How to Become a Successful Forex Trader

You’ve read through all (or most of) the articles, have gone through all the warnings and precautions about unrealistic expectations, reckless and risky practices, and compulsive trading, and what not, and you are still interested in forex? You’re not intimidated by sensible, realistic, and honest discourse about what can and cannot be achieved by a currency trader. Nor are you a dweller of cloud-cuckoo-land: you don’t seem to expect great returns for no effort.

Congratulations, that shows that you’ve got the right attitude, and are well-placed to step into the higher grades of your education. To scale a mountain is effortful, but the most spectacular view can only be enjoyed at the top. And so if you were willing to put up with all the bothersome talk on what is dangerous about forex, now you deserve to hear what is good, and just not good, but magnificent and awesome about participating in this wonderful market.

Forex is very lucrative for the diligent trader

Forex is serious business, and is no place for fools. True, those who just want to gamble away with their money would serve themselves better at casinos than forex brokers. And no, currency trading is not a game, a pastime, or a sport for those with a lot of leisure time to spare. But forex is by far the most lucrative and profitable financial business for the patient, reasonable, and diligent individual who is willing to invest the time and energy necessary for success. And yes, it is possible to achieve spectacular returns in this market, if you’re ready to pay for it: you’re going to devote a significant amount of time to learn the rules and better your skills; you’ll have to tame your pride when you achieve unbelievable returns on your investments, and suppress your fears when relatively harmless but inevitable losses threaten your determination for success. But in the end, the markets are driven by facts, and if you follow them for profit, the logical consequence of your actions will be profits, nothing more, and nothing less.

Are you the perfect trader personality?

Are you ready for a career in which you make the choices, you take the risks, and you bear the risks and rewards for your decisions? Is your passion for success strong and persistent enough to survive the foolishness of the herd, and the stridency of the mass media? Is your drive for achievement powerful enough to lead you through the clouds of uncertainty by persevering on what you know to be right, what you know to have been proven right through the ages?

Can you study and think for your own future? Do you value an independent mind, and critical thinking as qualities necessary for success in any serious endeavor? Are you aware of the role of persistence and patience in achieving your goals?

The right character can achieve great success

If your answer to the above is a yes, then you have the right frame of mind for a perfect trader. Realism is the trader’s philosophy: he’s as incredulous of those who believe Warren Buffet or Jim Rogers to be superhuman, infallible prophets as he’s of those who sell the super-duper insuperable methodology of the century, or the top-secret indicator of the millennium for hundreds of dollars. Great success in trading, and certainly in currency trading is definitely possible; large profits, and dividends are surely achievable if we’re willing to adjust our own characters, and improve our mentality to suit the task at hand.

The wrong personality for trading forex

One who thinks that he’s a great genius who’s always right about the markets would serve himself better by selling crystal balls: his arrogance is unlikely to last more than a few hours in the forex market. The seeker of the thrill of trading and the excitement of risky behavior would surely be happier bungee jumping than trading currencies; in any case, the chances of him making any profit in either activity is equally slim.

Trading forex is not very time consuming for the right type of trader

But if you don’t mind appearing boring and conservative among your trading peers, if you don’t enter this business for an ego-boost, or fame or social approval, but all you want is building a long-term fortune through hard work and study, then don’t waste any time in making the decision. Forex is as valid as a business as any other activity; its only difference lies in the profit potential, and the great number of opportunities: it’s almost impossible to miss the train of profit in this business. And no, don’t think that you have to give up your full-time job, or to listen to Bloomberg all the time, subscribe to forex webcasts, and read 1000 boring volumes on technical analysis to achieve success. Quite the opposite, as we’ve been insisting throughout our study in these pages, the facts that drive economic events are in fact very simple and straightforward. But it takes understanding, logical thinking and strength of character to do what is right, and to profit from them, and that’s all.

The pleasure of a successful trader

What can you expect from a career as an independent trader? Apart from profits and material gains, you’ll be able to achieve financial and personal independence. The satisfaction in being self-employed and successful will only add to the pleasure you’ll derive from being able to devote sufficient time to your friends and family. You will be taking part in creating the “big picture” along with thousands of big banks and brokerage houses, private and institutional investors and speculators, central banks and governments, and large international export and import firms and many others. And if you don’t seek it on purpose, success will inevitably bring you recognition and respect among your peers too.

