Achieving Success in Forex trading: All You Need to Know
Traders tend to constantly compare themselves and their results to others, hoping to achieve other peoples performance, forgetting that reality differs from person to person.
Available time for trading, available trading sessions to trade (time zone), strategy, risk tolerance, trader profile, skills, and available capital – are some of the factors that will determine the results and performance of every single trader.
There is no one and only true definition for success when it comes to trading. Every trader needs to define what success means for oneself and define a path to slowly obtain it. The process of constant improvement towards becoming a better trader is a very important process.
Success is a Process
Traders need to place themselves as their own benchmark instead of taking others as their benchmark for measuring success or failure. Their goal should be to continuously perform tasks that gradually improve themselves as traders.
Success in trading is an ongoing process, remember that, so ask yourself？
● Are you a better and more informed trader than the one you were 2 months ago？ That is an improvement.
● Have you managed to transition from being a losing trader into a break-even trader？
● Have you managed to follow your system in a more disciplined way than in the past？
● Is your win rate better than it was 100 trades ago？
● Are you feeling more confident to apply your strategy？
Every little step is considered progress, a shade of success worth acknowledging, which – compounded with others – will eventually lead you to the successful trader you are trying to become.
How to define your benchmarks and goals？
There are three steps you need to reach a higher level of performance:
First, understand where you stand today – What are your statistics？ What are your results？ What knowledge do you have？ Write them down in an honest way, and state if you are satisfied with what you wrote. This is now your new benchmark. From now on, you are going to compare your future performance against this data.
You can use a trading plan template to help build and manage your own plan, the way professional forex traders do.
Second, set your trading goals – Describe in a detailed way what you want to achieve in trading; get as specific as possible. Money tends to be the ultimate goal when defining success in trading, but actually, consistency, discipline, confidence when trading, the time investment for achieving certain results – all those are some of the other important factors that you can take into consideration. Furthermore, sometimes money is a byproduct of improving in other parameters.
Third, set achievable objectives – for every goal, set mid-term and achievable objectives that will get you closer to your goals. Describe also what you should practice in order to achieve every objective.
How to measure your success？
Once you have defined specific steps to follow in order to get closer to your goals, you need to measure your progress from time to time. These measurements will help you tune and adapt your actions to avoid losing track of your progress.
How often should you stop and review your progress？ There is actually no right or wrong answer. Depending on your trading style, you can set a time frame or a number of trades for measurement. For example, you can decide to stop and review your results every 50 or 100 trades, but for a position trader, waiting that long would not make sense, so that you can do it after 2 weeks or one month.
What to do if your performance improved or got worse？
At every measurement point (the time or trade period), compare your results and statistics to your initial or last benchmark. Make sure to acknowledge your improvements and observe what is yet to improve.
Ask yourself: Has anything in my trading improved？ Did I respect my risk rules？ Is my Risk Reward Ratio slightly better？ If yes, celebrate it! That is a shade of success! Preserve what you are doing well.
What about whats not working？ Go through the initial process again, break it down, understand what you need to change, adapt to learn to correct it, and improve it by the next measurement step. Set little objectives and steps to get closer to it.
We have learned that success in trading is much more than making money on an isolated trade. It is a personal process of constant improvement and partial successes that eventually bring a trader to a higher level of performance, where of course, money is the ultimate reward.