1. Teachable
The question is sometimes asked whether a person with a tertiary education from a prestigious institution makes a more capable trader than a high school graduate with an appetite for the market. On both counts, the issue is not one of education level, but of the individual being teachable.In order to learn, adults require immediate relevance to their job or personal life (readiness to learn). Most learning occurs as a result of life experience, in particular, through the making of mistakes (getting it wrong is a great teacher).Blame passing (we learn this from childhood – it’s always someone else’s fault, the fault of the instrument or tool, not ours) is an endemic disease that has to be cauterized if a trader wants to be successful. Traders often don’t want to look inferior or incompetent among their peers (goes to pride and competition, not wishing to show weakness – it’s also why admitting to losses resonates so deeply with many traders – it’s the elephant in the room, everyone experiences it but no-one talks about it).Asking the direct questions, admitting you don’t know it all, that you have learning and information needs isn’t a sign of weakness. It’s a sign of strength. The trader who can ask questions, obtain quality information, is the one who will succeed.Is your inner bullsh*t meter properly tuned in?Successful traders are open and teachable; they are honest and real about their abilities and learning needs.
2. Disciplined.
Trading Forex can be a gruelling education in how to get self-disciplined, fast.Losing money is painful, extremely painful. It hits where it hurts most, in our pockets and our pride (since we are after all, smart, intelligent, logical, rational people – getting it wrong isn’t in the repertoire). When market’s rod of correction kicks in, and does so repeatedly, we have two choices. Absorb the instruction and learn from it; or ignore it and walk away.The word “discipline” takes its origins from the Latin “discere” meaning “to learn”. To be self-disciplined, means a capacity to apply yourself to learning or doing a given task when you would rather be doing something else. Can you apply yourself to the task of amending both your behaviour (actions) and your thinking (cognitive processes) as a result of the instruction market delivers?Successful traders have cultivated the self-discipline to obey their own trading rules.Successful traders possess high levels of self-discipline.
3. Observant.
“The little things don’t mean anything. They mean everything.”The capacity to recognise, observe and pay attention to the fine details has much importance in trading Forex successfully. The astute quality in a trader, being able to juggle a multiplicity of fine detail; accurately sift fact from fiction; recall and apply a plethora of rules and rule exceptions at the right moment, is an important capacity.Successful traders have the best information. They don’t get this information by relying on other people to provide it in a neat little capsule “take one a day” form. They read widely, take in contrary opinion, pay close attention to the detail in their charts, think for themselves, and draw their own conclusions. This requires effort.Successful traders consciously arm themselves with the best information; they pay attention to the detail.Successful traders are observant and astute.4. Spirited.It takes a special kind of person to trade Forex successfully. A rare combination of dynamic spirit tempered by concrete realities.The successful trader needs to be comfortable with risk. Having the “spirit” to take risk in the first place is a legitimate and necessary requirement. The corollary is also having the balanced temperament to apply the brakes; to deal with concrete information and hard evidence as opposed to acting on emotion for the thrill of the ride.Gaining mastery of the instrument requires tempering the risk-taking spirit with the hard edge of realities, in particular, familiarity with the many nuances of the Forex market. It is this that causes the process of Forex market success to take time.Successful traders possess a dynamic spirit tempered by concrete realities; they are comfortable with, and respectful of risk.
5. Resilient.
Resilience is the capacity to endure adversity and to bounce back following adversity. Resilient human beings have the ability to weather the storms, to keep things in perspective when adversity strikes, to temper their thought processes with more balanced positive recollection.It’s not a question of adverse events occurring (because we all get our fair share of adverse life events eventually - that's just the random nature of life), it’s what we choose to do about it when they do.When losses occur, the resilient trader takes the lessons on board, learns from them, and amends their trading behaviour. Adverse events present us with opportunity to make a conscious choice - between being the victim or the victor.Successful traders possess resilience; they persevere, they bounce back.
6. Emotionally Mature.
The excite factor in a trader, the energy that drives success, can also be the Achilles heel. The ability to “act, not react” matters.Emotional maturity isn’t necessarily the exclusive domain of chronological years. Some young people possess tremendous maturity, while some older people are still just kids walking around in adult bodies. Being able to respond to emotional stimuli in a balanced controlled way without allowing negative emotion to rule responses is important.Successful traders demonstrate emotional maturity; they act in positive constructive ways, not reactive negative ways; they control their emotional responses; they don’t allow emotions to control them.
