When looking at the forex trading skillsets for the top tier of any profession, you’ll find that most of the best performers share the same or at least similar skills. The forex profession is no different. When we take a close look at the profitable traders, there is a number of skills that they all have in common.
We’ve compiled a list of skills that every trader needs. If there’s something you’re not good at, don’t stress, no trader has everything, slowly try to acquire the skills.
Most traders fail because they do not have a trading plan and the ability to manage the money. In addition, they never learned about the trader’s mental side, they constantly find themselves under pressure in their decision making. If it is their desire to enter the trade, otherwise they get bored, or their hesitation to cut a loss, and even if the trade is profitable, they can decide whether to take the money or wait and maybe earn more.
If you have a trading plan and you know how to handle each situation, this will take much of the pressure off, but since most traders do not use a trading plan, they find themselves constantly under pressure and often make the wrong decisions.
I recommend reading the last sentence again because it will change your career as a Forex trader!
We hope this doesn’t give you flashbacks to grade school if you ever struggled with arithmetic. Luckily for us, computer warriors, any desktop or laptop that we use to trade will handle the most complicated math functions. However, good traders still have to be comfortable with and maintain a basic fluency for calculations and processing numbers.
After all, the market boils down to a bunch of numbers plotted on a graph. Throughout the day, those numbers move up and down. The ability to process and analyze these numbers in real-time is essential for anyone who wants a shot in the market.
On any given day, a number of calculations will need to be made from whether an account can handle certain risks, trading as our risk management plan, or how large a trade would have to be to break even. Often we can’t rely on a computer for these numbers because, by the time we get an answer, it might be too late for a previously intriguing trade.
The market is going to excite you and it’s also going to disappoint you. Some days trades will go your way, while other days they won’t. This is how it is.
No matter how good a trader you are, there will be days that try your patience. The only way to survive in times that push and challenge you is to fortify your mental toughness. This means pushing yourself to increase your stamina while also disciplining yourself and being patient so you don’t make any reckless moves. Boosting the mind is just like boosting the body. Repetition and exercise will build the muscles needed to keep control of your mind, kick out your emotions, stick to your plan, and stay in control while trading.
You have to understand what you are trading, what is the Forex market, what are the pairs, the fundamental logic behind their movements, you must understand important economic events. It’s very important not only to look at the graph technically but also to understand the meanings behind it.
This one might seem obvious but never underestimate the amount of people who think they can just boot up a computer, hop on the internet, and successfully start moving around large sums of money.
Unless you’re a once in a generation, super talent, this just doesn’t happen. Sure, you might have a string of a few good trades, but sooner or later you’ll hit a wall.
In order to succeed, you have to put your pride away, at least in the beginning. A solid education that builds a core of forex trading knowledge is one of the keys to long term, sustained forex trading success.
Sure, sure, we know it sounds a bit contrary to the last point of needing an education but it’s possible to learn from others and still have an ability to think independently. When you learn, the idea is not to repeat whatever you’re told. For example, just because one trading method works for someone, it doesn’t mean it will work for you.
Rather, you need to take the examples that you’re given and learn from them. Do this by applying the lessons to your own style and skills, creating your own excellent trading regimen. Don’t make a trade just because everyone else is doing it but make it because your education tells you that it’s a good trade and specifically fits into your trading strategy.
In addition, you’ll have to deal with decisions during trading, you will have to build a trading plan and act accordingly, you will need to test your trades and write the result, eventually, there will be quite a few decisions you will have to make on your own.
Imagine a scenario for a moment: You’re in a trade and it’s moving along better than you had planned and while you’ve charted and prepared for successful trades, you suddenly need to start thinking on a larger time frame.
Trading requires the ability to see time as larger than any given moment. In other words, you need to be able to zoom out and roughly predict where you and your capital might be in days, months, or even years.
Imagining and predicting hypotheticals is not easy but with patience and practice, you need to be able to understand where you’re hopefully going.
You don’t have to love the actual charts but you need to be drawn to finance and the markets. This shouldn’t be something we need to write about but it’s surprising how many people jump into trading without an actual interest in finance.
This is not a career for those looking to make a quick buck. A successful trader is passionate about trading and most of what comes along with it. A desire to follow the market and learn about each individual currency should be inherent in anyone who wants to make it the forex market.
