There are a number of traits that one should not possess if he wants to earn money as a Forex trader. Four of these traits are greed, fear and lack of discipline and lack of patience.
All FX traders want to make money with currency trading. This claim is absolutely legitimate. The reality is, sadly, that the vast majority of traders lose money. And greed is one of the reasons for it. Critical for FX traders is not only to close positions on time when prices move in the wrong direction, but also to realize the profits in the right moment. And greed is one of the characteristics that contradicts taking profits in the right moment.
Greedy traders commit also other mistakes: They do not stick to bankroll management (they want to get rich quick and therefore speculate with too much money per trade) and they have too little stamina. And you need a lot of endurance as a FX trader. Even if individual trades are carried out within seconds or minutes, it is not possible to get rich quick as a FX trader. The chances are minimal that you can quit your job in the same year as you started FX trading in order to earn a living as a Forex trader.
Like greed, fear is a very poor companion of a Forex trader. Of course, FX traders fear losses. But losses are part of the business. You cannot earn money with every trade. It’s enough, at least theoretically, to close 50.1% of all trades with at a profit.
Anxiety is especially a problem for traders who have little experience, who are too greedy and who are risking too much money on individual trades. Palpitations may belong to online trading – the senses are more alert when adrenaline is flowing through the veins. But if you have the fear of loss with every trade, then you should trade for lower stakes (or even switch to a demo account) or stop trading foreign currencies completely: not everyone is suited for FX trading.
Lack of Discipline
The lack of discipline has already driven many traders out of business. You probably have heard stories like this one: a trader has set a stop loss order, the exchange rate decreases and approaches the stop loss limit more and more closely. Shortly before reaching this limit, however, the trader adjusts the stop loss limit. The trader does not want to close the trade with a loss. And you know the outcome: all too often the price drops even further, and the trader has have lost a significant portion of his capital. Discipline is very important for Forex traders in order to limit losses.
Lack of Patience
A successful trader is patient. He is sure of his cause. He isn’t discouraged by setbacks and doesn’t get distracted from his chosen path.
An unsuccessful trader is the opposite. Once he found a system which earns him some money, he is already altering it in the hope for even greater profits – without knowing for certain whether the system works at all. Or he has tested his system successfully, but then reads of another system that will bring even more profits in less time, and changes his trading strategy (and loses money) rather than to stick to his system which earns him at least a small profit.
Tip: We recommend anyone who starts trading Forex online to first test his skills extensively with a demo account. A Forex broker with an unlimited use demo account is eToro.