The foreign exchange market remains a very attractive business proposition, in spite of the fact that there are certain obvious risks involved. The chances of winning big are also there. However, those of you are who take little time in relating “big wins” or “big losses” to “luck” and “gambling”, might think once again. Forex isn’t really the place to be— for you—in that case. As a potential trader, you must understand that forex is much more than the proverbial “pure luck”. In order to succeed here, you need to educate yourself and gain a thorough understanding of marketing in the process. If you’re not ready to do that, then forex is not for you. Let us find out which kind of people is not cut out for stocks or the foreign exchange market or currency trading.
Forex is not for you!
It can be easily claimed that if traders or investors were a bit more serious about conducting some substantial self-study before trading, then the market would have seen fewer losses. It is advised that you refrain from trading if you don’t have the qualities mentioned below:
Patience
Forex is not meant for those who lack one of the cardinal qualities (as far as forex is concerned). There are times when you would have to sit for long in front of the computers to watch charts and determine your entry point. Impatience leads many traders to start trading before studying the chart thoroughly and getting an appropriate signal. Therefore, they are bound to close in the wrong position and lose a substantial amount of money in the process. One of the unmistakable attributes of successful traders is that they know very well when they want to enter or exit trades.
You need to exercise similar patience before you start trading as well. For instance, you have to practice with a demo account, for months before you start trading. Acquaint yourself with terms such as forex affiliates, conversion rate, commodity pairs, counter currency cross rate, etc.
Ability to Control Greed
As already mentioned above, successful traders know when to enter the trade and exit it. Yes, they exit trades after they secure the expected returns, without continuing for bigger gains. On the other hand, its greed, that leads most of the unsuccessful traders to hold on for too long, after initial success— thereby triggering risks of losing big, as well.
Ability to Control Emotion
Traders, who are primarily driven by emotions, should seriously consider their chances of getting into forex. Emotion is one of the major factors influencing your standing as an investor. Exercising a firm control over your emotions irrespective of whether you’re winning or losing, is important. For instance, the situation highlighted above— when traders keep on betting even after securing their expected returns— is partially driven by emotions besides greed.
It’s the same emotion that leads them to hold on after suffering losses initially. Any successful or experienced trader would generally like to opt for a safe exit when they start suffering losses in a trade. They are quick to understand that it’s not their day and it’s only wise to resign for the day so as to keep the losses within control. The more emotional traders, on the other hand, hold on, expecting that they would end up winning, finally, even after the initial losses— thus, ending up losing a huge amount of money in the process.
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