Trading in the Forex markets can be an incredibly rewarding endeavor. Not only is their room for financial gain, but the academic challenge of conquering the FX markets is one that many people find irresistible.

However, wanting to trade and actually becoming a good FX trader are two very different things. Many Forex traders start with the right intentions. However, they quickly fall by the way-side as they allow bad habits and practices to shape their trading.

So, what are some of the key differences between successful and unsuccessful Forex traders? And what are the qualities of a good trader?

Dedication

As with all things in life, success in trading can only come as a result of dedication. Many new FX traders have dreams of making millions from trading in a very short space of time.

As any professional trader will tell you, however, the road to trading success is a long and arduous one.

Becoming a great trader requires a significant time investment above all else. Time to learn about the Forex markets, formulate a strategy, learn to backtest, hone that strategy, trade, journal etc…

Perseverance

Having dedication is one thing, but remaining dedicated over time is what separated the wheat from the chaff.

Many people can be dedicated for a short period of time, but continuing to apply yourself to the FX markets week after week, month by month, year on year requires perseverance and resilience.

Forex trading is not easy. Many people underestimate how difficult it is to operate in an environment where losing money is part of the process. If a Forex trader wants to become successful, they will have to remain dedicated and resilient in the face of ongoing turmoil.

Strategy-Based

Many new FX traders wrongly assume that becoming a successful trader is about being able to call every turn in the market and trade off of tuition and instinct.

While there is an incredibly slim percentage of successful traders who operate like this, the majority of successful Forex traders will tell you that learning/developing a strategy and sticking to it is the key to being successful in trading.

Operating in live market conditions can be incredibly stressful. The prospect of losing/gaining money can provoke emotional responses that are hard to handle. So, having a clearly defined strategy that has been well back-tested will help provide a guide to help keep you from straying.

Pragmatic

There is an aspect of trading that is incredibly important to manage when it comes to being successful. However, it isn’t talked about as much as it should be. That is the Forex trader’s ego.

Many struggling FX traders attach too much personal weight to their trades. They believe that if they have called a move, they have to hold onto it, even if the market is going against them.

This can often lead to damaging behavior such as the moving of stop losses or “doubling down” on positions. Successful FX traders know that the ability to adapt is vital to success and that Forex trading is not personal. If a trader buys the market but the market turns against them, they are comfortable taking a stop loss and reassessing.

Pragmatism is also important when it comes to strategies. Many FX traders spend a great deal of time developing or learning a strategy they believe in.

However, if the strategy is failing in live conditions, they are unable to see that perhaps they need a new one. That’s usually because they have already invested so much of themselves in their original strategy.

While “strategy hopping” is certainly to be avoided, Forex traders should always be monitoring and re-evaluating their strategies. And, if they find them not to be working as they should, they should be open to tweaking or changing it completely!

Risk-Savvy

Risk really is a double-edged sword when it comes to Forex trading.

Many new FX traders make the fatal mistake of deciding that they will trade aggressive position sizes. The thinking is that a strategy delivering 2:1 returns, traded at 5% per trade (for example) can deliver 10% per winning trade.

As such, the trader stands to double their money in just 10 winning trades. However, the overlooked part of this equation is that the trader can also lose their account in as little as 20 losing trades. Sadly, many new Forex traders will experience this before a string of 10 winners.

Professional FX traders will all tell you that managing your risk is absolutely crucial to achieving and maintaining success in the market. Using conservative trade sizing, always using a stop loss and taking traders where you stand to win more than you lose, will be far more beneficial to long term success than taking aggressive trades.

So, if you think you have these qualities then congratulations!

However, if you feel like you still need to work on some of these areas, then do not fear. Learning to develop the correct habits and disciplines is not easy. But, it certainly is achievable and will give you a far greater chance of becoming a successful Forex trader!