7. Risk Manager.
A question on every good risk manager’s mind is “what can possibly go wrong or be wrong with this?” Accurately identifying potential sources of risk, and the capacity to sort fact from fiction, matters.In Forex, losses are part of the cost of doing business. They also become the cost of our market education. Paying for quality formal market education is one means to avoid paying for your education by more indirect means, losses.The best way to contain and manage risk effectively while you learn is to trade small. If a trader doesn’t have the discipline to trade a micro-account with the same discipline they would apply to a larger account, the outcome will be no different. Turning $100 into $200, or $500 into $1000, and eventually turning your seed capital into much larger sums requires exactly the same skill set as trading a larger account from the outset.Keeping the losses tight/low while you undergo the apprenticeship, setting aside the balance of your Forex trading capital for “later” is a common sense strategy.* The objective is to arrive at the point of accumulating consecutively successful winning trades before launching into larger accounts and larger position sizes. If the compounding factor cannot be realised on a small account, it won’t happen on a larger account either.Successful traders are competent risk managers.
8. Stress Manager.
Males of the species, being testosterone driven creatures, are prone to seeing opportunity and engaging in risk-taking behaviours. It comes with the territory, nature of the animal, part of the hunter/warrior profile.Cortisol is the hormone generated when stress levels reach a peak. It provides balance to the equation, it’s the “flight” part of the “fight or flight” response. When testosterone is peaking, opportunity abounds. When stress levels overtake, cortisol kicks in with the opposite view, disaster awaits at every turn, caution is the primary driver. Being afraid to take another trade, missing opportunities, happens for a reason. The over-riding instinct is one of self-preservation - this isn't a bad thing - it's a part of the mind's automatic programming to protect oneself from injury and is therefore something to be embraced, not shunned. It's the foundation of giving risk the respect it deserves. Keeping this response in proper balance is a learned skill that will improve with time as the trader's confidence grows.Managing the stress of trading, being able to identify your physiological responses and monitor these is important.Successful traders recognise their decision making can be affected by stress levels; they identify this and manage their stress responses effectively.
9. Hunger.
Being hungry for the expected outcome (an independent means to make money, the goal of financial independence), seeing the potential, having the motivation to persevere and wrestle with yourself, to put in the effort to fill your knowledge gaps, to apply yourself diligently to the task until you reach a point of proficiency is important. Knowledge is power. Knowledge provides the confidence to trust your TA and trust your trading ability.Hunger for the outcome, being driven to reach your objectives is a key ingredient of the successful trader.Successful traders display hunger for success; they put in the effort required to fill knowledge gaps.10. Focus.People who are most likely to succeed in Forex (as in life) are driven by reward for effort; they are highly focussed on what works, have a low tolerance for day-dreams that don’t deliver. This “reality-check” factor matters. Putting your cold cash on the line, backing your own judgement with hard coin in a high risk market takes courage and belief in yourself / your system / trading abilities.Despite the very best system or entry signals, every Forex trade is a “balance of probabilities” investment. Stacking the odds in your own favour to the greatest possible extent with each and every trade you make, matters.Successful traders are focussed on the reality-check issues; they clinically remove the dross from their inner dialogue; they pursue quality outcomes.
Summary
In the picture at the head of this article, the kitten looks in the mirror and sees a lion. This speaks of the optimism and confident belief the trader needs.It also speaks poignantly of getting a proper grip on current realities in order to make the transformation possible. Many new traders embark on this journey dreaming of the riches to come, seeing the possibilities but not seeing the present realities or what it takes to arrive at that point. Cultivating the personal qualities needed to trade Forex successfully requires focus, application, discipline.Successful traders possess a personal bullsh*t meter that is finely tuned. They are open and teachable; observant and astute; disciplined; spirited; hungry for success; resilient; emotionally mature; good risk managers; capable of dealing with stress; focussed on achieving quality outcomes.To the victor go the spoils.
No comments:
Post a Comment