On many online communities, there are different discussions on why a “real” successful foreign exchange trader has yet to surface. Come to think of it (if you’re a newbie trader), you may be interested in joining the hype; after all, it’s true that most of the successful forex traders are those you only see featured in magazines and TV.
As it turns out, the reason why successful forex traders have big reputations is because they dared to become big; for their trading careers, they applied the mindset to either “go big or go home”.
Profits & Losses Are Temporary
According to the legendary forex trader George Soros, generating a grand amount from a winning position is a huge deal; however, it is unlikely to last. The same is true with losses, as the man who earned a billion dollars in one trading day says. If you refuse to be active and revel (too much) on profits and losses, the establishment of better positions may remain unaccomplished.
Moreover, as John Taylor, the popular trader who also works as a political analyst, advises, you should apply risk management and money management tactics. The advice is also given by Lucky Skosana, the African trader who is strict regarding a 1% or 2% maximum loss allowance. Set restrictions with regard to profits and losses; calculate a trade’s expectancy so that you can keep profits and losses at bay, and easily stick to the rules.
For assistance, here’s a formula:
*P = profit; L = loss; R = profit percentage
Expectancy = [(P ÷ L) + 1] x R - 1
A Solid Trading Plan
The importance of engineering a solid trading plan should be regarded; this is according to numerous successful forex traders such as Stanley Druckenmiller (the trader with an integral participation in a billion-dollar deal), Victor Niederhoffer (the Japanese chart trader who turned $10 thousand into $5 billion), and Bill Lipschutz (the trader who turned a $12 thousand into $250 thousand). Avoid entering the forex market without a strategy; spontaneity may result to losses that can discourage further trading ambitions.
A solid trading plan defines the workability of your trading approach; you can make strategic modifications along the way. As Andrew Krieger, the trader who is famous for taking thousand-dollar risks, proposes, you should learn to take risks if an opportunity is presented. It is suggested, however, to be mindful of risks. Grand financial rewards are waiting with wise risk-taking and if favorable market conditions show up.