Whenever someone asks me what is missing them to become a successful Forex trader, I often reply that, without knowing it, they are most likely one decision away from getting the results they want.
This sounds exciting, isn't it?
Or maybe it sounds stressful because doing only one thing wrong could literally destroy your results in trading. That's partly true.
Over time, however, I came to accumulate the common reasons as to why traders who have been trading for a while still struggle.
“The game taught me the game. And it didn’t spare me rod while teaching.” – Jesse Livermore
For this article, I decided to combine a list of the reasons (for not being a successful Forex trader) I've identified by speaking individually to hundreds of currency traders from around the globe.
If you spot something that might be a cause of YOU not getting the results you want in your trading, I strongly recommend you take note of it and plan a way to fix it immediately.
You Do Not Know The Basic Principles Of Technical Analysis
While not knowing enough about technical analysis is one of the main reason why traders fail, it's not the biggest one. Chances are that this isn't the first blog about trading you come across.
If you've been slightly exposed to the trading world, you'll probably know enough.
In other words, you probably know how the market operates by now.
Do you need to know about every single market theory and indicator?
The things I've written about through the past articles contains what you need to get started with technical analysis:
- The 3 Types Of Trades You Must Know
- A Powerful Way To Draw Support And Resistance Zones
- The Magic Of The Engulfing Pattern – And Trading It!
- DTTP 052: The Art Of Technical Analysis And Trading Ideas – Jason Sen
That should already have set you up for a strong start.
You're Looking For Trades vs. Waiting For Trades
By reading that headline, you probably thought “oh…another picky word difference”, but I can tell that there's a huge gap between entering looking for trades and waiting for trades.
If you get to your trading desk and start to look for trades to enter, you're doing it wrong. The reason is that this sort of view of trading almost forces your mind to find a trade setup to enter. You might even become excited to have found a “perfect trade” at this exact moment and will forget to check a crucial criteria of your checklist before getting in. It's inevitable.
The solution consists of looking at your chart with the approach of a successful Forex trader:
- What is the price doing?
- What could the price do from here? (there should be at least 2+ possibilities)
- Where would I be interested in getting in? (where you'd have an edge)
Asking those previous questions allows you to create trade scenarios. You're creating a trade plan. Then, it's all about waiting until your scenario unfolds as you thought.
If the scenario you expected doesn't take place, that's fine. At least you won't have rushed to get in on an impulse and you'll feel much calmer.
You're Not Executing Properly On Your Plan
It's one thing to write a trading plan, but it's another to execute properly on it.
If you are making mistakes during your execution (i.e. entering too late/early, not taking the action you were expected to take), you might see a difference in your results.
That is the main reason why I tell people that backtesting isn't the same as trading. It's much harder than it seems to act perfectly when trading Forex live.
If you want to evaluate your execution, you need to track your trades. Having a Forex trading journal can make a big difference.
You Haven't Done Anything To Control Your Actions When Trading
Similar to not executing according to your plan, not controlling your actions can be a major reason why you're not a successful Forex trader yet.
There's something, however, that you must understand when it comes to the word control in trading:
You can't control your emotions and feelings, but you can control how you react to them.
That is absolutely key to understand because feelings/thoughts/emotions come and go at unexpected times. Trying to control them is a serious challenge and frustrates way too many traders daily.
The real question is: Are you going to act on those feelings/thoughts/emotions? At this point, it's up to you to decide.
And that's where, once again, mindfulness comes into play.
Being mindful means focusing our mind on a certain action or sensation. When we try to concentrate our attention on something, thoughts will come up. If they don't, you're most likely dead and should do something about it.
The exercise then becomes to re-focus your attention to the action in questions when you get distracted. We want to bring back our attention on the present sensation.
The more you practice mindfulness, the better you become at concentrating your attention and ignoring the thoughts that come up. It can make a big difference.
In a trading context, practicing mindfulness helps you to avoid impulsive trades or reactions.
More on mindfulness in trading: DTTP 006: The Amazing Power of Mindful Trading, DTTP 020: A Winning Mental Approach To The Market w/ Dr. Gary Dayton, and DTTP 023: The Disciplined Trader And The Top 3 Skills Traders Must Develop w/ Steve Ward
You're Trying To Remember Your Plan In Your Head
Very simply put, if you've never taken the time to write down your trading strategy and review it a few times, then do it now!
I thought for a long time that I was a good trader who could remember everything, meaning I skipped writing down a plan for a while. When I did write what I was supposed to do on paper, however, I felt 10x lighter and 30x clearer.
It works 🙂
In reality, if you do not have measurable ways to look at your trading strategy, how do you know if you're doing the right thing?
It's way too easy to modify your plan once you're in a trade to fit in a trade that you wouldn't normally enter. If you keep everything in your head, you'll keep making excuses for entering or not entering trades until your account blows up.
Take a look at Creating Your Forex Trading Strategy Playbook.
It's Up To You…
The main takeaway I want you to get out of this article is that you are responsible for everything that is happening with your trading. You might have been led by your emotions in the past, but it is your duty to learn what a successful Forex trader would do and implement it in order to become the best trader you can be.
Can you relate to any of the reasons mentioned above? Which one is preventing you from succeeding the most and how will you fix this? Anything else should be included in this article? Comment below and we'll discuss!