Without knowing it, you may very possibly be like a card player in the forex market. In fact, if you’re like most people who trade forex, you are probably more of a player than a trader. Forex traders who are not making money consistently, simply have the wrong mentality, unlike professional traders who have developed certain habits that allow them to earn money regularly by speculating the financial markets.
There are two types of forex traders, those who play with their money like card players do and professional traders who consider forex trading as a business. To determine if you are a player, let’s talk about some of the most common features for players. This will help those who are more players than traders to first acknowledge this factor and gradually change their mentality.
Main Features of Traders Who Are Players
Players are addicted; they like to do the same thing over and over just to get a feeling of euphoria. They consider trading as a hobby and not as a serious activity that involves a thoughtful and responsible approach. Unfortunately, this “hobby” often turns into an addiction to the game that can cost them thousands of dollars. Players become intoxicated by “hoping”, which is why they continue to lose and do not change their habits, they squander a lot of money even to take out loans to finance their habit. The players still believe that their luck will eventually smile and they continue to put more money on the table. Unfortunately, the majority of individual investors in the foreign exchange market have a similar approach to that of a card player. People with a similar mentality, become addicted traders and behave like fanatics of the a card game, they risk large sums of money, with random, no risk management plans. These types of traders are in the market for fun, even when they do not win. They lose the sense of reality by using a very high leverage as their approach to trading is based purely on greed and hope.
In the mind of a professional forex trader, money management is the surest way to control risk. Understanding and applying the risk/return ration, allows traders to manage risk on each trade. Basically, professional traders do not take a lot of pleasure to enter and exit the market. Unlike players, they do not seek euphoric emotions because they know exactly what they want to do within the market before making a trade. They do not rely on luck, but on the likelihood of success. In other words, they have a forex trading plan. Successful traders are familiar with their forex trading strategies, they do not enter the market only to make up for a loss and have confidence in their strategies over the long term. Generally, traders that make money, trade only a few major currency pairs and on reliable market configurations. Patience, consistency, a viable method and accuracy are the tools and qualities of successful traders. On the contrary, players invest in the markets randomly with very high leverage, as they enjoy the strong adrenaline rush.
What Can You Do Now?
Here are some principles that you can start apllying immediately to think and act like a professional trader:
To become a professional forex trader, you must create new paradigms that include positive habits that will assist you to obtaining the mindset of a winning trader.
Consider trading as a full-fledged occupation which includes significant responsibilities. You may have a family to feed? Would you be willing to take risks that are not calculated and could affect your family’s needs? You must realize that your limit is determined by your level of emotions, loss of your emotional control will certainly result in losses within the forex market.
Keep a trading journal to archive all past trades. All businesses have records of their expenditures and revenues to monitor and measure the performance of their daily activities.
Finally and most importantly, you have to be realistic about your profit goals in relation to your starting capital and do not invest money you cannot afford to lose. The possible loss of your funds should under no circumstance affect your standard of living.