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Business : You Must Have This Winning Mind, The Bigger Picture In Long Term Trading
Trading Forex can be highly profitable or a risky business. To this point you have probably heard of a few people who made a fortune of their lifetime out of trading Forex. However, you may also have heard of many people making constant losses in trading Forex. In fact, according to various research findings on active traders in Forex industry, a whopping 95% of them are losers. Only the remaining 5% make constant profits and good money out of this industry. Why this is so yet there are plenty of learning materials and institutions online teaching Forex and some even offer free services? It is the same question everyone new in this industry will ask themselves and never find the simple answer: winning and losing trades is largely inspired by your mind. It is your mind that makes decisions and it is the same mind that perceives ideas of how you will handle your trades.
Let us zero in on the right mindset of a profiting trader in Forex so we can understand what the winning mind is about. Basically, the winning mind of a trader handles decisions about the market from three perspectives: The higher but realistic target in a given period of time, strategy towards achieving the target and the compound effect. Here is a breakdown of these three aspects of the winning mind in trading:
Higher but realistic target over time
Being realistic in what you expect out of your trades is the first step towards setting the right profit target. You cannot expect to solve all your financial problems out of one single trade, same way you cannot expect to make a million dollars in profits out of only a ten dollar deposit to your trader’s account in a short while. Otherwise everyone would trade Forex and forget about their careers for good. This point becomes even clearer if you include the aspect of time in its elaboration.
Everything, not only profits but also losses are experienced over time. All your strategies and trading plans are pegged to your anticipated end result. If you set unreasonably short length of time for your end target while at the same time you anticipate higher yields you will not experience the results you anticipated for. Instead, your mind will be overwhelmed by greed and excitement which only leads you to worry, hope and lastly regret. Stay safe by setting low targets over practical length of time. For example, many professional traders aim for only 5% as their maximum profit each day they trade.
Find the achievers’ trade strategy
A strategy is basically your way of attacking the market. It entails your discipline and trading plan and must be compatible with your personality. This includes how much risk you can tolerate as well as your level of patience in waiting for the end result. The right strategy for one trader is not the same as that of the other because of the above mentioned factors.
Setting your own strategy takes efforts such as finding the right market session to trade, knowing what kind of trader you are and even what chart patterns and price action triggers your moves. Most importantly, how you manage your risk each time you trade. Remember, it is not how much you rip from the market that keeps you in this industry but how much you reserve from your margin against your growing rate.
It takes time to device yourself a compatible strategy but once you find one everything changes for the better.
The compound effect
Every move you take in trading Forex should employ the psychology of the compounding effect. In other words your efforts should be building up over time instead of being just a one-off attempt. This way you not only spread your risk but you also spread thin hence chances of your trading account being all wiped out by a few experiences are greatly diminished.
All advices you have heard about trading Forex such as the need to be consistent and the need to have patience in your trading are completely in agreement with the compound effect. That is the winning mind of the experienced trader. The bigger picture in trading Forex is that millionaires out of Forex attained their status out of setting realistic goals, using the right strategy and believing in the compounding effect.