One of the most important attributes for any forex trader is discipline. A sound knowledge of how the markets work, and an eye for opportunities is one thing, but mentality is very important too. Traders who have mental discipline will be more successful than their rash and inconsistent counterparts.
Planning is extremely important as a financial speculator; you should never open a position on a whim, as this is nothing short of gambling. Sometimes however, it can take a certain degree of strength not to immediately enter the markets when you think you’ve seen an opportunity. It’s far better to stay in control and miss an opportunity than it is to enter a very risky position. Poor planning is one of the major culprits for a losing position.
Following on from this, you should already know that having a sound strategy is very important indeed. Once you’re up and running with a successful one, you need to be disciplined and stick with it. Refining a strategy is always good, but you should not be easily diverted from what you already know is tried and tested. A consistent trading system will give you the edge. Don’t get caught up in what is seen to be ‘the next big thing’ without researching it properly first. There are a variety of different components to a strategy, and you must not pick and choose which ones you follow. Read this Alpari article for more on what exactly foes into a well-rounded strategy.
Self-discipline means knowing what you’ve done wrong and what you’ve done right. You need to constantly analyse your processes to make sure you know how to conduct your actions in the future. Sometimes it can be tempting to simply dive back into the markets after closing a position, but it’s far more effective to work out what the driving forces behind your last trade were, and why it did or did not work. Be critical of yourself; if a trade did not work, try to find out if it was a mistake that you made, not just an unexpected and unpredictable market movement.
Emotions have no place in the financial markets, and they can seriously harm your account balance. The gamblers fallacy in particular can be a problem for some traders. This is the situation in which a gambler will continually make bets, because they feel that they must eventually win. Financial trading is not gambling, and should not be treated as such. Becoming overly attached to a particular currency because it has done well for you before is another example of emotions getting in the way of good trading. Stick with your strategy.
Maintain discipline throughout your trading career, and you’re far more likely to meet with success. Forex can be both difficult and risky, and any edge you can give yourself is worthwhile.