Before we begin, I\u2019d like to make one thing crystal clear. There\u2019s a lot of talk out there (and has been for some time) about whether\u00a0anyone<\/em>\u00a0can consistently profit from trading Forex. I know because I used to be the person who would search for proof on the internet. I was searching for some\u00a0ray of hope that might help justify the endless torture I was putting myself through in those first three years of my trading career.<\/p>\n Here\u2019s my take on it\u2026 I\u2019m certainly part of\u00a0\u201canyone\u201d\u00a0so the answer is a resounding \u201cyes\u201d, anyone can consistently profit\u00a0trading Forex. Don\u2019t ever let someone tell you differently.<\/p>\n So what\u2019s the secret to success? Sorry to say, the only secret is that there is no secret. While there\u2019s no true\u00a0secret<\/em>\u00a0to success, there is a bit of advice that will absolutely determine whether or not you become profitable.\u00a0It\u2019s something that every single successful Forex trader has in common, and it\u2019s non-negotiable.<\/p>\n Never give up!<\/em><\/p>\n The problem is that so many\u00a0Forex traders struggle\u00a0for years, and then just before their breakthrough moment they throw in the towel. Or they take a two year hiatus and are forced to start all over again.<\/p>\n I know because I hear the stories. The ones about how Joe Schmo tried for two years to make this Forex thing work, but he just wasn\u2019t cut out for it. What Joe failed to realize is that his \u201cah ha\u201d moment was just around the corner.<\/p>\n This applies to all ventures in life, but\u00a0it\u2019s never been mo<\/p>\n re true than it is when it comes to becoming a successful Forex trader.<\/p>\n Now that that\u2019s cleared up, let\u2019s take a look at some other key characteristics that successful Forex traders have in common. This is by no means a complete list, but it does cover some of the more important (and less common) characteristics.<\/p>\n <\/p>\n Before the emails start pouring in, let me explain\u2026<\/p>\n No Forex trader is without losses. But there\u2019s a distinct difference\u00a0between how\u00a0the beginning trader loses and how the\u00a0successful Forex trader loses. What is it?<\/p>\n To put it succinctly \u2013\u00a0mindset<\/strong>.<\/p>\n Most starting out in the Forex market\u00a0view a loss as a bad thing. It\u2019s a way of\u00a0 But the successful trader doesn\u2019t view it as a \u201cbad\u201d thing. It\u2019s not a punishment because the Forex market isn\u2019t able to punish. It doesn\u2019t know where you entered the market\u00a0or where your stop loss was, so how could it possibly punish you?<\/p>\n It can\u2019t.<\/p>\n Don\u2019t get me wrong, nobody likes to see a trade go against them. I don\u2019t care if you\u2019ve been trading for one month or ten years, making money is much more enjoyable than losing money. But just because a trade doesn\u2019t go your way doesn\u2019t mean you should take it personally. Thinking this way will only dig the hole deeper.<\/p>\n The successful Forex trader has the mindset that\u00a0a loss is simply feedback<\/strong>.<\/p>\n Losses\u00a0can be a powerful way to learn. But just remember that even a trade that ends up as a loss can be the right decision. How is that possible? If you\u2019ve defined your edge, and the setup met all of your criteria to enter the market, then you did all you can do. The rest is up to the market, and some days the market just doesn\u2019t play along.<\/p>\n Next time you have a loss, analyze it as\u00a0constructive feedback to see how you could improve the next time. Just keep in mind that even an A+ setup doesn\u2019t always work\u00a0out.<\/p>\n I\u2019ve had many trade setups that didn\u2019t work out that I would gladly take every single week. That\u2019s because I know that my edge will win out over time and put money in my account. In fact, a good exercise after a losing trade is to ask yourself, \u201cwould I take this same setup again next week if it presented itself?