are always focused
Highly effective traders know that focus is the key to achieving trading success. New traders often fall into the trap of losing focus during trading sessions. They are driven by emotions and other external factors. Highly effective traders focus before they make any decision.
- They know the principles of money management
Money management is indispensable in all forms of trading. Successful forex traders know this, and they capitalize on it. They diversify their trades and they don't risk all their capital on one hail mary decision. They are very disciplined with their capital because they know that their trading success depends on proper capital management.
10.They always love to learn
“The capacity to learn is a gift; The ability to learn is a skill; The willingness to learn is a choice”-Brian Herbert.
Highly effective traders study books, read blogs and listen to other successful forex traders. They learn from their winning strategies and adapt them. They are willing to try out new trading strategies in accordance with their trading principles. More than anything, they are willing to learn.
In this article we have learnt 10 habits of highly effective traders. We have learnt what separates highly effective forex traders from other forex traders. The principles can be learnt and are not hard to follow.
Try them out for yourself by opening an account and trading with Exness.