Successful Traders
1. “I never take a loss”. Losses are an inevitable part of trading. Successful traders know that sooner or later a runaway loss would wipe out their account, even if hanging on for a recovery might pay off in the short term. In Forex trading, everyone loses sometimes – it’s the ability to win more than you lose that makes you a successful trader.
2. “Money management is not important”. Deciding how much you risk on each trade is just as vital to long-term success as good trade entries and exits.
3. “Averaging down is a good entry strategy”. Why would you want more of something that is going against you? Successful traders starting strong is a critical sign of a successful trade. Adding to a trade at a worse price is a self-indulgent psychological defense mechanism that professionals cannot afford (and don’t use often, if ever).
4. “I can predict short-term movements from a chart with 90% accuracy”. This is simply impossible, and even the most talented technical traders claim maximum success rates below 70%. Very few traders do better than 55% even when picking their battles extremely carefully.
5. “I have a strategy that is profitable in all market conditions”. There are two ways to make money trading. The first is to use a defined strategy that makes some money in most market conditions or lots of money in rarer market conditions. The second is to use your own discretion and judgement of the market. A magic formula that makes money every day simply does not exist, with the possible exception of high-frequency trading, which is not accessible to retail traders.
6. “You should be in the market every day”. There are times of crisis when the market is so wild and unpredictable that almost any kind of trading becomes dangerous. Breaks from the market can also refresh the mind and relax the body.
7. “This price just can’t go any higher or lower”. The market can do anything at any time. As John Maynard Keynes once said, “The market can remain irrational for longer than you or I can remain solvent.”
8. “I bet the farm on this trade.” Jesse Livermore is widely considered to be the greatest trader of all time, and he frequently bet his metaphorical farm. Consider the facts that he went broke several times during his career, most notably at the end of it, and died at his own hand. Those very few traders who retire rich after betting the farm are not successful, just very lucky.
9. “I learned everything there is to know about trading”. This is not just arrogance, but stagnation. Even if you already know what you need to know to be good, isn’t there always something out there that can simulate your mind to be great, and help keep it sharp?
10. “I couldn’t do it without my fantastic trading platform”. A nice platform with bells and whistles is just that – a nice-to-have. As long as it is fast, visible, executes, and doesn’t crash, then it is all you need. A trading platform with all the bells and whistles, autotraders and advanced charts, news feeds and apps won’t turn a loser into a winner by itself.
11. “I am entirely self-taught”. Would you trust a surgeon that said he taught himself everything he knows? Of course not…because everyone who is skilled has to learn their skills from somewhere, whether it’s another professional, a course or even just a few books. There is no such thing as a trader who just practiced without direction until he made perfect. He’d be sure to suffer devastating losses in the process, and unless he’s already independently wealthy, he wouldn’t be able to afford this lesson. There’s no shame in learning from a professional – in fact, continued learning is the sign of a smart trader. The smartest of them all continue learning, even after they’ve found their successful strategy. The market is evolving constantly, and a successful trader knows that his trades should be too.
Adam Lemon, DailyForex