\u201d You should always be able to answer this question with a resounding \u201cyes\u201d. If you answer with a \u201cno\u201d, you need to take a step back, figure out where it went wrong and correct it for the next trade.<\/p>\n A far too common saying is that trading losses are the cost of doing business. While I agree that they\u2019re inevitable, I don\u2019t agree with the analogy.\u00a0Instead of labeling a loss as a business\u00a0cost<\/em>, why not think of it as a business\u00a0investment?\u00a0<\/em>Each loss is an investment in your trading business and ultimately your trading education. This is a much more constructive way of spending your money.<\/p>\n The money you put at risk on any given trade, whether it\u2019s $5 or $500, is an investment with the best Forex coach in the world\u00a0\u2013 the market. Keep an open mind and it\u2019ll show you everything you need to know.<\/p>\n <\/p>\n Every successful Forex trader I\u2019ve ever met uses\u00a0price action<\/a>\u00a0in some way, shape or form. This doesn\u2019t mean they\u2019re using price action in the same way I use it, but they\u00a0are using some form of price action as part of their trading strategy. Whether a trader is using raw price action or simply to identify key levels in the\u00a0market, price action plays a major role in any strategy. That\u2019s because it serves as\u00a0a representation of\u00a0the psychology within a market. It gives us some insight into the minds of other traders.<\/p>\n Having some idea of where buy and sell orders are in the market is critical to becoming a successful Forex trader. It can strengthen any trading strategy by\u00a0providing\u00a0areas to watch for potential entries as well as profit targets.<\/p>\n <\/p>\n I see a lot of talk around the internet about the need for a trader to develop an edge and define it. And if I\u2019m honest, most of what I\u2019ve read out there is pretty alarming. It\u2019s little wonder why so many traders have trouble understanding the importance. So what exactly is an \u201cedge\u201d and why is it important?<\/p>\n Although there are dozens of factors that make up your edge, you don\u2019t have to master all of them at once. Nor do you have to master all of them to start putting the odds in your favor. It\u2019s perfectly natural to master one set of factors and then slowly expand to others to further define your edge. Not only is this natural, it\u2019s the preferred way to learn.<\/p>\n Have you ever heard the saying, \u201cjack of all trades, master of none\u201d? If you try to master too many of these factors at once, you\u2019re setting yourself up to become\u00a0good<\/em>\u00a0at a lot of factors that make up your edge.<\/p>\n Instead, become a master of two or three factors. You\u2019ll find this to be the fast track to becoming profitable, and much less stressful than trying to become good at twenty factors. Once you\u2019ve mastered those three or four things, expand to others to continue stacking the odds in your favor.<\/p>\n For example, master identifying key levels along with a price action strategy\u00a0such as the\u00a0pin bar<\/a>. This is really all you\u00a0need<\/em>\u00a0to start\u00a0seeing your profit curve rise. Then once you\u2019re comfortable with those two, strengthen your trading edge by learning\u00a0stop loss strategies<\/a>\u00a0or different\u00a0entry and exit strategies<\/a>.<\/p>\n The key is to only\u00a0tackle one or two factors at a time.\u00a0Using a slow and steady approach\u00a0will get you on the road to becoming a successful Forex trader in no time.<\/p>\n <\/p>\n But trying hard is what it takes, right?\u2026<\/p>\n Wrong.<\/p>\n This might apply to other ventures in life, but Forex is the exception. Successful Forex traders know that trying too hard is a sign that something isn\u2019t right.<\/p>\n This is different from\u00a0studying<\/em>\u00a0hard. As a new trader to Forex, studying the market to include how different currency pairs move is highly recommended.\u00a0But\u00a0trying<\/em>\u00a0to make\u00a0a trading strategy work will only lead to destructive behavior, such as emotional trading.