The importance of developing realistic targets and proper mindset for forex Trading
The best policy when advising clients on how to enjoy a successful part or full time trading career is by being honest. Facing up to the reality; that squeezing profit out of the forex market on a consistent basis, is a difficult proposition, is essential to our personal trader growth. Without being grounded and developing realistic targets from the beginning of their careers, novice traders will be aimless and directionless.
Analyzing why most traders think they’ll profit against the odds, is a fascinating subject. In dissecting many of the beliefs, we’re able to correct many misconceptions and hopefully point our novice traders in the right direction.
This article isn’t meant to deter novice traders from trading, quite the opposite.Our intention is to open the eyes and minds of new traders as to what’s possible and what isn’t. To very quickly help novice traders develop the necessary mindset; realistic and balanced.
I’ll be better than the rest
This is an admirable ambition, but have you considered what’s actually required to be better than the vast majority of traders, who fail to become profitable? You need: time, dedication, an insatiable appetite for experimentation and curiosity. Oh and you need money, probably more than you think, in order to generate a part time, or full time income. Want to make an extra €10k a year? You’ll probably need circa €20k account capital to generate a 50% return and it must be noted that a 50% year on year return on an investment is an extremely good return, beating many professional forex hedge fund managers, by a considerable distance.
So are you prepared to put the time in, are you ready to fully commit to our forex trading industry, do you have a reasonable sum of savings and risk capital that (critically) won’t affect your standard of living if you lose a proportion of it? Are you comfortable with the fact that you’re probably going to lose some of your capital, before you get to grips with the whole process of trading and it may take a year or more, of applying many hours a day to the subject of trading, before you’ve begun to develop a working strategy? If you’ve answered these questions honestly and are still committed to trading, then you’ve passed an important test.
How difficult can it be?
Well according to the many stories you’ll read on various trading forums and websites, making gains of 1000% per annum couldn’t be easier. And opening an account, becoming a small one person business, actually getting to grips with your platform and simply placing trades, is not a difficult process to navigate through. However, that’s a world away from being proficient and ultimately profitable, whilst 1000% growth per annum is quite frankly delusional. Beginning to understand the complexity and explore the full capability of an advanced trading platform such as MetaTrader, isn’t a one week process, it can take many weeks/months to become highly proficient with the platform’s full capabilities.
Trading isn’t difficult, we often make it more difficult by over complicating the issues involved. In simple terms; trading involves making a reasonable bet that a market will move one way, or the other. We do that by risking a small amount of our account capital per trade. If we’re right more often than we’re wrong, then we’ll make profit.
There is absolutely no reason why novice traders can’t profit from forex trading and move through the gears to become profitable inside a relatively short time, perhaps inside six to twelve months. The reasons the majority fail are obvious and sadly repetitive; under capitalized, impatient, over trading, not understanding how absolutely critical risk per trade and money management is to our outcome, not trading forex through an STP/ECN FX broker.
Yes the odds are against us when starting out, but as we’ve just listed, there’s many methods by which we can tip those odds in our favor. And as we’ve pointed out several times before, even a coin toss strategy could be profitable, if your risk is controlled. You don’t have to take excessive risk, you don’t have to be brave, you don’t have to be bold to forge out a successful career trading forex. You can and will give yourself every chance of success, if you get the afore mentioned basics right at the outset.
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