Knowledge gained from forex trading is useful in life

But the most important point is that the knowledge that you’ll gain by trading forex, and having a good understanding of fundamental analysis and economical events, will grant you the literacy that will be useful to you throughout your life.Even if you are perfectly content with a non-trading career, and are happy with your full-time job with little understanding of where the economy is going, you’ll eventually find out that to protect your nest egg, you do need to know more about economics and trading, and that by ignoring the risks related to currencies, you’re not isolating yourself from them. Yes, many currency traders do stupid things, and speculators do often waste fortunes through overleveraging, and gambling, but that does not make the hard-working idiot who doesn’t know how to protect his hard earned cash any smarter, does it?

Think of the hyper-inflation era in Germany. Or the collapse of the ruble in Russia in 1998. Or the Argentine default that wiped out the savings of millions of hard working people. Or of the recent collapse of the British pound which halved or erased fortunes in the course of about a year. Or of the dollar devaluation and high inflation in the US during the 70’s. Think of how the Japanese exporters were bankrupted because they couldn’t properly anticipate the rise of the yen in 2008. Or the currency crisis of the advanced Scandinavian nations in the 1990’s. The list could really go on and on and on.

In all these nations, well-meaning, reasonable people had cocooned themselves into believing that ignorance about currency trading is wisdom, and diversifying your basic assets is speculation. But one morning they woke up to find their dreams crashed by economic realities. Their savings were halved or reduced by a third overnight, but who did they have other than themselves to blame if they hadn’t taken the time to learn about risks that arise from ignorance about currencies and economics?

As with most things, the truth about forex is somewhere between the extremes: Forex is not a get-rich-quick scheme. But forex is not, as a lot of people seem to believe, a chance game, or just another name for online gambling either. Forex is a business, in some ways akin to investment, where your returns are proportional to the exertions that you make. If many of us find the workings of the currency markets unfathomable, let us remember that it is very hard to understand something without learning about it. The likes of George Soros, Jim Rogers, David Tice are not successful in this business due to exceptional superhuman skills. But they do know how to say no to herd psychology, how to refuse to be drawn into the vortex of bubbles and mania, and they know the value of a good medium-term investment based on facts, fundamentals, realities, rather than the teachings of gurus, political spin, well-wishing or doomsaying.

Summary

So let us summarize the points we’ve made in this text which we hope will be helpful in clarifying some of the worries and fears in the mind of the beginning trader. There’s nothing exceptionally dangerous or difficult about the forex market in comparison to any other market; currencies usually don’t go to zero, and the unleveraged account is in fact in no danger at all of being wiped out under normal circumstances. Stupidity, and reckless behavior or wrong in any business, any market, and any career, the forex market is no exception to this. Ignoring currency trading, dismissing forex as speculative gambling is as reckless as ignoring inflation and interest rates when making basic financial choices: Currencies are the building blocks of all kinds of economic activity, and there’s little difference between taking a mortgage, or getting a credit card and hedging and managing your currency exposure through currency trading, as long as you do not overleverage, and don’t do what you don’t understand.

Great profits are possible in the forex market, great returns are achievable if you work hard and place logic and reason above emotion and sensation. If you think that you’re capable of this, don’t hesitate to begin your career today. If you already trade other markets, your experience in forex will widen your horizon, and enhance your skills and vision. If you’re new to trading, this is the field where you’ll get priceless education and invaluable experience by learning what moves the markets, and what drives economic developments. And on top of that, there lies the greatest reward of them all, the goal of all trading activity: material gain beyond anything you’d expect to be possible, if you’re sane and sensible and will not gamble your assets away.

So if you feel that you’re ready, go ahead. In the next chapter you’ll find some details on how to open an account and begin your trading career.

Key Points

• While losses are inevitable, forex trading can be very lucrative for the right trader.
• Trading forex successfully requires hard work, patience and dedication.
• The facts that drive economic events are not hard to understand, but it takes hard work to profit from them.
• learning how to trade forex can give you knowledge that is useful in many aspects of life.

Further Reading

• The Secret to Forex Trading Success
• Forex Trading Tips
• Learn to Trade Forex Confidently