<\/p>\n Jack Schwager, Author of the\u00a0Market Wizards<\/em>\u00a0series said it best when he said, \u201cgood trading should be effortless\u201d. I\u2019m a big fan of this book series. You can find these books\u00a0here\u00a0<\/a>if you\u2019re interested in a good read.<\/p>\n I remember when I first started trading Forex, I would spend countless hours studying setups\u00a0over the weekend; and not just in one sitting. I would often come back to my trading desk multiple times on Saturday and Sunday. Then on\u00a0Monday, more often than not\u00a0I would end up taking a completely different trade setup only to watch the original setup\u00a0move in the intended direction without me.<\/p>\n Sound familiar? I was trying too hard to make it work\u2026<\/p>\n As soon as I stopped over-analyzing trade setups and trying to make them work, my profit curve started to rise. Now I spend maybe\u00a020\u00a0minutes per day looking at my charts. The exception being the charts I post on this site of course.<\/p>\n As counter-intuitive as it may seem, learning to not try as hard\u00a0was one of the things that completely changed my trading career for the better. Learn to trust your intuition and stop second guessing yourself.<\/p>\n Successful Forex traders\u00a0have taken note of this, which is why they let the market do the heavy lifting for them.<\/p>\n It\u2019s often the smallest things in life that effect the greatest improvement. The concept of thinking in terms of money risked\u00a0as it applies to Forex trading is no exception. It\u2019s an extremely simple concept that can have a huge impact\u00a0on your journey to becoming a successful trader.<\/p>\n I\u2019ve never met a successful Forex trader who didn\u2019t know how much money they were risking on any given trade. You may think that\u2019s an obvious statement, but a surprising number of traders don\u2019t think about how much\u00a0money is at risk before opening a trade. This is because they\u2019re using an arbitrary percentage to calculate risk, such as one or two percentage of their\u00a0trading account balance.<\/p>\n Think about your last trade for a moment. Did you define\u00a0the exact dollar amount at risk before putting on the trade? Or were you more focused on the number of pips and the percentage of your account at risk?<\/p>\n The convenience of\u00a0Forex position size calculators<\/a>\u00a0have made it so that we never have to consider the amount of money at risk. This convenience has caused a huge oversite.<\/p>\n Don\u2019t get me wrong, I use the position size calculator at the link above before each and every trade. However I\u2019m only interested in how much\u00a0money<\/em>\u00a0is at risk\u00a0\u2013 I could care less about the percentage (within reason of course).<\/p>\n Isn\u2019t it the same thing? Yes and no.<\/p>\n Obviously 2% of $5,000 is $100. In that respect the 2% and the $100 are essentially the same thing. However in terms of\u00a0the way our mind perceives these two figures\u00a0they\u2019re at opposite ends of the spectrum.<\/p>\n I wrote an article a while back called,\u00a0Pips and Percentages Will Only Get You So Far<\/a>. In it I talk about the need to think in terms of money risked\u00a0vs. pips or percentages. This is because pips and percentages carry no emotional value. So when you define your risk on a trade as a percentage, it only triggers the logical side of your brain and leaves the emotional side searching for more.<\/p>\n This means that when you think in terms of a percentage, you\u2019re\u00a0only\u00a0defining<\/em>\u00a0your risk but you aren\u2019t\u00a0accepting<\/em>\u00a0it. As soon as you convert that percentage to a dollar amount, your\u00a0mind is able to visualize what $100 looks like. This enables you to determine if you\u2019re prepared to lose that $100. In other words, is the trade setup in question good enough for your $100?<\/p>\n It\u2019s much easier to risk 2% without fully accepting the potential loss because it doesn\u2019t carry the emotional value that money does.