Just like any other business, Forex trading also has winners and losers. As much as two traders can use the same strategy in Forex trading, one of them can make consistent profits while the other can make consistent losses. This difference arises from the attitude of the traders and their commitment in applying the strategy. This article describes some attributes that differentiate the winners from the losers in the foreign exchange market.
To begin with, winning traders have realistic expectations on the amount of profit that they can make according to the size of their trading accounts. On the other hand, losing traders have unrealistic expectations and think that Forex trading is another way of getting rich quickly without any sweat. Because they have realistic expectations on the market, winning traders do not engage in bad trade habits like emotional trading and overtrading.
Losing traders generally have the tendency to dream up fantasies where the Forex market offers them with future riches and provides a solution to all their problems. They transfer these fantasies and unrealistic expectations to the market and have trouble coping with the reality of being wrong. If circumstances start working against them, they try to ignore them. If a currency pair sold rises and the trade is clearly against them, they do not abandon the fantasy of their belief and keep hopping for the trade to work in their favor.
Another difference between winning and losing traders is risk management. In contrast to losing traders, winning traders know how to effectively manage their risk. Winning traders are able to absorb losing money because they practice risk management. Losing trades usually trade with money they are not able to risk in the market. As a result, they end up making emotional decisions and wiping their accounts faster than they expected. To trade Forex effectively, it's important that you remember that the Forex market is very dynamic in nature and expose only the amount you are ready to lose to the market.
Lastly, winning Forex traders have developed a "winning mentality." As such, they trade using proven strategies and trading plans. The reason why most people lose while trading currencies is due to lack of discipline in trading. Winning traders have discovered this secret, and, as a result, they do not rush any trade; they allow the market itself itself and study it properly before placing and quitting trades.