Whether you are a Forex scalper who stares at the computer for 4 hours a day or a position trader who looks at the chart once a day, you need to be supremely disciplined to succeed. The secret to successful trading lies in staying motivated, proper money management, and the right mental attitude toward losing.
From time to time, staying motivated can be extremely difficult. When we were introduced to the foreign exchange market, we were told that it is a 24-hour market which offers lots of trading opportunities to make easy money. Once we are knee-deep in the Forex market, we understand that 90% of the trading opportunities occur in the London and New York markets. Yes, you can trade in the Asian or the Australian markets if you are looking for small bounce of several pips to get your blood pumping.
Depending on your time zone, you may need to stay up past midnight to trade the London Market or wake up at five in the morning to trade the New York Market. The hardest part isn't staying up late or waking up early, it is sitting in front of the computer waiting for the market to come to you. For whatever reason, your entry criteria may not be met; hence, you will continue to sit on your hands, waiting for the ever-elusive market to come to you. The art of trading is similar to fishing. If the fish do not cooperate, it is likely that you will come home empty-handed. It is important not to trade when there are no opportunities in the market and to stay motivated each day.
There are many Forex instructors and automated Forex trading software that preach that the risk of each trade should be 5% of your capital. Basically, each time that you win, you have additional capital to risk. This has a compounding effect when you have a string of winning trades, but it is also a formula for disaster. When you increase your trading lot size, you also risk losing more. You need to focus and understand the maximum drawdown of your trading system. Your trading account must be ample enough to withstand a string of losses without affecting you mentally or wiping out your account. If you are using a proper manual trading method or profitable automated Forex trading software, your losses will come to pass and a string a winning will come back again. Remember to have enough funds to enable you to recover and profit from the market.
Traders need to understand that mental attitude is more important than mental capacities or the trading system itself. The mental attitude toward winning and losing is the key to your Forex trading success. It is how you rebound from a string of losing trades that speaks volumes about who you are as a trader. Do you still believe in yourself and your trading system after a string of losses when all the trades were executed with perfection? You need to believe in yourself, and your attitude makes all the difference. After you have acquired the motivation, the money management, and the mental attitude, you will need to maintain these three traits with you month after month. With these characteristics, you will understand why Forex trading is a marathon and not a sprint.