<\/p>\n Successful Forex traders know this. That\u2019s why they always define their risk in terms of money. They may use a percentage as a threshold of how much they\u2019re allowed to risk, but when it comes to fully accepting the risk before putting on the trade, money is the only way to think.<\/p>\n <\/p>\n There aren\u2019t many guarantees in the Forex market. But one guarantee I can make without a shadow of a doubt is that there\u2019s no successful Forex trader who is trading today for money he needs tomorrow. In other words, trading Forex to gain a certain amount of money within a specific period of time.<\/p>\n I\u2019m not saying that you can\u2019t generate the majority of your income from trading Forex and do it full time. I would be contradicting myself if I made that statement. What I am saying is that no successful Forex trader\u00a0needs\u00a0<\/em>a win today to pay the electric bill tomorrow. No trader can sustain that kind of pressure and become consistently profitable. That kind of environment will only foster destructive emotions like fear and greed.<\/p>\n This topic takes us back to the fact that successful Forex traders don\u2019t try too hard. If you need the money from trading to pay bills, odds are that you\u2019ll feel pressured to win. If you\u2019re feeling pressured to win you\u2019ll most certainly be trying too hard instead of allowing\u00a0the market\u00a0to do the heavy lifting.<\/p>\n Likewise, don\u2019t allow the money to be\u00a0your sole reason for trading. Of course the desire for money is what attracted us to trading in the first place, but don\u2019t let it become your only desire.<\/p>\n Embrace the challenge and focus on the journey to becoming a successful Forex trader and the money\u00a0will come.<\/p>\n <\/p>\n Of course I\u2019m talking about taking a breather, not walking away altogether. All successful Forex traders know when to walk away and take a break. Those who are truly passionate about trading Forex know how hard it can be sometimes to walk away from the market. But it\u2019s absolutely necessary to become a successful trader.<\/p>\n Walking away can be especially difficult after a trade. This is because our emotions are running wild and often get the best of us. But that\u2019s exactly why\u00a0walking away at this time can be beneficial.<\/p>\n1 They Don\u2019t\u00a0\u201cLose\u201d<\/h4>\n
![\"successful](\"http:\/\/cdn.dailypriceaction.com\/wp-content\/uploads\/2014\/05\/successful-forex-traders-dont-lose.png\")
signaling that they did something wrong. And doing something wrong is bad. At least that\u2019s what we\u2019ve come to believe over the course of our\u00a0lives.<\/p>\n<\/h2>\n
2 They Use Price Action<\/h4>\n
![\"price](\"http:\/\/cdn.dailypriceaction.com\/wp-content\/uploads\/2014\/05\/price-action.png\")
<\/p>\n<\/h2>\n
3\u00a0They Have\u00a0a Defined Edge<\/h4>\n
![\"successful](\"http:\/\/cdn.dailypriceaction.com\/wp-content\/uploads\/2014\/05\/successful-forex-traders-defined-edge.png\")
An edge (in my book) is\u00a0everything<\/em>about the way you trade that\u00a0can help put the odds in your favor. It\u2019s a combination of the time frame you trade, the\u00a0price action strategies<\/a>\u00a0you use, the key levels you\u2019ve identified, your\u00a0risk to reward ratio<\/a>, etc. It even goes as far as your\u00a0pre and post trade routine. How do you handle losses? What do you do when you win? These are all things that make up your trading edge.<\/p>\n<\/h2>\n
4\u00a0They Aren\u2019t Trying Too Hard<\/h4>\n
<\/h2>\n
5\u00a0They Think in Terms of Money Risked<\/h4>\n
![\"successful](\"http:\/\/cdn.dailypriceaction.com\/wp-content\/uploads\/2014\/05\/money-risked-forex-successful-traders.png\")
<\/p>\n<\/h2>\n
6 They Don\u2019t Need the Money<\/h4>\n
![\"forex](\"http:\/\/cdn.dailypriceaction.com\/wp-content\/uploads\/2014\/05\/forex-traders-dont-need-the-money.png\")
<\/p>\n<\/h2>\n
7\u00a0They Know When to Walk Away<\/h4>\n
![\"Forex](\"http:\/\/cdn.dailypriceaction.com\/wp-content\/uploads\/2014\/05\/successful-forex-traders-wins-and-losses2.png\")
<\/p>\n