By Chris Donnell – Trading Forex is an exciting activity. No where is there more promise of immediate fortune and unlimited potential than in the Forex market. The problem is that the vast and dynamic nature of Forex is the very thing that appeals so readily to the greed inherent in human beings and tends to lead unwitting traders into behavior unbecoming of a professional. Professionalism is just the thing that often escapes part-time amateur traders. There is no truer statement than Forex trading should be treated like a business. Furthermore, a business can hardly hope for success if it is not planned and managed in a professional manner. You’re Lemonade Stand couldn’t possibly expect to succeed if you did not control costs, operate properly and work efficiently. The same goes for Forex trading. Due to the informal nature of Forex trading, with most traders sitting at home, alone, making decisions with little or no scrutiny and/or open consideration nor contribution from others, often people are risking their personal fortunes with little regard for structured action or set parameters on their behavior. This is the fastest way to go broke trading Forex.
Often squeezing trading in between dinner, washing dishes or babysitting the kids, traders set themselves up for defeat because they don’t allocate adequate resources (in addition to money) to their efforts. Nearly as often, many traders take short cuts, base their decisions on unqualified opinions from others, random guesses or even treating the Forex like their own personal ATM or home casino. If you lay down a bet on the roulette table, black or red, you may very well win many times in a row. You could even gain a small fortune if the stars ‘fell in alignment’. However, trading Forex we are not leaving our hard-earned personal finances entirely up to chance at all. On the contrary, like scientists, we should evaluate the conditions, our tools and information so thoroughly that, while price is a beast we cannot nor will ever control, every single action and possible re-action is entirely mechanical. There is no place for fragile human emotion in the world of spot currency trading.
No matter what method you use to trade you should be completely familiar with every aspect of the strategy you employ. Approaching your trades in a cold robotic way is most ideal. Furthermore, you mustn’t let your human desire for personal fulfillment, achievement, accolades, or just plain entertainment have any part in your system. It is not uncommon for traders to want so bad to be correct about their trading decisions they will risk an exorbitant amount of capital just so that they can end the day saying “I made money”. Or equally loathsome, some traders will take on unsuitable risk in order to maintain a winning streak. These features are the product of vanity and ego which have no place in an investment of any kind. Just like one invests in mutual funds, bonds or buys stock in GE for example, they are merely deciding that prevailing factors are in their favor and the rest is left up to market forces which they duly forget about until 1, 3, 5, or dozens of years later when they must redeem their capital (or what is left of it) due to a pre-subscribed rule or condition (i.e., their retirement, et al). Just like Forex traders set a stop loss and a take profit, average investors set their limits, goals and settings as well.
Some of the best advice to new traders could simply be: treat your Forex trading like a business. You would never act in an irrational way to get new clients at your day job, or undermine the company’s budget just so you could claim success on a daily project, or even risk losing your job to soothe your own psychology. Yet, people do similar things in Forex all the time. It is that critical, without your job you may very well not be able to survive. Likewise, if you want to make an investment you usually go seek out an investment ‘professional’ typically equipped with MBAs, CFAs and licenses out their ears. If you squander your investment income you won’t have a retirement future. It is that simple. Take it seriously.
In life, everything comes with a price. Aside from winning the lottery, everything we do and everything we achieve is typically earned in some way or another. That is why we must treat Forex trading as a magnificent yet constantly evolving and advancing obsession. We will never totally master it, we can only hope to acquire the skills sufficient enough to succeed at it. And that effort, time, research and so on is the cost of that success. There are no easy paths nor shortcuts. If you get lucky and buy an EA (Forex robot) that actually works, then you may be fortunate for a time. But, in order to succeed completely and in the long run you will need to treat trading as no less than a career. With a career come significant responsibilities. Respect your career and live up to its responsibilities.
About the Author
Chris Donnell is CEO of TopGun Software, LLC and is both an active trader and developer of the most profitable Forex Trading System available to retail traders and free to traders at FXCM or FXCM.
