Even in a world of 8 billion people, no two are exactly the same, and this is also true of traders and their trading personalities. Some might be more aggressive, whereas some might be cool, calm, and collected. Some like chasing the big wins, and don’t mind losing a bit in order to get them, while others may prefer to take lots of small wins.
If you were take any group of traders, and give them the exact same system rules to trade, the results would still work out very different from each other. This isn’t necessarily a bad thing – it’s good to be unique. The point is that you have to know your lifestyle and personality so that you can identify your own strengths and weaknesses. Forcing yourself to trade in a way that isn’t a good match for your personality will leave you frustrated, and most likely not as successful as you could be.
Profits take time
Often, newbie traders will dive into the forex markets with the sole aim of making money as quickly as possible. But while this is possible, it doesn’t necessarily mean you will end up profitable in the long run.
It is common for new traders, armed with a trading system taken from the internet or a book that promises guaranteed profits, to think that they have enough of a grounding in forex trading to start making millions straight away. Then reality bites – the system doesn’t really work as well as you thought, and the market is behaving in a way you can’t understand.
In order to be a successful forex trader, you need to make a serious time investment into learning, practicing, note-keeping, and evaluating. The day you stop learning about forex is the day when you will lose whatever trading edge you had.
You need to work out how much time it will take you to learn the basics, and then figure out how long you should spend in each session reading charts and news reports, recording your trades, and trading the markets.
Ideally, you could devote yourself to trading full-time, in which case your learning would be accelerated dramatically. However, this is easier said than done, because of course there are always other things that get in the way, such as work and family commitments.
This doesn’t mean that you can’t trade, but it should give you some realistic expectations when it comes to determining your trading style. It’s probably out of the question to become a day trader or scalper if you are fitting it in around other commitments, but you could feasibly profit from longer-term trades.
Every day, you need time to analyze the market, and consider the economic news that could affect the markets that day. Because news moves the markets, you have to consider the economic developments that are going on around the world and to make it part of your daily routine.
In this series, we shall be considering a range of different trading styles, from scalping to swing trading, in order to help you choose one that fits your personality.