This might seem like a given for anyone who’s over a certain age but it’s astounding the amount of people who never quite matured to the level of accepting responsibility for one’s actions. In forex, this is an absolute must.
As we mentioned earlier, you’re going to win some and lose some. Even the best traders have poor trading sessions and it’s just something you have to accept if you’re going to make it in this profession. Bad trades happen for a variety of reasons but to blame someone else or something else is a recipe for trouble. in addition, if you will not take responsibility for bad trades, you might not cut your losses, using stop-loss, and eventually you will lose your money.
At the end of the day, you and you alone are responsible for what happens during trading hours. Accepting responsibility will make it possible to shake off the bad times and not let the good times go straight to your head.
Good trading boils down to expertly understanding and managing risk. The most successful traders have a healthy respect for risk and know the damage that comes when they push it too far.
Fluency in the risk-reward ratio is another key skill that is necessary for traders if they want to succeed in this profession.
In order to understand price movements and the overall moves of the market, technical and fundamental analysis is a language you must learn to speak fluently.
Applying this knowledge to real-time events as they unfold over the course of a trading day lets you chart out a path that will give you the best chance of success.
When you study charts and can identify things like emerging candlestick patterns, you’re working in the language of the market. Fluency here can help you survive during downtimes and thrive during booms.
Even if you did everything right, and you are now ready to trade correctly, always when you start trading, it is very easy to deviate from the trading plan, we are human, and everything is very dynamic.
You created an orderly trading plan, to act by it! Try not to look for adventures, and hope this time it will be in your favor.
If you have a great trading plan that proves itself, the more you stick with it, the better you will succeed at Forex.
As we mentioned earlier, if you do not yet have the capabilities to trade Forex, here are some ways to improve them
Sometimes to verify indicators that you trade by, you should check the graphs for longer times, not always will a 15-minute graph tell the full story as an hour graph, and not always an hour graph will tell the same story as a daily graph.
Always try to check the graphs for all kinds of time variations, other timeframes might work better with your strategy and maybe it will be more profitable.
Most traders like to trade every day and short term, if you are unable to make a profit, try to see if you should trade on a daily basis, or trade longer terms.
If what you’re doing isn’t working, you can always trade different pairs. With so many possible combinations, you’ll probably never run out either. There is no rule that you must trade the biggest or most valuable currencies. Look around and do thorough research. It’s possible that certain currencies fit your skills and style better than others. Don’t be afraid to try new ones and don’t be dogmatically attached to old ones.
There are many strategies and trading methods, each person recommends something different, and each one thinks it’s the best for trading.
It is important to understand that if you learned from a mentor to trade Forex and the mentor is very successful, that does not mean that you will succeed with the same trading method.
You need to be always open to learning other strategies, especially if you are not profitable. try other methods, maybe there is another one that will better suit your character or your daily routine.
In this article, you will find all the popular strategies.
In this article, you will learn in-depth the supply and demand strategy, there are also 4 YouTube videos on the subject, if it’s easier for you.
It could very well be that your trading plan is not ready yet, it is very important that you review the plan, make a record of your trades, and test your strategy and your money management.
Without registration and testing, you will never be able to develop your trading plan and improve as a trader.
Was that good education you received just not good enough? Go out and learn more. There is no limit to how much you can learn. In fact, you should always be learning to improve your performance.
The best way to improve is to recognize where we failed in the past and make the necessary changes to avoid those mistakes in the future. This is as true in forex as it is in all aspects of life.
Volumes of books have been written on the psychology of trading. Understanding your own brain, its strengths and weaknesses, is the only way you’ll be able to begin to deal with the multitude of stressors forex trading will throw at you.
Once you have a deeply familiar understanding of yourself, you can then explore methods to help you deal with problems and situations.
Pro forex traders invest the most in the mental aspect of trading, if you want to take it to the next level and invest in your mental-trading skillset, we recommended this course.
Well, there is no magic way to gain forex trading skills and improve them. If you want to be a successful trader, it’s going to take hard work and a very high level of self-discipline and effort. Every day will bring new challenges and you have to be willing to accept that you’re not always going to come out on top. But if you prepare and work tirelessly to accumulate the forex trading skills listed here, you’ll give yourself the best chance to make it big in the forex market.
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