If you’re just starting to take your first steps in our forex industry, then welcome to our fascinating, challenging, at times frustrating, but incredibly rewarding industry. The vast majority of us will probably discover retail forex trading by accident, as much as by design. We may stumble across trading through an introduction, or through an advert that we’ve seen served up on a website we’ve visited, a site which will gauge our interest in financial products and services and then deliver us the appropriate adverts, based on our browsing history.
Generally there’s two reasons why trading appears to be initially attractive, firstly; the potential to increase the meagre returns received from low interest bearing accounts. Emergency interest rates have been in existence for over a decade now, since the financial crises first broke in 2007. Quickly thereafter, European and North American central banks, lowered rates in a concerted ZIRP (zero interest rate policy) program, to attempt to stimulate the Western Hemisphere economy, killing savings rates and shredding the buying power of the domestic currencies of the countries that engaged in such monetary policy. Prudent savers were hammered and suddenly had to find riskier investments, forex, indices and equity trading being an obvious occupation.
Secondly; we may be restless in our current career and be looking for a change. Rather than take a dramatic leap of faith, by giving up our career and taking a huge gamble on our personal financial security, trading can provide an excellent bridge and halfway house. It’s a part time business initially, that you can set up with limited capital and controlled risk, and you can experiment with it until you reach a stage when you feel comfortable with your experience and level of profitability, allowing you can finally concentrate on trading full time.
However, when we start out on our trading journey, it’s natural that we’ll set ourselves targets, we’ll have visions of where we’d like to be inside twelve months, three years, five years and over a longer term period. When we set these targets we should avoid fantasizing and keep our dreams and visions grounded and realistic. Our first goal should be to become proficient and profitable, hopefully we’ll then be in a position to see sufficient account growth, enabling us to consider becoming full time. When we reach a position where we can now consider becoming full time, we can then radically alter our life plans.
Despite the fact that the attrition and failure rate in retail trading is high, the successful traders (who many of us come across during our day to day activity), all appear to have followed an uncanny similar route to their success. And whilst successful traders come from very diverse backgrounds, they all appear to have remarkably similar character and personality traits.
In terms of their expectations they were reasonable, they very quickly attached discipline to their trading and appear to be risk adverse. They’re constantly searching for the lowest risk measured against a reasonable level of return. Ironically these risk aversion instincts are far more valuable to a trading career than having some latent trading ability, and if there’s a natural talent for trading it certainly doesn’t involve seeing patterns that other traders, or algorithmic programs can’t find. A talent for trading involves the far less obvious soft skills, such as; patience, calmness, quiet determination, focus etc.
Keep your aims reasonable and achievable and you will most likely reach those targets and hit those goals. The trading wasteland is littered with tales of inexperienced traders who thought they could turn 5k into 500k, and whilst that’s not impossible, the chances are extremely remote and we are dealing in a business that’s all about probabilities and what’s possible, if we’re grounded and realistic.
