Many of us recoil when confronted with motivational talking and writing, particularly when it’s aimed at us FX traders. You’ll recognise the style of writing by now; “stay positive and think your way to profitability”, “you can win big, if you dream bigger”, “use the rocket, but aim past the stars”. There’s many other equally nauseous phrases we could choose, but you get the point. They’re the type of phrases delivered by motivational, speaking evangelists, who hold court lecturing folk how to change their lives and “make millions”. The irony; that the speakers made their money through holding motivational courses and not in the ‘hard knocks’ world of commerce, is lost on the audience, who often pay thousands of dollars to attend the various motel seminars.
Sure, we have to stay positive when trading, if we weren’t a glass 51% full kind of person then we probably wouldn’t be (marginally) optimistic individuals, who’d investigate possibilities and experiment with FX trading. But imagining that a PMA (positive mental attitude) is all you require to succeed at trading, is both misleading and intelligence insulting.
Well many of us seasoned professionals would testify that it’s the individuals who are: calm, grounded, realistic, stable, with clear objectives, who make a trading plan and stick to it, who display self doubt, but have emotional control and insight, are far more likely to succeed in the ‘game’ of FX trading, as opposed to excitable individuals, sucked into our industry by: dreams, false promises and the illusion of wealth.
Extending the psychology angle a bit further, a recent study determined that elite sports competitors could improve their performance if they focused on a goal whilst performing. Quite simply; if a runner focused on the finish line, or looked straight ahead at a target in the distance, as opposed to looking at the ground in front of them, they’d perform at a higher level. In keeping focus on the target (however distant), runners maintained their: discipline, form, correct breathing and kept their minds clear, to carry out their objective.
So how do these two examples relate to trading, what are the points we’re trying to make? Apply insight into why you’re trading, identify your goals and set them, concentrate on the finish line, determine your end game and plan how you’re likely to achieve it.
Are you trading to supplement your income permanently, or do you have a plan to move through the gears (over the years), to eventually resign from your current profession and become a full time trader? Once you’ve identified your ambitions you need to adjust your trading plan accordingly. The realist will determine that the learning process will take years, as opposed to imagining they’ll be a full time profitable trader inside a few months.
What are your realistic financial goals? Many novices are seduced by flashy adverts, or forum posts, suggesting they can make unlimited returns from a modest account. We hate to break it to you, but the probability of you turning $10,000 into €100,000 inside a year, are incredibly remote unless you gamble outrageously.
Finally, determine and commit to your end game now. Set yourself milestones of achievement that will cause you to perhaps up your game, to change your trading plan and overall strategy. For example; if/when you’ve banked 100% profit on your original account, however long it takes, then you’ll commit to amend your approach to trading. If you reach a 50% growth target inside 18 months, after experiencing many various market conditions, then you may have preset that as the date you’ll finally move on (and up) to full time trading. And whilst you evolve as a trader, keep asking yourself the questions set out in the article title; why are you trading, what’s your goal, what’s your end game? It’ll help you keep realistic, focused, grounded and humbled, a few of the essential characteristics associated with successful traders.