2Bull Forex Blog

Forex trading is all about having the right method but also the right attitude. Here we will look at 10 character traits that the losing 95% of traders have and if you want to enjoy currency trading success you need to avoid them.

Here they are in no particular order of importance.

1. I am not responsible

A symbol of losers – they think success will come with no effort on their behalf and blame everyone else for their failure from the tip they got from friend, newswire or broker, to the market being against them.

These people make up a surprising amount of the losing majority and they fail to see that no one can give them success but themselves. Instead of seeing this they do the following.

2. I Like to take expert advice

If you do be very careful as most of the people who put themselves out as experts on the net are anything but – their marketing companies and have never traded in their lives.

Again a vast amount of traders buy systems with unbelievable track records and then are surprised when they fail in real time (they never look at the disclaimer that says the track record is a simulation and not real). If something looks to good to be true it probably is and this is very true in forex trading.

If you follow an expert and have not done your homework on the logic they base their views on, then you are unlikely to have the confidence to follow their method with discipline when it hits a losing period.

If you don’t follow a method with discipline then you have no method at all.

3. I don’t like being wrong

Well in forex trading your going to be wrong a lot of the time, as only you can be wrong and the market price is always right – no matter what you or I think. Most traders hate taking a loss and looking stupid but the markets do that to everyone and even the best traders lose at times.

If you try and argue with the price and justify your position, you will run up losses and lose and your emotions will take over.

4. I deserve to win I am smart

I have met some very clever people in forex trading and the majority of them lose – if you think that being smart helps you then it won’t.

In forex trading you get paid for being right with your trading signal that’s it and it’s a fact that the best forex trading systems are simple.

They work far better than complicated ones as they have fewer elements to break.

Clever people tend to over elaborate their trading and think the more they put in the more they get out but this does not apply in forex trading.

If you want to make money keep it simple and remember forex trading is probably 20% method and 80% mindset.

5. I am not a patient person

If you are an anxious or nervous person then you are unlikely to win at forex trading. You need patience to wait for the right opportunities and you need patience to hold positions through short term volatility to bigger profits.

If you are an anxious trader you will probably let your emotions get the better of you trade too much, engage in revenge trading etc and lose.

There of course other losing traits but the above are very common ones and hold anyone of them and you will lose.

Forex trading is not hard to learn anyone can do it but most fail because they don’t realize that correct mindset is the key to success. To be successful at forex trading you need to rely on yourself, have a deep understanding of why your method works, so you can have the confidence to apply it with discipline.

If you understand the above you can avoid these common losing traits and get a mindset for forex trading success.

This story is about a famous experiment in 1983, when trading legend Richard Dennis wanted to prove anyone could learn to trade so he taught a group of people who had never traded before then set them off to trade – the result? They made $100 million in 4 years. There is a lot you can learn from this story and use in your own forex education.

The turtle experiment proved ANYONE can become a successful trader, with the right Forex education and everything about trading can be specifically learned by anyone with the desire to succeed.

This is Of course true – but still 95% of traders lose their money and the turtle experiment can give you an insight into why and how you can enjoy currency trading success.

The Experiment

The people Dennis selected represented a variety of different people of all ages, both sexes and from all walks of life including:

An actor, security guard, a couple of professional card players, an auditor, a boy fresh from school and a female exchange clerk – so a diverse group of people!

They then went on to make annualized 70% returns and make $100 million and many went on to become trading legends.

Dennis taught a Trend Following simple trading methodology – but also the confidence and the discipline to follow it through periods of drawdown, to long term currency trading success.

What You Can learn

The reason most forex traders fail is simply they cannot adopt the right mindset to succeed. Having a sound method is only part of the equation for success – you must have the confidence and the discipline to follow your system through draw down periods to win longer term.

If you can’t follow your method with discipline, you really have no method at all.

Dennis proved that a simple system that traders could understand, applied with discipline, could lead anyone to success and he was proved right.

This logic of course still applies today.

The way to make money in forex trading is based upon the following:

A Simple Logical Method + Understanding of It = Confidence = Discipline = Forex Success.

Most traders however use methods that are not logical with good examples being day trading or scientific methods, or they follow someone else.

Of course if you use a method that’s not logical you stand no chance but if you try and follow someone else without believing or testing their logic you will fail as well.

You are going to get losses (don’t let anyone tell you won’t) and its here the correct mindset is so important your discipline is based on confidence and you need this to stick with your method.

Discipline is vital to success and this is based upon inner knowledge and understanding.

The turtle experiment is part of trading history, the story should act as inspiration to anyone who wants to learn currency trading and enjoy currency trading success. It inspired me to start my trading career 5 years ago and has inspired countless traders over the years, as it shows that anyone has the opportunity to achieve success if they learn the right knowledge.

If you understand the above then you to could become a successful trader and make the income you desire from trading global forex markets.

As we turn into the New Year it’s a good time to make changes and take action – if you are trader who is not doing well or a potential trader then these 2 tips will help you make money fast not just in 2008 but at anytime and they should be a cornerstone of your forex education.

The first point I want to make needs serious thought 95% of traders lose money not because they can’t learn forex trading (anyone can) but because they believe certain myths and commonly accepted wisdoms that are wrong.

The tips below are not conventional but don’t let that worry you the bulk of traders don’t make money so being in the minority is good so here are your 3 tips

1. Be Patient Trade Less

Many traders think the more they trade the more they will win but this is simply not true in forex trading in fact the opposite is true – the more you trade the greater the chances are you will lose.

You don’t get paid for the effort or amount of trades you make – you get paid for being RIGHT that’s it. I know traders who trade every day and make nothing and others who trade a few times a year and make over 100% annualized gains!

The majority of novice traders believe the day trade and make money myth and that’s all it is a myth. Day traders don’t make money period.

If you don’t believe me, try and find a real track record on a day trading system and you will be looking for ever. You have to catch the big high odds moves and they can ONLY be spotted by looking at longer term data and data within a day is meaningless.

If you like the buzz of trading you will lose – if you are patient and wait for high odds trades you will win.

2. Diversification

You will have heard it countless times diversify; don’t put all your eggs in one basket etc. On a small account of $1,000 or less you don’t have enough to diversify and make big gains at the same time.

All diversification does is dilute gains – wait for the big moves and load them up with as much as you can afford.

3. Take Bigger Risks

You will hear many give you the advice of only risking a maximum of 2% on a trade – well on 1,000.00 that’s $20 you won’t make much doing that!

Wait for the good trades and load them and risk up to 20% on a small account.

You can only diversify and risk less per trade if you have enough cash and that’s $10,000 + if you don’t you need to risk more – period!

4. Have Courage

Learn to accept big gains!

Hang on you may say all traders can do that because that’s why their trading currencies.

They are – but they don’t understand accepting a big gain is harder than taking a loss.

Why?

Because as soon as a trader sees a profit he wants to take it and the bigger it becomes the harder the temptation is to resist. As open equity swings keep eating his open profit it becomes too much and he snatches a mediocre or minor gain.

What happens next? The trade goes on to make 10,000 20,000 or more and he’s not in.

If you want to make money you need to have courage and accept that open equity will eat into your profits and have confidence to hold for a bigger longer term gain.

If you want to make more money from your forex trading and you are starting off with a small account make the above part of your forex education and you will see your profits increase dramatically.