Reasons why some novice Forex traders succeed more quickly than others
When you’ve spent the majority of your working life involved in the finance industry (in one form or another), you’ll have met all kinds of fascinating people during your career and life journey. It’s always important to learn from others, as everyone you meet has a story to tell and everyone you meet has a talent, or skills which you don’t have. In short; everyone you meet is better at something than you are and when you accept that humbling fact, you begin to open up your mind to many learning possibilities.
Many of us will have created inbuilt defense mechanisms as adults; when others try to teach us new skills, or pass on wisdom, we often recoil. We become set in our ways as the years tick by, we develop insecurities regarding our status and place in our world and can all too easily reject new ideas, as we think we know better than our teacher, or tutor.
Opening up to new ideas and influences is a skill we can lose as we get older, which presents direct problems and conflicts when we discover Forex trading as a potential career. We’re more likely to be mature adults when we begin to attempt to trade (to either supplement our savings and investment income), or to forge out a different career path and as such we can be stubborn and resistant to change.
But there are obvious exceptions to many of the barriers and circumstances just mentioned, there are individuals who discover trading later in life and get it ‘right’ very quickly. They take on board all the instructions, they listen, read, watch and learn. And in a relatively short space of time they’re profitable and successful. They’re who we’d term the “success traders”, the individuals we always imagine ourselves becoming when we imagine where trading could take us.
So what separates these successful traders from the rest of us? What X factor do they have in order to become successful in a shorter time scale than others, why don’t they blow up accounts and keep coming back for more, until they have exhausted and burned through all their savings. The answer is rather surprising, these cool traders, who appear to have got it together, are in fact the quiet, studious, types who talk less and do more. They fly under the radar and approach trading with a dedicated, forensic, scientific approach.
Ask any brokers for their stats on who eventually becomes successful as traders and they’ll testify that it’s generally folk from: forensic, finance, academic and accountancy backgrounds. It could be a scientist, a maths teacher, an accountant, engineer, mechanic, or indeed any profession that requires professionalism and attention to detail. Perhaps surprisingly ex armed forces personnel also have a higher percentage chance of success; they’re disciplined, will accept instructions from who they consider to be their more experienced seniors, they are able to remove emotion from critical decision making and have learned to park their egos.
However, after analyzing many hundreds of traders and the factors which separate the novice traders who become successful, in a time well below the average time taken, there is one common denominating factor which constantly points to success; understanding risk. This one aspect is without a doubt the “holy grail” of trading and it’s those who come to understand risk and the impact it’ll have on their trading, who are far more likely to succeed.
Those traders who listen to their tutors or more experienced peers, regarding how limiting risk and lowering return on investment expectations to more reasonable and achievable levels, are far more likely to succeed. They’re not necessarily risk adverse, but they very quickly discover that there’s only so far a robust trading method can reward you. They learn that limiting losses to within a small percentage of their account to cope with the (at times), random market distribution of winners and losers, is a clear path to trading success.
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