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Every day, many forex newbies around the world try their hand in forex trading. Many of them failed and never look back, some persist for years but never achieve anything, a few soar in almost no time at all. With all those information, including entry-exit strategy, money management, and psychological control available freely in the Internet, supposedly everything is not as different. So how a forex newbie can advanced to a higher level as a trader?
Many mistakenly think that the difference between a successful trader and a struggling one is the entry-exit strategy, personality or even experience. But all those things are simply skin-deep. They don't explain why some traders work for years without achieving significant results except maybe the amount of their losses. True, to succeed, a trader needs to have the right entry-exit strategy, apply money management and some experience. But, if there is something which makes a difference between years of struggling or a relatively short time to achieve, it is this.... Well, actually there are three:
1. Know what you do
A trader can only buy or sell to either enter or exit the market, or wait. But this is just the tip of the iceberg. After all the traders - successful and failed ones - do the very same thing – either buy or sell, or wait.
For example: A successful trader knows that when he/she buys to exit the market, there is still a chance that price continues to go down even further than the profit they reap. They don't regret their decision, they don't even try to gain a few more pips for a few more dollar. When they close a trade, it is done for them.
Forex newbies, on the other hand, are most likely to regret the moment their trade is close and price continue to “supposedly” give them more profit. The regret most likely makes them prolong the exit or chase profit, with a disastrous end-result in the long run.
Let's take a simple act such as waiting. A successful trader knows that waiting is a part of the game. They will wait patiently while price shows itself. A forex newbie often cannot contain his/her urge to make profit and dislikes waiting. Thus, newbies make themselves prone toward mistakes.
2. Why you do it
The simplest answer is because there is a signal to do what a trader has to do. For a newbie, or an unsuccessful trader, if they take note for every action they took, they will see that the majority of their actions are not strategy-urge action. Most likely, it's their desire to gain money. Thus, they enter the market too early and close it at a loss for fear of a pullback; or too late, simply because they don't want to leave money on the table.
In other words, a newbie thinks he/she do something while, in truth, they do something else entirely.
3. Under what circumstance you're doing it
When a trader has watched his/her chart following a signal, it is a very different situation than when such trader look at the chart from time to time. The second circumstance makes a trader act in haste and waste his/her fund.
Even in a situation that some might call an “emergency exit,” a successful trader still knows what kind of situation they can treat as “emergency.” A simple counter-move of the price, even if it is a surge, doesn't always mean an “emergency.”
These three points of difference between a trader who knows and implements them and those who don't, warp the quest to success in trading in such a considerable time.
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